Add the Pine Tree State to the growing list of states offering program to provide coverage to those whose employers do not offer a plan.
Gov. Janet Mills (D) signed the Act To Promote Individual Retirement Savings through a Public-Private Partnership (LD 1622) into law June 24. The legislation, introduced by Sen. Eloise Vitelli (D-Sagadahoc), passed the Maine House of Representatives and Senate on June 17.
The measure requires each covered employer to allow its covered employees to decide whether or not to contribute to a payroll deduction Roth IRA by automatically enrolling them but with the opportunity to opt out. Covered employees who opt out will be automatically reenrolled at regular intervals but will have the opportunity to opt out again. The Maine Retirement Savings Board could expand the options available to employees by also allowing them to contribute to a traditional IRA.
Covered employees will automatically contribute 5% of their salary or wages initially, and may elect to contribute at a higher or lower rate. The legislation also calls for an annual increase of contribution rates by no more than 1% of wages or salary up to a maximum of 8%. Employer contributions are not allowed.
The legislation also allows certain individuals who are not employees, such as the self-employed and independent contractors, to participate in the program.
The legislation will be phased in over a 12-month period beginning in April 2023:
- April 1, 2023: a covered employer with 25 or more covered employees must offer the program to them;
- Oct. 1, 2023: a covered employer with 15 to 24 covered employees must offer the program to them; and
- April 1, 2024: a covered employer with 5 to 14 covered employees must offer the program to them.
Visit our state auto-IRA plan resource center!
Maine Retirement Savings Board
The bill establishes a new Maine Retirement Savings Board to develop, implement and run the program. In addition, the board will:
- conduct market, legal and feasibility analyses if the board considers them advisable;
- adopt rules the board considers necessary or advisable for the implementation and general administration and operation of the program;
- cause funds to be held and invested and reinvested under the program; and
- develop and implement an investment policy that defines the program’s investment objectives consistent with the objectives of the program and that provides for policies and procedures consistent with those investment objectives.
Off to a Flying Start
So far, 2021 has proven to be an active year in terms for new state-run auto-IRA programs:
- In Virginia, legislation creating the VirginiaSaves program is awaiting the signature of Gov. Ralph Northam (D);
- Delaware enacted its Expanding Access for Retirement and Necessary Savings (EARNS) program in May;
- New York City enacted a mandatory “Retirement Security for All” program in May;
- Expansion of the Illinois Secure Choice program is awaiting the signature of Gov. J.B. Pritzker (D); and
- In New York State, legislation making the state’s voluntary auto-IRA program mandatory is awaiting the signature of Gov. Mario Cuomo (D).