Which states have mandatory retirement plans?
Key takeaways
Some states require employers to offer a retirement savings plan or enroll employees in a state-sponsored program.
These programs are often called state-mandated retirement plans or auto-IRA programs.
Employers can avoid enrolling in the state program if they already offer a qualified retirement plan (like a 401k).
Requirements vary by state and employer size.
What are state-mandated retirement plans?
State-mandated retirement plans are programs created by individual states to increase retirement savings access for workers whose employers do not offer a retirement plan.
Most state programs operate as auto-IRAs, meaning:
Employees are automatically enrolled.
Contributions are made via payroll deduction.
Accounts are typically Roth IRAs.
Employees can opt out.
Unlike traditional employer-sponsored 401(k) plans, state auto-IRA programs do not require employer contributions.
If you're unfamiliar with how different retirement accounts compare, reviewing the differences between a SEP IRA vs Roth IRA can help clarify how state programs typically function (most use Roth IRA structures).
Which states currently have mandatory retirement plans?
As of 2026, the following states have enacted mandatory retirement savings programs for certain employers:
States with active or implemented programs:
California (CalSavers)
Colorado (Colorado SecureSavings)
Connecticut (MyCTSavings)
Illinois (Secure Choice)
Maryland (MarylandSaves)
Massachusetts (CORE Plan – for certain employers)
New Jersey (RetireReady NJ)
New York (Secure Choice – rolling implementation)
Oregon (OregonSaves)
Virginia (RetirePath VA)
States with programs enacted or in development:
Delaware
Hawaii
Maine
Minnesota
Nevada
Vermont
Washington
Implementation timelines and employer size thresholds vary.
Because these requirements evolve, employers should check their state’s official program site for the most up-to-date compliance rules.
Which employers must comply?
While rules vary by state, employers are generally required to participate if they:
Meet a minimum employee threshold (often 5 or more employees)
Have been in business for a specified period
Do not already offer a qualified retirement plan
Employers can avoid enrolling in the state program by offering their own plan, such as a 401(k), SEP IRA, or SIMPLE IRA.
Understanding how employer plans compare with individual retirement options — including how tax treatments differ — can help businesses evaluate alternatives before defaulting to a state program.
How do state auto-IRA programs work?
Most state-mandated retirement programs follow a similar structure:
Employers register with the state program.
Employees are automatically enrolled.
A default contribution rate (often around 3–5%) is applied.
Contributions go into a Roth IRA under the employee’s name.
Employees may opt out or adjust contribution levels.
Unlike 401(k) plans, these programs generally:
Do not allow employer matching
Have lower contribution limits (IRA limits apply)
Offer limited investment menus
Why are states requiring retirement plans?
Many Americans do not have access to workplace retirement benefits. State-mandated programs aim to:
Increase retirement participation
Reduce reliance on Social Security
Encourage long-term savings habits
Improve financial security for future retirees
Automatic enrollment has been shown to increase participation rates significantly compared to voluntary opt-in systems.
Are state retirement plans the same as 401(k)s?
State retirement plans are typically not the same as 401(k)s.
Key differences include:
Feature | State Auto-IRA | 401(k) |
Employer contributions | No | Optional (often yes) |
Contribution limits | IRA limits | Higher 401(k) limits |
Investment options | Limited | Broader selection |
Administrative burden | Low | Higher |
Fiduciary responsibility | State-managed | Employer-managed |
For employees, participating in a state auto-IRA may be better than not saving at all. However, individuals who want more flexibility may consider opening their own retirement accounts in addition to workplace savings.
What happens if an employer doesn’t comply?
States may impose:
Monetary penalties
Fines per employee
Escalating compliance notices
Penalties vary significantly by state.
Employers should evaluate whether offering a private retirement plan may better suit their workforce before defaulting into the state system.
How state retirement plans fit into your broader savings strategy
Whether you're an employer or employee, retirement savings accounts are often only one piece of financial planning.
Many savers balance long-term investments with more accessible savings vehicles, such as:
High-yield savings accounts for emergency funds
CD accounts for predictable fixed-rate returns
Individual IRAs for supplemental retirement savings
Diversifying across account types — retirement, taxable savings, and fixed-income — can help create financial flexibility.
Bottom line
While state-mandated plans focus on retirement investing, maintaining accessible savings can improve overall financial resilience.
Raisin’s marketplace allows you to:
Compare high-yield savings accounts
Explore competitive CD rates
Access multiple banks with one login
Maximize the potential of short-term cash
Balancing long-term retirement growth with competitive savings yields may help support a stronger financial foundation.
Frequently asked questions
Are state retirement plans mandatory for employees?
Employees are typically automatically enrolled but may opt out.
Can employers avoid state retirement programs?
Employers that offer a qualified retirement plan (such as a 401(k) or SEP IRA) generally do not need to enroll in the state program.
Are state auto-IRAs Roth or traditional?
Most state programs use Roth IRAs, meaning contributions are made after tax and qualified withdrawals are tax-free.
Do state retirement plans guarantee returns?
No. Like other IRA investments, returns depend on market performance and carry risk.
The above article is intended to provide generalized financial information designed to educate a broad segment of the public; it does not give personalized tax, investment, legal, or other business and professional advice. Before taking any action, you should always seek the assistance of a professional who knows your particular situation for advice on taxes, your investments, the law, or any other business and professional matters that affect you and/or your business.
© 2026 Raisin SE. All rights reserved.
The Raisin name and logo are trademarks of Raisin SE. All other trademarks, logos, marks, and brand names are the property of their respective owners.
*APY means Annual Percentage Yield. APY is accurate as of April 19, 2026. Interest rate and APY may change after initial deposit depending on the terms of the specific product selected. Minimum opening deposit is $1.00.
Raisin is not an FDIC-insured bank, and FDIC deposit insurance only covers the failure of an insured bank.
Raisin is not an NCUA-insured credit union. NCUA deposit insurance only covers the failure of an insured credit union.
Raisin does not hold any customer funds. Customer funds are held in various custodial deposit accounts. Each customer authorizes the Custodial Bank to hold the customer’s funds in such accounts, in a custodial capacity, in order to effectuate the customer’s deposits to and withdrawals from the various bank and credit union products that the customer requests through Raisin.com. The Custodial Bank does not establish the terms of the bank or credit union products and provides no advice to customers about bank or credit union products offered by the applicable bank or credit union through Raisin.com. Each customer also authorizes the Service Bank to move funds among the various banks and credit unions at the customer’s request. First International Bank & Trust (FIBT), Member FDIC, is the Service Bank. Bell Bank and Starion Bank, each Member FDIC, are the Custodial Banks.
†Based on $250,000 in FDIC or NCUA insurance coverage per insurable category of ownership at each partner bank or credit union on the Raisin platform (each a "Product Bank"), when aggregated with all other deposits held by you at such Product Bank and in the same insurable category. Deposits made through Raisin will be eligible to receive deposit insurance from the FDIC or the NCUA (each a "Deposit Insurer") in accordance with and up to the maximum amount permitted by law at each Product Bank. Raisin is not a bank or credit union and does not hold any customer funds. Funds are held at FDIC-insured banks and NCUA-insured credit unions. Deposit insurance covers the failure of an insured bank or credit union. Certain conditions must be satisfied for pass through deposit insurance coverage to apply. Customers may choose to deposit funds with identically registered accounts at different Product Banks on the Raisin platform to be eligible for Deposit Insurer coverage up to $10 million for individual accounts and $20 million for joint accounts when at least 40 Product Banks are utilized. Please be aware, however, that any deposits you have at a Product Bank, whether through the Raisin platform or outside the Raisin platform, that you may hold in the same capacity (such as in an individual capacity or joint capacity) count toward the applicable Deposit Insurer's deposit insurance maximum amount, and any such amounts that you hold in the same capacity at a Product Bank that exceed the maximum insurance coverage by the applicable Deposit Insurer will not be insured. For more information on FDIC deposit insurance, please see here. For more information on the NCUA share insurance fund, please see here. You are solely responsible for monitoring the amount of funds you have on deposit at each a Product Bank, whether through the Raisin platform or outside the Raisin platform, to confirm that the deposits you hold in the same capacity at each Product Bank do not exceed the maximum deposit insurance coverage provided by the applicable Deposit Insurer.