New Jersey Retirement Program

NEW  New Jersey Retirement Program

New Jersey has implemented a new law, effective March 2021, requiring New Jersey businesses (both for-profit and non-profit) with at least 25 employees and which have been up and running for 2 years, to provide a retirement plan for their employees.
New Jersey will require business owners to either sponsor a retirement plan (401(k), 403(b), SEP IRA, SIMPLE IRA, profit sharing or other qualified retirement plan) or adopt the new state-run Secure Choice retirement plan.
Employers have until the end of 2021 to provide some form of retirement plan for their employees. Companies that do not comply with the mandate will be penalized up to $500 on a per eligible employee basis for non-compliance.
The features in the New Jersey Secure Choice Plan are as follows:
  • It is a payroll deducted IRA, run by the state of New Jersey.
  • All W-2 employees, including part-timers, are eligible to participate.
  • It has a 3% automatic enrollment. 3% will be taken out of every employees’ salary and contributed to an IRA, unless they opt out on an annual basis.
  • Employees can adjust the contribution percentage during enrollment periods.
  • Open enrollment period will be at least once per year.
  • The maximum contribution is $6,000, with a $1,000 catch-up contribution if age 50 or older.
  • No loans are built into the plan.
  • No employer contributions. This includes profit sharing and an employer match.
  • Enrolled employees pay administrative costs and expenses for the management of the plan of a maximum 0.75% of their individual assets in the plan. Fees will automatically be deducted from their account annually.
What do employers have to do to administer the New Jersey Secure Choice Plan?
  • They must submit an employee census on an annual basis.
  • Track eligibility status for all employees.
  • Provide enrollment packets to all employees 30 days after their date of hire.
  • Track which employees have opted in or out of auto-enrollment.
  • Automatically enroll employees who have not opted out within three months of their hire date at a 3% payroll deduction.
  • Repeat the auto-enrollment process each year for any employee who opted out.
  • Hold open enrollment every two years.
  • Track all employees who have not participated in the last year and auto-enroll them.
  • Deposits of the employees deduction amounts.

For current information on programs and loans available to small businesses, please visit the Small Business Organization’s website.