By Joseph Maddaloni, Jr,. Esq.

The New Jersey Secure Choice Savings Program, also called the NJ Auto-IRA Law, is set to launch next month. Once the Program is up and running, employers must comply within nine months or be subject to penalties. The Program requires for-profit and nonprofit businesses with 25 or more employees that have been in business for at least two years and do not offer a qualified retirement plan, to implement a payroll deduction retirement plan for employees. Employers can either participate in the state-run plan or offer employees an alternative qualified retirement savings option such as a 403(b) or 401(k) retirement plan.

The Program’s implementation date was originally set for March 28, 2021; however, the Program was allowed up to a one-year extension due to COVID-19. Accordingly, March 28, 2022, is the current deadline for Program implementation, although an official schedule has not yet been published. Participation in the Program by employers with fewer than 25 employees is optional. 

The Program is managed by the New Jersey Secure Choice Savings Board, which was created by the Program’s enabling legislation. The Board is expected to publish more specifics prior to the implementation date. However, at this time, covered employers will be required, at minimum, to distribute an information packet prepared by the Board, set up payroll infrastructure to accommodate automatic enrollment, deposit employee payroll deductions into the program fund, offer an annual Open Enrollment period and enroll any new employee no later than three months after their hire date.

The Program comes with no long-term costs to the taxpayers or to employers because program management fees will be paid by participating employees and are capped by the enabling legislation. There is currently no mandate for an employer contribution or match. 

Employers will report their compliance with the Program on the employers’ state income tax returns. Employers that fail to comply with the Program face penalties from the state Treasury Department. Penalties range from a warning to a $500-per-employee fine. While awaiting further direction from the Board, New Jersey employers should consider whether they will participate in the state-run plan or offer their employees an alternate qualified retirement plan that better meets specifications.

For more information, contact Joseph Maddaloni Jr. at jmj@spsk.com or at (973) 540-7330.