Deadline Extended Until August 31, 2023, for Businesses to Comply with Connecticut’s Mandatory Retirement Program
Update Applicable to:
All employers with five or more employees do not sponsor a qualified retirement plan in Connecticut.
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What happened and what are the details?
Connecticut has established a state-run employee retirement savings program (“MyCTSavings”) launched in 2022 and is administered by the Office of the State Comptroller. The individual retirement account (IRA)-based program generally requires that private-sector employers with five or more employees in Connecticut — at least five of whom have been paid $5,000 or more in the previous calendar year — join MyCTSavings if they do not currently offer a qualified, employer-sponsored retirement plan for their employees.
Employer compliance with the program has been phased in based on the number of employees a business has, starting with those with 100 or more employees. The deadline for the last phase, applicable to small businesses with between five and 25 employees, was March 30, 2023. However, the State Comptroller’s office announced an extension for all employers to register to August 31, 2023.
Covered employers may register for the MyCTSavings program directly at https://myctsavings.com/employers. After registering, the employer will receive information and instructions regarding MyCTSavings, including materials to be distributed to employees. Note that eligible employees are automatically enrolled in the program, but they may change the automatic salary deferral percentage or opt out of the program.
Employers that offer a qualified, employer-sponsored retirement plan for their employees are exempt from compliance with the program but should certify their exemption on the MyCTSavings portal – https://myctsavings.vestwell.com/register/exempt, by the August deadline.
Employer Action Necessary
Although no employer contributions are permitted under the program, it does impose some requirements on employers. If they have not done so already, Connecticut employers with five or more employees (at least five of whom have been paid $5,000 or more in the previous calendar year) and that do not sponsor a qualified retirement plan need to take the following steps:
- Register with MyCTSavings by August 31 (employers that offer a qualified plan for their employees are exempt and should certify their exempt status on the MyCTSavings website by that date);
- Provide certain required program information to eligible employees;
- Begin employee payroll deduction contributions and timely remit them to the state program; and
- Direct employees requesting information about the program or investment options to go to www.MyCTSavings.com/savers or call 833.811.7436
Penalties for Non-Compliance
If a business fails to enroll an employee in the program, the Office of the Comptroller could bring a civil action to require enrollment. In addition, the state legislature is considering a proposal imposing “a small penalty” for not complying with registration requirements. Further, an employer that fails to remit timely payroll contributions may incur penalties, including wage and hour violations assessments.
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For more information, please see the links below:
Article 1 – Article 2 – Article 3
What do employers need to do?
Employers should review the links provided above and begin registering as soon as possible if they do not provide a qualified retirement plan by August 31, 2023.