Written by Douglas Velnoskey
Under Maryland law, most Maryland employers are now required to offer their employees access to a retirement savings plan. The Maryland Saves retirement plan is a state-run, automatic payroll deduction program that supports employers looking to comply with the need to offer a retirement plan for their employees.
Employers with five or more employees in Maryland are required to offer a retirement savings option to their employees, either through the Maryland Saves program or another qualified retirement plan. Companies who already offer a retirement plan for employees, like a 401(k), SIMPLE IRA, or SEP IRA are exempt. If an employer already provides an employer sponsored retirement savings vehicle, they must notify the Maryland Saves program that they offer a qualified plan and receive their waiver.
While this new requirement may seem daunting, the responsibilities of the employer are straightforward. Employers’ primary role comes via payroll deduction and reporting. When it comes to payroll deduction, employers are responsible for deducing the contributions to the Maryland Saves plan from their employees’ wages and transmitting them to the plan. Employers do no need to contribute any funds themselves, but they must facilitate employee contributions. Additionally, employers must report employee participation while also contributing payroll deduction information the Maryland Saves platform.
By leveraging the Maryland Saves platform, employers can provide a retirement savings vehicle for their employees while removing many of the complicated elements of managing their own qualified plan. There are no direct fees for employers to participate in the program. However, employers may incur minor administrative costs relative to administering their own qualified plan.
The overall goal of the Maryland Saves program is to improve retirement savings among employees who lack access to employer-sponsored retirement plans; therefore, helping to address the state’s retirement savings gap.
The concepts illustrated here have legal, accounting and tax implications. Neither Janney Montgomery Scott LLC nor its Financial Advisors give tax, legal, or accounting advice. Please consult with the appropriate professional for advice concerning your particular circumstances. For more information about Janney, please see Janney’s Relationship Summary (Form CRS) on www.janney.com/crs which details all material facts about the scope and terms of our relationship with you and any potential conflicts of interest.
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