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MarylandSaves program launched to help small business owners offer retirement benefits to employees

MarylandSaves is a program that will require eligible employers to establish a retirement savings plan for their employees. The program opened to the public on September 15, 2022. The state-provided Roth IRA plan is the first to include retirement income and emergency savings components.
Businesses have no payment obligations, no federal reporting requirements, and will pay nothing to MarylandSaves for the service.

Businesses that register (or already have a retirement plan) don’t have to pay Maryland’s annual report filing fee, and if you sign up by December 1, you can save $300 beginning in 2023, and every year after.

MarylandSaves: Program Information
In February 2016, the Maryland Small Business Retirement Savings Program and Trust was introduced in the House. The bill was designed to create a mandate for certain private-sector employers in the state to establish a retirement savings plan for eligible employees.

In November 2021, Josh Gotbaum, chair of the Maryland Small Business Retirement Savings Program, announced that MarylandSaves would offer an automatic workplace retirement and emergency savings program.
On September 15, 2022, MarylandSaves was made available to the public, and Maryland began providing access to retirement savings through Roth Individual Retirement Accounts (Roth IRAs), referred to as WorkLife accounts.

Employers who must participate in MarylandSaves
MarylandSaves provides access to retirement savings through automatic Roth IRAs to eligible employees of specific, private-sector small businesses. Under the law, employers with an automatic payroll system are required to establish a payroll deposit retirement savings arrangement for employees through a state-run trust. This means that employers who use an automated payroll system must offer a retirement plan or sign their employees up for MarylandSaves.

Specifically, any private-sector, for-profit, or nonprofit business operating in the state of Maryland that meets the following criteria must participate in the plan:

1.Those that pay employees through a payroll system or service;
2.Businesses in operation at least two years;
3.Businesses that do not currently offer an employer-sponsored retirement savings arrangement to employees; and,
4.Businesses that have not provided a retirement savings plan in the last two years.
It’s important to note that small businesses that meet these criteria may opt to establish their own retirement savings program for employees as an alternative to MarylandSaves. EagleStone can help you evaluate your options – contact Yohan Allender at 301.917.9305.

How to register for MarylandSaves
To register for the program, employers can go to the website and enter some basic information, including your company’s State Department of Assessments and Taxation (SDAT) number and a unique access code that the program is sending to eligible businesses (via mail or email). If your business has not received an access code, you can request a code via the website.

Businesses that register (or already have a retirement plan) don’t have to pay Maryland’s annual report filing fee, and if you sign up by December 1, you can save $300 beginning in 2023, and every year after.
Businesses can register as exempt if they already provide a retirement savings account to employees. 

MarylandSaves and employees
Workers must be at least 18 years old to participate and cannot have access to an employer-sponsored retirement plan. MarylandSaves requires automatic enrollment for employees; however, employees may opt-out of the program at any time by visiting the MarylandSaves website.

Participating employees can withdraw funds, choose investment options, and change their savings amount. Accounts are portable, meaning that savers may keep them when they change jobs.

MarylandSaves has set an initial default contribution rate of 5% of an employee’s pay, with automatic 1% annual increases (up to a maximum of 10%). Once the program is in place, employees may select the amount they wish to save through paycheck deferrals, up to the annual contribution maximum. For 2022, 2021, 2020, and 2019, the IRS contribution limit to Traditional IRAs and Roth IRAs has been $6,000 ($7,000 if a participant is age 50 or older). Because there are income restrictions on eligibility to contribute to Roth IRAs, some employees may not be eligible to save for their retirement through the MarylandSaves program. 

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When analyzing how to help your employees save for retirement, it’s important to compare MarylandSaves to other options and explore alternative retirement savings plans available. EagleStone can help you evaluate your options and discuss plans. Contact the EagleStone team today.

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