On May 27, 2016, Gov. Malloy signed HB 5591 into law, creating Public Act No. 16-29. This law establishes the Connecticut Retirement Security Program to improve the retirement security of workers in the state who do not have access to an employer-sponsored retirement plan or payroll deduction individual retirement account (IRA).
The law's requirements apply to all “qualified employers,” defined as private sector employers that employ at least five people each of whom was paid at least $5,000 in wages in the preceding calendar year. “Covered employees” are those who have worked for a qualified employer for a minimum of 120 days and are at least age 19 years old.
The law creates the Connecticut Retirement Security Authority (“the Authority”), which has been given the task of establishing the program, which will consist of Roth IRAs for eligible private-sector employees. The individual Roth IRAs will be established and maintained through the Authority's program or a third-party entity in the business of establishing and maintaining IRAs.
Under the program, qualified employers must automatically enroll each covered employee within 60 days after the employer provides the employee with the informational material on the program the bill requires. If the employee does not affirmatively opt in (contribution options are provided) the employer must enroll the employee with a contribution of at least 3 percent but not more than 6 percent of the employee's taxable wages (up to normal IRS limits). A covered employee may opt out of the program by electing a contribution level of zero. Employers will not be required to match contributions.
Finally, the law contains penalties for employers that fail to remit contributions or that fail to enroll employees.
The program is expected to be implemented by Jan. 1, 2018. Some sections of this law are effective immediately and others are effective July 1, 2016.
Public Act No. 16-29 »