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New Jersey Secure Choice Savings Program

Back on March 28, 2019, New Jersey (NJ) Governor Murphy signed the New Jersey Small Business Retirement Marketplace Act which would require public and private employers with 25+ employees, that have been in business for at least two years, to automatically enroll their employees in the New Jersey Secure Choice Savings Program (Secure Choice Savings), if the employer doesn’t currently offer a 401(k) or other qualified retirement benefit. Enrollment for the program began as of March 28, 2021, however, employers are not obliged to register their employees in the program until the end of 2021. Employers with less than 25 employees are also encouraged to participate as well but are not currently required to do so. Additionally, employers of governmental agencies are not required to participate.

How Does the Program Work?

According to the legislation, only W-2 employees, including part-time employees, can participate in the program. Meaning that independent contractors would be ineligible to take advantage of the benefit. Employees will be automatically enrolled and setup to contribute 3% of their compensation to the program via a payroll deduction. For employees that are younger than 50 years old, the maximum annual contribution is limited to $6,000 and capped at $7,000 for those older than 50. Unfortunately, employers are not permitted to provide any contributions to the plan on behalf of the employee.

Employer Compliance Requirements

Employers are required to provide employees with a notice that explains their rights under the program. This is done by providing enrollment packets and information to all eligible employees, this also includes new employees within 30 days of hire. Employers are also required to track employee eligibility status, and who has opted out or in the program. Furthermore, employers must offer an open enrollment period for the program every two years and auto-enroll any employee who hasn’t been participating for in program at least one year. Employers must track those employees as well as submit this and an employee census annually to the New Jersey Secure Choice Savings Board.

Next Steps

Employers are encouraged ensure that they meet the compliance requirements before the end of the year by working to get employees enrolled in the state plan or look to begin offering a company-sponsored retirement plan that meets the program’s requirements and ensure their payroll systems are setup for the deduction.

HR Works, headquartered in Upstate New York, is a human resource management outsourcing and consulting firm serving clients throughout the United States for over thirty years. HR Works provides scalable strategic human resource management and consulting services, including: affirmative action programs; benefits administration outsourcing; HRIS self-service technology; full-time, part-time and interim on-site HR managers; HR audits; legally reviewed employee handbooks and supervisor manuals; talent management and recruiting services; and training of managers and HR professionals.