The New Jersey Secure Choice Savings Program Act was signed by Governor Phil Murphy. This law was established to help close the gap between the New Jerseyans who have access to a retirement savings option at work and the 1.7 million private sector employees in the state who don’t.
It requires that employers who meet the requirements provide a retirement savings plan at work through RetireReady NJ or another comparable retirement program that satisfies the state order. RetireReady NJ is governed by the New Jersey Secure Choice Savings Board, administered by Vestwell State Savings, LLC, and is free for employers in the Garden State.
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What is New Jersey’s Secure Choice Savings Program?
When a business has been around for at least two years and has at least 25 employees, it must offer the New Jersey Secure Choice Savings Program, aka RetireReady NJ—a state-mandated retirement program, if it doesn’t already provide a qualified, employer-sponsored retirement plan. The deadline to sign up in 2024 was September 15 for businesses with 40 or more employees and November 15, 2024 for those with 25 to 39 employees.
New Jersey employers that haven’t registered yet have missed the deadline and must register immediately to avoid future penalties. If a business already offers a retirement plan, they must certify that to claim their exemption from RetireReady NJ.
How does the NJ Secure Choice Savings Program—known as RetireReady NJ—work?
The default account type for RetireReady NJ is a Roth individual retirement account (aka Roth IRA). Since contributions are made with after-tax dollars, the earnings from them are not taxed when distributions are taken after age 59½. The other available RetireReady NJ account type—if an employee selects it—is a Traditional IRA. Its contributions are pre-tax, so the distributions after age 59½ are taxed as income based on when the withdrawals are made.
The accounts are portable, meaning that they can be rolled over. There is a cost for that: $50 per rollover out and $5 for each paper check. However, if money is taken from these accounts before 59½ and not rolled over onto another eligible IRA or to an eligible retirement account, then there is a 10% IRS tax penalty.
Eligibility requirements for employees
To participate in RetireReady NJ, the requirements for savers are pretty simple:
- They need to be at least 18, which is the age of majority in the state.
- They must pay NJ income taxes, whether they are full-time or part-time employees of a NJ employer or are self-employed.
- This means they can either be a New Jersey resident or have a NJ employer, even if they’re not living in the state.
- They must be eligible for a Roth IRA. For example, if someone’s modified adjusted gross income in 2025 is $150,000 or more if they’re filing taxes on their own, or it’s $236,000 or more for those filing joint taxes, then they may only be able to contribute a limited amount to a Roth IRA or won’t be able to contribute anything at all.
Enrollment and contribution options for employees
While the program’s default account type is the Roth IRA, employees can select a pre-tax Traditional IRA instead. (Note: If they choose the latter, they can receive tax credits when filing their tax return since they’ll still be making after-tax contributions through the program.)
Otherwise, they will be automatically enrolled in the Roth IRA, and 3% of their gross pay after taxes will be taken out of each paycheck unless they opt out of the program entirely. If enrollees want to save more or less, they can select another savings rate (anything from 1% to 100%). In addition, they can choose to have that rate automatically increase by 1%. The auto-escalation option, if activated, takes effect annually on January 1.
A savings rate can also be changed anytime, as long as the maximum contribution limit for the year isn’t exceeded. That amount is the same for 2025 as it was for 2024: $7,000 for those age 49 and younger and $8,000 for those 50 and up, whether they’re single filers or married filing jointly.
If an existing pre-tax retirement account is being rolled over into the program, consult with a tax or financial advisor first before taking any distributions. Discuss the possibility of that money being considered taxable income, depending on the RetireReady NJ account (i.e., Roth or Traditional IRA). If needed, a RetireReady NJ Roth IRA can be recharacterized to the RetireReady NJ Traditional IRA using this form.
To save through the program, there are fees for employees, not employers. There is an annual administration fee that employees pay, deducted from the account balance. It’s about approximately 0.75% (i.e., a $0.75 charge for every $100 in your account), along with other fund-based fees across the investment options.
For a $1,000 investment, this is how much it will approximately cost from one to 10 years, excluding what you will pay in state and federal taxes:
| Investment | 1 year | 3 years | 5 years | 10 years |
| Capital Preservation Fund | $9 | $27 | $47 | $105 |
| Target Retirement Date Fund | $9 | $27 | $46 | $104 |
| Large Cap Fund | $8 | $25 | $43 | $96 |
| Mid Cap Fund | $8 | $25 | $43 | $97 |
| Small Cap Core Fund | $8 | $25 | $43 | $97 |
| Small Cap Value Fund | $19 | $58 | $99 | $216 |
| International Equity Fund | $8 | $26 | $45 | $101 |
| Fixed Income Fund | $11 | $34 | $58 | $130 |
Understanding the investment options
Indecision can still lead to investing. If employees get overwhelmed by choices and don’t act, there is a default investment option. It’s provided by Vanguard, which also found that among their administered plans, those with automatic enrollment had 94% participation versus the 67% participation rate for those who voluntarily enrolled.
So when employees do nothing at all, these are their automatic retirement investments through Vanguard:
- A Capital Preservation Fund for the first 30 days
- Then, a Target Retirement Date Fund after 30 days
Or they can choose what they want. As of April 2024, this is the full range of choices:
| Investment option | Invested in | Underlying investment fee | Total annualized asset-based fee |
| Capital Preservation Fund | Vanguard Treasury Money Market Fund | 0.09% | 0.84% |
| Target Retirement Date Fund Series | Vanguard Retirement Funds, including:
| 0.08% | 0.83% |
| Large Cap fund | Fidelity® 500 Index Fund | 0.015% | 0.765% |
| Mid Cap Fund | Fidelity® Mid Cap Index Fund | 0.025% | 0.775% |
| Small Cap Core Fund | Fidelity® Small Cap Index Fund | 0.025% | 0.775% |
| Small Cap Value Fund | Wasatch Small Cap Value Fund (Institutional Class) | 1.07% | 1.82% |
| International Equity Fund | Fidelity® Global ex US Index Fund | 0.055% | 0.805% |
| Fixed Income Fund | Baird Core Plus Bond Fund (Institutional Class) | 0.30% | 1.05% |
What employers need to know about the Secure Choice Savings Program
Eligibility requirements and deadlines for employers
Small business employers have enough on their plates. The good news is that meeting the criteria to set up the Secure Choice Savings Program, known as RetireReady NJ, is simple. Employers in the state of New Jersey need to …
- Be no less than two years in business and registered in New Jersey.
- Have at least 25 employees in the state (and never less than that during the prior calendar year). Those employees can include:
- Visa workers can participate in the program as long as they are W-2 employees who meet the eligibility requirements, such as paying NJ income taxes.
- Business owners, shareholders, and family members who are also classified and taxed as employees count toward the minimum number of employees required for eligibility.
- Not already provide a qualified, employer-sponsored retirement plan.
Employer responsibilities under the Secure Choice Savings Program
The program is designed to be simple for employers to facilitate, although they have no oversight over it and are not responsible for it. Employers have no fiduciary responsibility for the program, so they don’t assume liability for decisions and outcomes made in connection with it.
However, there are some important tasks related to it that need to be checked off your employer to-do list—along with some clear guidelines on what you you should never do:
| Do | Don’t |
| Register your business by creating an employer account (guidance on how to do this below) | Provide tax, legal, investment, or financial advice—or manage employees’ personal information, including beneficiary details |
| Share key onboarding details for existing and new employees to the program administrator, which include full legal name, Social Security number or taxpayer ID number, date of birth, address, and email address | Promise a return on savings or any type of additional benefit |
| Update your participating employees’ contribution rates within your payroll once a 30-day period to opt out after enrollment has passed | Tell employees whether or not they should contribute to the program—or share opinions about it and the IRAs maintained by it |
| Set up payroll deductions and remit employees’ contributions quickly to the program administrator | Contribute money to the program or match employee contributions |
| Maintain employee records and keep your employees’ payroll contributions and staff list up to date | Offer assistance for determining eligibility for a Roth IRA or Traditional IRA |
The RetireReady NJ website also posts notices for educational webinars they hold to assist employers. Topics covered include program introductions for employers and employees and payroll submission.
Non-compliance penalties
If your business has 25 or more employees, and you haven’t claimed an exemption because you already offer a qualified retirement plan, you must register to administer RetireReady NJ. If you don’t, the penalties can be considerable. Register by these dates, depending on your company size:
| Number of employees | Deadline to register | To avoid penalties, register before … |
| 40 or more | September 15, 2024 | June 15, 2025 |
| 25 to 39 | November 15, 2024 | August 15, 2025 |
If you’ve missed the registration deadline, register as soon as possible to avoid these penalties:
| First calendar year of any violation | Written warning |
| Second calendar year of any violation | $100 fine |
| Third and fourth calendar years of any violation | $250 for each employee who was neither enrolled in nor opted out of participation in the program |
| Fifth and more calendar years of any violation | $500 for each employee who was neither enrolled in nor opted out of participation in the program |
| Failing to remit employee contributions | $2,500 for the first offense and $5,000 for every additional offense |
How to register your business for the Secure Choice Savings Program
When broken down into a few steps, registration is easy and fast. This checklist provides an overview, and here are the key tasks and details:
- Go to RetireReady NJ to set up an employer account.
- You’ll need your access code, your employer identification number (EIN), and your business email.
- RetireReady would’ve sent it to you via email or mail when you were due to register, but if you misplaced the notification or don’t remember receiving it, you can look up your access code online.
- Your business email will be your username, and you’ll create your own password.
- You’ll also need to share your payroll provider (e.g., Gusto) and payroll schedules, along with your bank information, such as the routing number, bank name, bank account number, and account type). Check out the NJ Retire Ready help article for more information about integration with Gusto.
- Enter employee details, including Social Security numbers, full names, permanent US addresses, birthdates, phone numbers, and email addresses.
- RetireReady NJ will send messages about opting in or opting out within 30 days.
- If they opt in, then contributions can be made and managed through the program.
- If they fail to make a selection, then they’ll be automatically enrolled in a Roth IRA with the default contribution selection of 3% of gross pay after taxes have been taken out.
Benefits of the Secure Choice Savings Program
Americans are at risk of not having anything (or enough) to fall back on when they retire. Almost half had no savings in retirement accounts, based on data from the 2022 Survey of Consumer Finances (SCF). And when people do have some money set aside, it’s typically not much. In fact, the not-for-profit USAFacts shares that at 30 to 34 years old, the median retirement savings was $4,700. And for those 20 years older, the median retirement savings amount was only $24,000.
Having an auto-IRA like RetireReady NJ can make a big difference for employees to begin that retirement account without having to give it much thought. In fact, a Gusto analysis found that employees in states with auto-IRAs are 20% more likely to contribute to retirement savings accounts than they were before the implementation of an automatic enrollment program.
As it turns out, removing the friction that can come with someone having to take the step to enroll in a retirement program helps employees focus on the future today. When easy in the form of automatic payroll deductions for a state-sponsored retirement plan equals access, employees can take advantage of the benefits of investing early for later life when they can no longer work.
Do businesses have to use the Secure Choice Savings Program?
Businesses of 25 or more employees don’t have to enroll in RetireReady NJ if they’re already providing a retirement plan that meets the requirements to be exempted from the state’s own program. Suitable employer-sponsored examples that would be appropriate and satisfy the standards for an exemption include:
- Defined benefit plans, such as a pension
- 401(k) plan
- 403(b) plan
- Simplified Employee Pension (SEP) plan
- Savings Incentive Match Plan for Employees (SIMPLE) plan
For businesses that must enroll because they meet the eligibility requirements and don’t offer an alternative retirement plan, the RetireReady NJ portal is designed to make administering the auto-IRA state program easy for employers. It has a batch upload feature and a payroll system integration. The portal also allows employers to add a payroll provider or representative to follow through with and manage the responsibilities on their behalf to ensure they’re fully compliant with the program and state mandate.
Retirement benefits made easy with Gusto
If you’d like, you can add Gusto or your preferred payroll provider to your RetireReady NJ retirement program to help you manage your administrative tasks for it. But if you want your employees to have a retirement savings program that offers more benefits and flexibility, consider enrolling in a 401(k) plan.
Colorado and Oregon, which have auto-IRA mandates, have actually seen an increase in 401(k) adoption amongst the smallest employers in those states, including those with at least five employees and those with one to four employees, respectively. Here are some benefits of offering a 401(k):
- Reduced cost with tax credits: Eligible businesses may be able to claim up to $16,500 in tax credits for the first 3 years of their 401(k)—potentially covering 100% of plan costs.
- Flexible and affordable plan options: Gusto’s growing list of 401(k) partners means plenty of plans to choose from at low price points to fit your budget.
- Integrated to make life easier: Gusto payroll syncs with your 401(k) plan to make automatic deductions. Employees manage their own Gusto accounts, with access to their paystubs, W-2s, 401(k) accounts, and contribution details.
- Great benefits help you build a great team: Because 401(k) plans have higher contribution limits, employees can save more money with an employer-sponsored 401(k) than with state-mandated IRAs. Gusto’s own analysis has even found that employer-sponsored 401(k) offerings increase employee retention.
Not sure which choice would be the best fit for your business? This table lines up the features of a 401(k) versus RetireReady NJ to help you decide:
| Features | 401(k) | RetireReady NJ IRA |
| Auto-enroll | Available | 3% |
| Auto-escalation | Available | 1% increase each year on enrollment anniversary up to 10% |
| Payroll integration | Available | Available |
| Investment options | Large range of funds that varies based on the provider | 19 funds |
| Employer matching and profit-sharing contributions | Available | No |
| Investment advice | Available | No |
| Taxability | Pre-tax and after-tax contributions available | Roth after-tax contributions and pre-tax Traditional IRA contributions |
| Annual contribution limit | $23,000 for employees ($30,500 for those 50 and older), plus optional employer contributions | $7,000 for employees ($8,000 for those 50 and over) |
| Participant fees | Varies, but often ranges between 0.5% and 2% of the plan balance annually | There’s an annual administration fee that’s about 0.75%, which amounts to a $0.75 charge for every $100 in an account. In addition, for each investment option, there are underlying investment fees that, as of April 2024, range from 0.015% to 1.07%, as well as total annualized asset-based fees that range from 0.765% to 1.82%. |
If you have an existing Gusto account, learn more about our 401(k) partners here.
You can also create an account with Gusto to enroll in a 401(k) plan. Gusto’s platform makes that simple.
