State retirement mandates are a growing trend across the country, with the aim to address the retirement savings gap and ensure everyone has access to an employer sponsored retirement savings program. If you're a business owner, that means the rules may not be optional anymore - and the deadlines are coming fast.
You may also have heard that state-sponsored retirement savings plans also impact small employers. If there is an active mandate or one being implemented in your state, you're probably wondering if it applies to you.
This article provides a state-by-state breakdown of the current landscape, covering states with active mandates, pending legislation, and those with no mandates at all. We hope this information helps you to stay compliant, avoid fines, and decide if a traditional 401(k) might be a smarter fit for your team.
What are the state-mandated retirement programs?
State-mandated retirement programs are not defined benefit plans like pensions. Instead, they are typically structured as individual retirement accounts (IRAs). The states with these mandates automatically enroll employees, who have the choice to opt out of the programs. That's why the automatic IRAs are known as auto-IRAs, though other names for the programs are used, such as "work and save" and "secure choice."
Most state auto-IRAs are mandatory for any company that doesn't already offer an employer-sponsored retirement option and has met other state-mandated criteria, such as number of employees, qualifying the company as an “Eligible Employer”. While the auto-IRAs are typically Roth IRAs with after-tax contributions, some states also offer Traditional IRAs for pre-tax contributions through their programs.
As of June 2026, retirement mandates are no longer rare — they're spreading across the country. More than a dozen states already require certain employers to offer a plan, and several others are in the process of launching. The common thread: states want to close the retirement savings gap by making sure workers have access to payroll-deduction retirement programs.
Here are the big things employers may need to know:
This is a growing trend: More states are rolling out mandates every year, and deadlines are getting closer.
Deadlines are coming fast: Each state sets its own timeline, and some are already wrapping up final phases. In California, for example, the latest deadline was December 31, 2025 - requiring businesses with just one employee to comply or face fines.
Requirements vary: Every state has its own rules about which businesses are covered and what happens if you don't comply.
Penalties can be steep: Many states fine businesses for non-compliance - sometimes hundreds of dollars per employee, per year.
Location matters: You may have to follow the rules of a state where your employees live or work, even if your company is based elsewhere.
Most programs are auto-IRAs: Auto-IRA programs give employees a way to save but come with lower contribution limits and no employer match compared to a 401(k).
A federal boost is coming: In 2027 the Saver's Match will start putting up to $1,000 a year into eligible workers' retirement accounts. That could make helping your employees save now more valuable - and if you choose a plan that lets employees save more (like a 401(k)), they could be able to capture a bigger portion of that benefit. You may want to evaluate your business objective to determine if this type of plan is right for you.
State-by-State Breakdown
California
Mandate Status: Active for businesses with 1 or more employees. Businesses with “owner-only” employees are exempt. Effective December 31, 2025, the mandate covers any business with at least one W-2 employee.
Program Name: CalSavers
Type of Plan: Auto-IRA
Fines for Non-compliance: Miss the deadline and it's $250 per employee. Stay non-compliant another 90 days and the fine jumps by $500 per employee — that's up to $750 per worker if you ignore the mandate.
California launched CalSavers back in 2019, rolling it out in stages. Larger employers went first, and now for the final group, 1+ employees, the deadline has passed.
Colorado
Mandate Status: Active since October 2022. Applies to businesses with 5 or more employees that have been in business for at least two years and don't already offer a qualified plan.
Program Name: Colorado SecureSavings Program
Type of Plan: Auto-IRA
Fines for Non-compliance: $100 per eligible employee per year, not to exceed $5,000 annually. Enforcement of fines will not begin until at least one year after the program is established or one year after an employer is scheduled to enter the program, whichever is later.
Connecticut
Mandate Status: Active since 2022. Applies to businesses:
That have been in operation for at least two full calendar years
Have had 5 or more private-sector employees in Connecticut as of October 1 last year
At least 5 of those employees earned $5,000 or more in taxable wages last year
You don’t already offer a qualified retirement plan
New as of July 1, 2026: The program now also covers personal care attendants employed through state-funded programs. Learn more at the MyCTSavings site.
Program Name: MyCTSavings
Type of Plan: Auto-IRA
Fines for Non-compliance: Effective July 1, 2025 there is a three-strike enforcement process, with escalating annual penalties based on employer size ranging from $500 to $1,500. Learn more.
Delaware
Mandate Status: Active since 2024. Applies to businesses with 5 or more employees that don't already offer a qualified plan.
Program Name: Delaware EARNS (Expanding Access for Retirement and Necessary Savings)
Type of Plan: Auto-IRA
Fines for Non-compliance: An annual penalty of $250 per employee, up to a maximum of $5,000 per year may be enforced.
Illinois
Mandate Status: Active since 2018. Applies to businesses with 5 or more employees in business every quarter of the previous year, that have been in business for at least two years, and don't already offer a qualified plan.
Program Name: My Illinois Savings
Type of Plan: Auto-IRA
Fines for Non-compliance: Fines of $250 per employee for the first year, and $500 per employee for each subsequent year.
Maine
Mandate Status: Active since 2024. Applies to profit or not for profit businesses with 3 or more employees that have been in business for at least two years and don't already offer a qualified plan.
Program Name: Maine Retirement Investment Trust (MERIT)
Type of Plan: Auto-IRA
Fines for Non-compliance: Penalties are assessed per eligible employee for each calendar year of non-compliance:
$20 (July 1, 2025 – June 30, 2026)
$50 (July 1, 2026 – June 30, 2027)
$100 (July 1, 2027 onward)
Maryland
Mandate Status: Active since 2022. Applies to businesses with at least one employee over the age of 18, that have been in operation for at least two calendar years, that use an automated payroll service and don't already offer a qualified plan.
Program Name: MarylandSaves
Type of Plan: Auto-IRA
Fines for Non-compliance: No current penalties.
Massachusetts
Mandate Status: Active, but voluntary. Applies to non-profit employers with 100 or fewer employees as an alternative to a more traditional 401(k).
Program Name: Massachusetts Defined Contribution CORE Plan
Type of Plan: Multiple Employer Plan (MEP)
Fines for Non-compliance: No current penalties.
Minnesota
Mandate Status: Active with voluntary enrollment between January 19 – March 30, 2026. Businesses with 100+ employees must comply by registering between April–June 2026. Businesses with 50–99 employees must comply by registering between July–Dec 2026.
Program Name: Minnesota Secure Choice Retirement Program
Type of Plan: Auto-IRA
Fines for Non-compliance: No current penalties.
Nevada
Mandate Status: Active since 2023. Applies to businesses with 6 or more employees that have been in business for at least three years and don't already offer a qualified plan.
Program Name: Nevada Employee Savings Trust (NEST)
Type of Plan: Auto-IRA
Fines for Non-compliance: Still being determined.
New Jersey
Mandate Status: Active. Applies to businesses with 10 or more employees that have been in operation for at least two years and don't already offer a qualified plan. Employers with 10-24 employees should expect registration notification throughout 2026.
Program Name: RetireReady NJ
Type of Plan: Auto-IRA
Fines for Non-compliance: Fines can include a written warning in the first year and a $100 fine in year two. In years three and four, employers could receive a $250 fine for each employee who wasn't enrolled in the program or didn't opt out.
New York
Mandate Status: Active since October 2025. Applies to businesses with 10+ employees that have been in business for at least two years and don't already offer a qualified plan. Businesses with 30 or more employees were required to comply by March 18, 2026; 15 to 29 employees by May 15, 2026; 10 to 14 employees have until July 15, 2026.
Program Name: New York State Secure Choice Savings Program
Type of Plan: Auto-IRA
Fines for Non-compliance: Penalty amounts have not been publicly announced yet.
Oregon
Mandate Status: Active since 2017. Applies to businesses with 1 or more employees that don't already offer a qualified plan.
Program Name: OregonSaves
Type of Plan: Auto-IRA
Fines for Non-compliance: Fines of $100 per employee, up to a maximum of $5,000 per year.
Rhode Island
Mandate Status: Active since 2025. Businesses with 100 or more eligible employees that don't already offer a qualified plan must comply by October 15, 2026, with additional deadlines for smaller businesses through 2028.
Program Name: RISavers
Type of Plan: Auto-IRA
Fines for Non-compliance: $100 per eligible employee, up to $5,000 per year.
Vermont
Mandate Status: Active since 2024. Applies to businesses with 5 or more employees that have been in business for at least two years and don't already offer a qualified plan. Note: Vermont is expanding the program to businesses with 2 or more employees; visit Vermont Saves for the latest on compliance deadlines.
Program Name: VTSaves (Vermont Saves Program)
Type of Plan: Auto-IRA
Fines for Non-compliance: The current maximum penalty is $20 per eligible employee, increasing to $75 per eligible employee on or after October 1, 2026.
Virginia
Mandate Status: Active since 2023. Applies to businesses with 25 or more employees that have been in operation for at least two years and do not currently offer a qualified retirement plan. Note: As of July 1, 2026, Virginia expands RetirePath to businesses with 5 or more employees; visit RetirePath Virginia for the latest on compliance deadlines.
Program Name: RetirePath Virginia
Type of Plan: Auto-IRA
Fines for Non-compliance: Up to $200 per eligible employee each year of non-compliance.
States Without Mandates
While the majority of states have either implemented or are considering retirement mandates, some states currently have no active or pending legislation. However, it's worth noting that this landscape is frequently evolving, and some of these states have seen early discussions or legislative proposals in the past.
Here is a list of states without mandates as of June 2026:
Idaho
Kansas
Kentucky
Louisiana
Montana
Nebraska
New Hampshire
North Dakota
Ohio
Oklahoma
South Dakota
Texas
Wyoming
States with no mandates but recently considered legislation:
Alabama
Alaska
Arizona
Arkansas
District of Columbia
Florida
Georgia
Indiana
Iowa
Michigan
North Carolina
South Carolina
Tennessee
West Virginia
Wisconsin
States with programs under development:
Hawaii → Hawaii Retirement Savings Program
Mississippi → Mississippi Work and Save (Currently Voluntary)
Missouri → Show-Me MyRetirement Savings Plan (MEP) (Currently Voluntary)
New Mexico → New Mexico Work and Save IRA Program (Currently delayed)
Pennsylvania → PhillySaves
Utah → Utah Retirement Plan Exchange (Currently Voluntary)
Washington → Washington Saves
What This Means for Employers
For many employers, navigating the ever-changing landscape of state retirement mandates can feel like a guessing game. Varying requirements from state to state can be difficult to track and manage, especially when you're managing these changes on top of running your business. It's understandable if you feel overwhelmed by the details.
However, staying ahead of these changes can be crucial to avoid costly penalties. For example, in states like California and Illinois, fines for non-compliance can reach up to $500 per employee for each year of non-compliance.
Beyond avoiding penalties, proactively offering a retirement plan can give you a competitive edge in attracting and retaining talent since it is considered an important benefit by many employees. A private 401(k), in particular, can help reduce administrative complexity and provide features like higher contribution limits, tax benefits, and even employer-matching options that state plans may often lack.1
Gusto Retirement offers a straightforward, low-cost 401(k). We handle most of the admin, like government filings and compliance, and help to empower your employees with a platform that scales with your business.
Meet the mandate and empower your employees with Gusto 401(k)
State retirement mandates can feel like just another item on a long compliance checklist. But what if, instead of simply meeting a requirement, you could use this opportunity to offer a more modern option for employees?
State IRA programs do the job of meeting the mandate. But if you want more control and benefits - like higher savings potential, tax perks1 or the option to match - that's where a 401(k) makes a real difference for you and your employees.
Here's how a Gusto 401(k) offers more:
Powerful Tax Advantages: Your business can deduct any employer contributions on its federal income tax return. Additionally, powerful tax credits introduced by the SECURE 2.0 Act can cover up to 100% of plan administration costs for the first three years2, making it more affordable than ever to get started.
Higher Contribution Limits: A 401(k) allows for significantly higher savings potential. For 2026, the 401(k) contribution limit is more than three times higher3 than the limit for state-mandated IRA programs, empowering your employees to save more for retirement.
Flexible plan design: 401(k) plans, like those offered by Gusto Retirement4, offer more flexibility for businesses to make changes as you grow. This puts you in control of retirement plans for your employees.
The movement toward state-mandated retirement savings is rapidly expanding, with new programs being introduced each year. Staying informed and proactive could be the key to turning a compliance requirement into a strategic advantage for your business.
Gusto Retirement is designed to be your partner in this process, helping you set up a 401(k) that both assists with your compliance and provides a powerful benefit to attract and retain your team.
FAQs
Which states currently have retirement mandates?
As of 2026, 16 states have active retirement mandates: California, Colorado, Connecticut, Delaware, Illinois, Maine, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New York, Oregon, Rhode Island, Vermont, and Virginia. Several more states — including Hawaii, Washington, and New Mexico — have programs under development.
Does my business have to comply if I'm headquartered in a different state?
Yes, in many cases. Mandates typically apply based on where your employees live or work, not just where your business is incorporated. If you have even one W-2 employee in a state with an active mandate, you may be required to offer a qualifying retirement plan in that state.
Does a 401(k) satisfy state retirement mandate requirements?
Yes. Businesses that already sponsor a qualifying retirement plan — such as a 401(k) — are generally exempt from enrolling in a state’s auto-IRA program. A 401(k) also offers advantages over the state plans, including higher contribution limits, the option to add employer matching, and greater flexibility in plan design.
What is a state auto-IRA program?
A state auto-IRA is a government-run retirement savings program that automatically enrolls employees at businesses required to participate. Workers can opt out if they choose. Most state programs offer Roth IRAs with after-tax contributions, though some also provide Traditional IRA options. Contribution limits for these IRAs are lower than 401(k) limits, and employer matching isn't typically available.
What are the penalties for not complying with a state retirement mandate?
Penalties vary by state but can be significant. California fines non-compliant employers $250 per employee initially, rising to $500 per employee 90 days later. Illinois charges $250 per employee in the first year and $500 per employee each subsequent year. Virginia charges up to $200 per eligible employee per year. Several states are still finalizing their penalty structures.
Quick note: This article is not to be taken as tax, legal, benefits, financial, or HR advice. Since rules and regulations change over time and can vary by location, consult a lawyer or HR expert for specific guidance.
Disclosures
1This content is for informational purposes only and is not intended to be taken as tax advice. Please contact a tax professional for further information.
2You should consult a tax professional to determine what types of tax credits or deductions your company is eligible to claim.
3May be adjusted annually to account for IRS cost-of-living adjustments. Learn more.
4Material provided herein may contain content from Gusto, Inc. and its affiliates, each a separate entity with different regulatory requirements and standards. References to “our” or “we” refer solely to Gusto Retirement Services LLC (“Gusto Retirement” or “Gusto 401(k)”) unless otherwise specifically stated. The information in this material is for informational purposes only and is not intended to be an offer, recommendation, investment advice, legal or tax advice, or a solicitation to buy or sell any security.
Investment advisory services for Gusto’s 401(k) (when 3(38) fiduciary services are selected) and SEP IRA/IRA products are offered by Gusto Investment Services, LLC, an affiliated SEC-registered investment adviser. For more information regarding these services, see the ADV 2A Brochure and Form CRS.
Recordkeeping services for Gusto’s 401(k) and SEP IRA/IRA products are offered by its affiliate, Gusto Retirement Services, LLC. 3(16) plan administrative services are also offered by Gusto Retirement Services, LLC and only made available to clients who use the integration services available through Gusto’s payroll service. Gusto Retirement Services, LLC uses a third-party to provide custodial services.
