Washingtonians have to wait a couple more years before Washington Saves takes effect. While Senate Bill 6069 was passed by both the state’s Senate and House and signed into law in 2024 by Gov. Jay Inslee, the Washington Saves automatic enrollment individual retirement account (IRA) program it enacted isn’t scheduled to launch until July 2027, though it could be phased in earlier.
Following the model set by the more than a dozen states that already have retirement mandates (such as California, Illinois, New Jersey, New York, Oregon, and Virginia), Washington Saves is intended to benefit the employees who work for businesses in Washington state that don’t offer employer-sponsored retirement savings plans.
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What is the Washington Saves program?
When employers don’t offer qualified retirement plans to employers, Washington Saves will provide an automatic savings program, which deducts a certain amount of wages from paychecks. Those wages are put into an automatic Individual Retirement Account or auto-IRA that companies can facilitate for workers who want to utilize it for planning ahead for their future retirement security.
Washington Saves will be available in 2027, and over the next couple of years, the Washington Saves Governing Board is developing and implementing the program. The Board includes members of the Legislature, the State Treasurer, the Director of Labor and Industries (L&I), and the Governor’s appointees.
Washington state small-business owners are in support of a state-facilitated retirement savings program. A 2023 survey by the Pew Charitable Trusts revealed that 72% of them want it. That’s good news, considering 43% of the private-sector workforce in Washington (1.2 million workers) has employers who can’t provide retirement benefits.
How does the Washington Saves program work?
The start of July 2027 is the deadline for when Washington Saves needs to be ready for employers to implement, though it may be phased in, possibly based on employer size.
The first half of 2027 is when the Washington State Department of Labor & Industries is supposed to inform and guide employers about their responsibilities for Washington Saves.
While the operational details of Washington Saves don’t exist yet, how to get it up and running is being figured out with a workback plan. The deadline for the first preliminary report is due December 1, 2025, and is expected to contain the following:
- Feedback on the proposed timeline.
- A detailed account of the progress made through the outreach initiatives and implementation of the program.
The deadline for the final report with the following information is due on December 1, 2026:
- Program design and implementation recommendations, along with the outreach activities.
- Employer and employee feedback received from workers and employers on the program’s design and preferred retirement account types.
- Recommendations on the structures for the program and the board.
- Once Washington Saves is operational, the administrative and staff assistance that the board should receive from certain state agencies.
Eligibility requirements for employees
Washington Saves will be available for employees who are at least 18 years old and working for an employer without a qualified employer-sponsored retirement plan. Self-employed individuals might be able to participate, depending on what the Governing Board decides.
Although the auto-IRA options are still being determined, there may be a pre-tax traditional IRA or a post-tax Roth IRA. Savers must also meet the criteria for the type of IRA they’re contributing to.
For example, if someone’s modified adjusted gross income (MAGI) in 2025 is at least $150,000 when they’re single tax filers or at least $236,000 when they’re 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. Those amounts might differ in 2027 when Washington Saves launches, but they are something to keep in mind when making an IRA selection.
Enrollment and contribution options for employees
Since Washington Saves is an auto-IRA program, contributions go into a default investment plan unless an employee opts out or selects one of the other available options that will be approved by the Governing Board. The default contribution rate will also be determined by the Governing Board, but that default amount will be between 3% and 7% for the first year of the program, possibly increasing by a max of 1% annually without it exceeding 10%.
What employers need to know about the Washington Saves program
Eligibility requirements and deadlines for employers
While the Washington Saves program is still in development, here’s what we know so far about employer eligibility:
- No less than 2 years in business in the state of Washington with a physical presence
- A separate, qualified retirement savings program isn’t provided to covered employees who have continuously worked for the employer for at least 1 year
- The employees need to have worked a combined minimum of 10,400 hours during the previous calendar year
Employer responsibilities under the Washington Saves program
Employers aren’t responsible for the decisions and their outcomes that are made in connection with the Washington Saves program. However, as with all the auto-IRA programs that are in effect across other states, there are some dos and don’ts that employers must follow when facilitating it:
| Do | Don’t |
| Register with Washington Saves | Provide financial advice |
| Give employee information to the program administrator and share disclosures and program info with employees | Guarantee any investment, rate of return, or interest on assets |
| Allow employees to opt-out | Monitor the employees’ eligibility to make contributions to the program |
| Submit employees’ payroll contributions that you withhold from their paychecks | Contribute money to the program or match employee contributions |
Non-compliance penalties
Complaints can be filed with L&I, which will investigate. Employers could be reported by employees. Violations could include when workers aren’t automatically enrolled in Washington Saves or told about their options or if their contributions aren’t submitted properly. Violations must be reported within three years from when they first occurred, and employers have 30 days to appeal citations.
Before January 1, 2030, employers found to be in violation will receive assistance from L&I. After January 1, 2030, violators will receive a letter detailing the issues and how to correct them. Starting in 2030, those who commit willful violations, so those violations that were done on purpose or the employer was aware of, may need to pay penalties upwards of these maximum amounts:
| First violation | $100 |
| Second violation | $250 |
| Each subsequent violation | $500 |
Benefits of the Washington Saves program
So far, $840 million has been saved by workers through state-facilitated programs, and Washington Saves can help even more people contribute to their nest eggs. Every dollar matters when you’re retired and may not have a salary for decades, but still need to pay for food, your home, and other essentials your household requires, along with non-essentials that you want to continue to enjoy.
That may seem obvious, but in truth, while 76% of Americans know that retirement savings are important, just 39% have a plan in place to support them when they want to retire, reveals a survey from the Bipartisan Policy Center. That contributes to retirement gaps—what people are expected to have saved for retirement versus what they will need to cover expenses. For Washington households, it will amount to an income shortfall of $4,810 annually, on average, by 2040.
Washington Saves and programs like it can help reverse those trends and reduce or even eliminate those shortfalls. Americans who have workplace plans with automatic payroll deductions for contributions are 20 times more likely to save for retirement, according to research from the AARP. In addition, Gusto analyzed state auto-IRAs, and the results revealed that there was a 55% increase in retirement savings for median earners and below.
Do businesses have to use the Washington Saves program?
Washington state already has a voluntary retirement program in place called the Washington Small Business Retirement Marketplace. It’s operated by the Washington Department of Commerce, and the plans offered are verified by the Department of Financial Institutions or the Office of the Insurance Commissioner, depending on whether it’s a securities-based or insurance-based plan, respectively.
Employers with less than 100 employees, as well as sole proprietors and self-employed individuals, can choose among a range of low-cost plans that offer easy enrollment. They include these options:
- Solo 401(k)
- Roth IRA
- Traditional IRA
- Simplified Employee Pension or SEP IRA
- Savings Incentive Match Plan for Employees or SIMPLE IRA
Once Washington Saves launches, both the voluntary Retirement Marketplace and the state auto-IRA will cease to exist. Those businesses that meet the auto-IRA eligibility requirements and don’t already offer a qualified retirement plan—whether that plan is through Retirement Marketplace or not—will need to participate in Washington Saves.
Retirement benefits made easy with Gusto
With several options at your disposal, you may wonder which is the right choice for your small business today or when Washington Saves rolls out in the future. One consideration to weigh in that decision is that a 401(k) plan could offer more benefits and flexibility for your employees.
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? To help you decide, this table lines up the features of a 401(k) versus what is currently known about Washington Saves, since the program is still in development:
| Features | 401(k) | Washington Saves |
| Auto-enroll | Available | The default rate will be between 3% to 7% for the first year |
| Auto-escalation | Available | Will possibly increase by a max of 1% annually, not exceeding 10% |
| Investment options | Large range of funds that varies based on the provider | There will be a default investment plan and alternative options approved by the Governing Board, as well as a self-directed option for employees who want to select how their funds are invested |
| Employer matching and profit-sharing contributions | Available | No |
| Investment advice | Available | No |
If you have an existing Gusto account, learn more about our 401(k) partners here.
Or create an account with Gusto to enroll in a 401(k) plan. Gusto’s platform makes that simple.
