The New Jersey Secure Choice Savings Program: What Employers Should Do Now

Approximately one million full-time workers in New Jersey don't have access to an employer-sponsored retirement plan, according to the American Retirement Association. To help make retirement planning more convenient for both employers and employees, New Jersey Governor Phil Murphy signed New Jersey Secure Choice Savings Program Act into law in March 2019.
 
The state-run retirement option requires businesses with 25 or more employees that do not provide a qualified retirement plan such as a 401(k) to offer an automatic payroll deduction for employees, which will be paid into an IRA.
 
The Program is mandatory for employers - for-profits and nonprofits - that have 25 or more employees in New Jersey without a current employee retirement plan, such as a 401(k) or 403(b). Employers with fewer than 25 employees may participate in the program, but will not be required to. While regulations have not been issued, the enabling legislation provides that the program will affect employers who have been in business for at least two years.
 
"We know that employers play a vital role in helping employees save and plan for retirement but many small businesses are unable to sponsor a retirement savings plan," says John Sarno, president of the Employers Association of New Jersey (EANJ).
 
However, the best evidence suggests that small businesses do not sponsor retirement savings plans because of administrative burdens, fiduciary and legal issues, an absence of in-house expertise, costs and fees, employee turnover and/or a high percentage of part-time workers, the uncertainly of the company’s future and higher priorities.
 
But employers that compete for skilled talent and therefore are more likely to invest in that talent can make a big difference if they have access to affordable, high quality retirement savings plans.
 
That’s why EANJ formed an Association Retirement Savings Plan.
 
Through the plan, EANJ members help their employees achieve retirement security by participating in a customizable, fiduciary-managed, high-quality 401(k) and profit-sharing plan.
 
It allows employers of any size to have the same advantages as large corporations with thousands of employees. For example, big corporations with thousands of employees benefit by having much lower costs and fees per employee for their retirement plans due to the size of plan assets and economies of scale. Likewise, through the Association Plan, small and mid-sized employers can access best-in-class retirement savings funds while enjoying the lowest fees by leveraging the assets of the entire Plan to gain access to premium funds that would otherwise be closed to them because they cannot meet high minimum investment thresholds.
 
EANJ formed its plan under existing federal guidelines and has been in operation since 2015. It is administrated at the highest fiduciary standards and beneficiaries have the same legal protections as any 401K plan sold in the market.
 
Funds are also managed by investment advisors as the costs are shared among the participating employers.
 
For small employers the value is immediate, as they would not be able get access to the best plans because their assets are too small. For large employers with 100 or more plan participants, thousands of dollars are saved because the Plan files the necessary documents and spreads the costs of mandatory audits, legal and administrative expenses.
 
Join EANJ on March 15th to learn about how the new retirement savings law will impact your business and the availability of EANJ's Association plan.  Details & Registration.