If your company does not have a retirement plan for employees (e.g., 401(k), 403(b), SEP, or Simple IRA), this article is for you. The new law mandates private-sector employers without pre-existing retirement plans to establish a retirement savings plan for eligible employees and offers an alternative program. “MarylandSaves” is a new, state-sponsored retirement program available to Maryland employers as an alternative to traditional retirement benefit plans. The program was originally devised in a Maryland House Bill from 2016 (Maryland HB1378), but only became effective September 15, 2022.

Maryland employers are not required to sign up for the MarylandSaves program if the business already offers a retirement savings plan to employees. But for private employers that do not offer such options, the following criteria must be met to establish a payroll deposit retirement savings arrangement through MarylandSaves.

• The employer must be a private, for-profit, or nonprofit Maryland business that has been in operation for at least two years.
• The employer must pay employees through a payroll service.
• The business cannot currently offer an employer-sponsored retirement savings arrangement to employees and has not done so in the last two years.

MarylandSaves has no set-up fees and does not require the employer to establish each employee’s individual account or make contributions. For every year that an employer and its employees are enrolled, the Maryland Department of Assessment and Taxation will waive the employer’s $300 annual report filing fee. This fee can also be waived for employers with pre-existing plans, if they provide proof of such enrollment by December 2022.

Employees options through this state-run Roth IRA include retirement income and emergency savings mechanisms. MarylandSaves also permits participant employees to opt-out of the plan at any time, withdraw funds, choose investment options, and change their savings amount. The accounts can be moved, so employees may keep them active when shifting from one job to the other.

If you are an employer without a retirement plan for your W-2 employees, MarylandSaves may require your mandatory enrollment. Now is a good time to figure out what obligations your business may have in the wake of this new law. Feel free to call any one of our business or employment lawyers for more guidance.

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