New Jersey Opens Auto-IRA Program

New Jersey has officially launched a new state-run program for private-sector workers who otherwise lack access to tax-advantaged retirement savings accounts at work.

Participation in the program, known as RetireReady NJ, is mandatory for established employers with two years in operations and at least 25 workers. Employers that already offer a retirement plan are exempt from participation, but they still must follow certain certification requirements detailed on the program’s new public website.

State officials are planning several webcasts to help educate employers about their responsibilities, including one scheduled for next week on July 17.

This spring, a small group of New Jersey employers participated in RetireReady NJ’s pilot program, through which more than 250 workers gained the ability to save for retirement. The program is now being expanded to all qualifying employers.

Individual employers will be notified by RetireReady NJ when it’s their turn to register. The process is straightforward for employers, according to the website, but they will need to provide both their federal employer identification number and a RetireReady NJ access code sent to them by the state.

To minimize the burden on employers, the employer portal integrates directly with leading payroll providers. If an employer doesn’t currently use an external payroll provider, or if they’re not interested in an integration, the process to manually upload payroll contributions is also straightforward, according to the website.

Employee contributions to RetireReady NJ accounts are made on a post-tax basis, with a default contribution rate of 3%.

If employees choose to do nothing once enrolled, their contributions will first go to a capital preservation fund for 30 days after the initial contribution. Then, they will roll into a target-date fund. Investors can also customize their investments across a basic menu of fund options.

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