Vermont launches state auto IRA program for employers without retirement plans
October 31, 2024 | Legislative Committee on Administrative Rules/LCAR, Joint, Committees, Legislative , Vermont
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The Legislative Committee on Administrative Rules (LCAR) convened on October 31, 2024, to discuss the implementation of Vermont's new state auto IRA program, aimed at enhancing retirement savings for employees without access to workplace retirement plans. The meeting focused on the proposed rules governing the program, which mandates that employers with five or more employees who do not offer a qualified retirement plan must enroll their employees in a Roth IRA.
The discussion began with an overview of the program's structure, which includes definitions related to employer registration, payroll deductions, and account management. The program was developed in collaboration with various stakeholders, including the Vermont Saves Advisory Board, AARP, and the Partnership for Dignified Retirement, a multi-state consortium.
The committee reviewed the timeline of the program's development, noting that the proposed rule was submitted to the Secretary of State on July 12, followed by a public hearing on August 20. Feedback from the public and legislative council was incorporated into the final rule, which was presented during the meeting.
Key financial details were also discussed, including the fee structure for the program. Employers participating in the pilot program, which launched in October, will incur a fee of $26 per account annually, with $22 allocated to the program administrator and $4 to state operational costs. An additional average annualized asset-based fee of 0.32% will apply to the underlying investments.
The committee addressed concerns raised by various organizations regarding the clarity of the rules, particularly about employer registration and the definitions related to employee leasing companies. Adjustments were made to ensure that employers not required to register would not be contacted unnecessarily.
The meeting concluded with a motion to approve the proposed rule, which was passed unanimously. The full program is set to launch in December, with outreach efforts underway to educate employers about their responsibilities under the new law. The committee emphasized the importance of compliance and the potential penalties for non-registration, which could reach up to $75 per employee after October 2025.
Overall, the meeting marked a significant step toward implementing the auto IRA program, aimed at improving retirement savings accessibility for Vermont's workforce.
The discussion began with an overview of the program's structure, which includes definitions related to employer registration, payroll deductions, and account management. The program was developed in collaboration with various stakeholders, including the Vermont Saves Advisory Board, AARP, and the Partnership for Dignified Retirement, a multi-state consortium.
The committee reviewed the timeline of the program's development, noting that the proposed rule was submitted to the Secretary of State on July 12, followed by a public hearing on August 20. Feedback from the public and legislative council was incorporated into the final rule, which was presented during the meeting.
Key financial details were also discussed, including the fee structure for the program. Employers participating in the pilot program, which launched in October, will incur a fee of $26 per account annually, with $22 allocated to the program administrator and $4 to state operational costs. An additional average annualized asset-based fee of 0.32% will apply to the underlying investments.
The committee addressed concerns raised by various organizations regarding the clarity of the rules, particularly about employer registration and the definitions related to employee leasing companies. Adjustments were made to ensure that employers not required to register would not be contacted unnecessarily.
The meeting concluded with a motion to approve the proposed rule, which was passed unanimously. The full program is set to launch in December, with outreach efforts underway to educate employers about their responsibilities under the new law. The committee emphasized the importance of compliance and the potential penalties for non-registration, which could reach up to $75 per employee after October 2025.
Overall, the meeting marked a significant step toward implementing the auto IRA program, aimed at improving retirement savings accessibility for Vermont's workforce.
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