As more states take action to address retirement savings gaps, employers are facing a growing list of requirements related to employee retirement plans. For many businesses, especially those with larger employee counts, this is no longer optional — it is a compliance issue that must be addressed.

State-mandated retirement programs are no longer a future concern — they are an active compliance requirement across a growing number of states, with financial penalties for employers who fail to act.

The Hidden Complexity of Offering a 401(k)

While offering a 401(k) plan provides flexibility and potential advantages, it also comes with additional responsibilities, particularly for companies with 100 or more employees.

At the federal level, larger retirement plans are subject to annual audit requirements. These audits typically:

• Cost between $10,000 and $15,000 annually
• Require approximately 40 to 80 hours of internal preparation
• Add administrative and compliance complexity

For many businesses, these requirements create both financial and operational burdens that must be carefully managed.

State-Sponsored Retirement Programs

To address these challenges, many states have introduced retirement savings programs designed for employers that do not offer a traditional 401(k). These programs allow employees to contribute to retirement accounts through payroll deductions while helping employers remain compliant.

States with active or emerging programs include:

• California — CalSavers
• Colorado — Colorado SecureSavings
• Connecticut — MyCTSavings
• Delaware — Delaware EARNS
• Illinois — Illinois Secure Choice
• Maine — Maine Retirement Investment Trust (MERIT)
• Maryland — Maryland$aves
• Massachusetts — Massachusetts CORE Plan
• Nevada — Nevada Employee Savings Trust Program
• New Jersey — RetireReady NJ
• New York — New York Secure Choice Savings Program
• Oregon — OregonSaves
• Rhode Island — Rhode Island Secure Choice Retirement Savings Program
• Vermont — VT Saves
• Virginia — RetirePath Virginia
• Washington — Washington Saves

Each program has its own requirements, deadlines, and employer responsibilities, making it important for businesses to understand what applies to their specific location and workforce.

How State Retirement Programs Typically Work

Most state-sponsored retirement programs are designed to minimize the burden on employers while still meeting compliance requirements.

In general:

• These programs are typically free for employers to offer (outside of internal administrative or compliance time)
• They are structured as Roth IRA accounts for employees
• Employers are not required to make contributions
• Employees are automatically enrolled but can opt out

While these programs simplify compliance, they may offer less flexibility compared to a traditional 401(k), particularly for employers looking to enhance their benefits offerings.

What About North Carolina, South Carolina, and Georgia?

While many states have already implemented retirement mandates, others are actively exploring similar programs.

• North Carolina — Currently on the watch list; no mandate in place at this time
• South Carolina — Currently on the watch list; proposed legislation (South Carolina Small Business Retirement Savings Plan and Trust Act) may introduce:
• A state-run IRA program
• Coverage requirements for small businesses
• Potential employer participation fees (which would differ from most existing state programs)
• Georgia — Currently on the watch list; no mandate in place at this time

For employers operating in these states, it is important to stay informed, as legislation can move quickly and may introduce new compliance requirements with little lead time.

Choosing the Right Approach

Employers generally have two paths:

• Implement a traditional 401(k) plan and manage associated compliance requirements
• Enroll in a state-sponsored retirement program to meet mandates

The right choice depends on several factors, including company size, administrative capacity, and long-term benefits strategy.

Why This Matters for Employers

Retirement plan requirements are expanding, and noncompliance can lead to penalties and administrative complications. At the same time, offering a structured retirement option can improve employee satisfaction and retention.

Understanding the options — and the associated responsibilities — is essential for making informed decisions that support both compliance and long-term business goals.

How FullHR Supports Employers

FullHR works with businesses to navigate the complexities of retirement plan requirements, helping employers:

• Understand state-specific mandates
• Evaluate 401(k) vs. state program options
• Maintain compliance with federal and state regulations

Do not wait until deadlines or audit requirements create unnecessary risk or expense. If you are unsure whether your business is compliant — or if you want to explore a more efficient approach — now is the time to act.

Contact FullHR today to review your retirement plan strategy and ensure your business is positioned for compliance, cost control, and long-term success.