Connecticut businesses have until August 31, 2023 to offer a retirement savings plan to employees. In 2016, the Connecticut General Assembly enacted Public Act 16-29, which created the Connecticut Retirement Security Authority (CRSA). Pursuant to this law, employers in Connecticut with at least five employees must provide a qualifying employer-sponsored retirement savings plan to employees or enroll in MyCTSavings, a state-run retirement plan created by the CRSA.
In an April 5, 2023 press release, State Comptroller Sean Scanlon announced that the deadline for businesses to comply with this law has been extended from the original date of March 30, 2023 until August 31, 2023. Employers who already offer a qualifying retirement savings plan to their employees must certify their exemption from the MyCTSavings program through the MyCTSavings website. Qualifying employer-sponsored retirement plans include a plan qualified under Internal Revenue Code sections 401(a) (including a 401(k) plan), qualified annuity plans under section 403(a), tax-sheltered annuity plans under section 403(b), Simplified Employee Pension plans under section 408(k), a SIMPLE IRA plan under section 408(p), or governmental deferred compensation plans under section 457(b). Payroll deduction IRAs are not included.
To comply with their obligations under this law, Connecticut employers that do not already offer an employer-sponsored retirement plan must register for the MyCTSavings program on the state’s website (MyCTSavings.com). The MyCTSavings program establishes individual Roth IRAs for each employee, which are funded through employee payroll contributions. Employers will receive notices that must be provided to employees. Employers must then enroll their current employees, who will have the choice to opt-out within 30 days. New employees will become eligible and automatically enrolled if they are at least 19 years old, perform services within Connecticut and remain employed for at least 120 days. Employers must then make appropriate deductions from their employees’ paychecks and send the employee contributions to MyCTSavings. Employers cannot make contributions themselves to MyCTSavings. Connecticut businesses that fail to comply with these requirements may be subject to penalties for wage and hour violations. Fortunately, participation in the MyCTSavings program will not require changes to an employer’s W-2 reporting; the IRA Trustee for the MyCTSavings program will file IRS Form 5498 (IRA Contributions Information) and send copies directly to employees for their records.
Employers in Connecticut that do not already offer a retirement savings plan for their employees or have not enrolled in MyCTSavings should do so as soon as possible. Employers should also work with their payroll providers to ensure that the employee contributions are being processed correctly.
[View source.]
