RoutineMetric

US Retirement Plan Mandate & SECURE 2.0 Auditor

Check compliance against state-mandated auto-IRA deadlines & federal SECURE Act 2.0 rules.

State legislatures and the federal government have significantly increased compliance pressures on businesses offering retirement plans. Use this auditor to evaluate your business's legal exposure, potential state-level fines, and requirements for automated enrollment features.

Employer Profile

Determines applicability of state-level auto-IRA mandates.
Calculates thresholds for state programs and SECURE 2.0 exclusions.
SECURE 2.0 auto-enrollment exempts companies less than 3 years old.
Used to evaluate current compliance posture & grandfathered status.
Quick Tip: Offering a qualified private retirement plan (like a 401k or SIMPLE IRA) almost always satisfies state Auto-IRA exemption rules!

Compliance Assessment SummaryHIGH RISK EXPOSURE

Potential Penalty Exposure

$3,750/year

State Mandate Audit

ACTION REQUIRED
Target State:California (CalSavers)
Mandate Deadline:Passed (June 30, 2022 for 5+ FTEs; Dec 31, 2025 for 1-4 FTEs expansion)

You have 15 employees, which meets or exceeds the 5-employee threshold for California (CalSavers). Since you do not offer a qualified plan or participate in the state program, you are non-compliant.

Penalty Details: $250 per employee after initial non-compliance notice, increasing to $750 if non-compliance continues beyond 180 days.

SECURE 2.0 Auto-Enrollment (Section 101)

ACTION REQUIRED
Company Age Rule:Applies (≥3 yrs)
FTE Exemption Rule:Applies (>10 FTE)

If you decide to transition from your current status to establish a new private 401(k) or 403(b) plan, you will be legally required to design it with mandatory automatic enrollment and auto-escalation features.

Mandated Auto-Enrollment Rules for new plans:
  • Automatic initial enrollment of 3% to 10% of pay.
  • Automatic escalation of 1% per year up to at least 10% (max 15%).
  • Employees must retain the right to opt out manually.

Next Action Plan

We recommend taking immediate steps to resolve active compliance exposures:

  1. Establish a Private Plan: Consider a modern, qualified 401(k) or Simple IRA plan. Building one satisfies state mandates in all active jurisdictions and exempts you from the State Auto-IRA program.
  2. Confirm State Exemption: Once your private plan is established, remember to officially claim your exemption certificate on the state program registration portal (e.g., CalSavers, RetireReady NJ) to avoid erroneous automated fine notices.
  3. Setup Automated Features: If setting up a plan post-December 2022, configure automatic enrollment correctly with your provider to stay fully compliant with SECURE 2.0 Act Section 101 rules.

Understanding US State Retirement Mandates & SECURE 2.0 Legislation

Over the past several years, both federal and state-level lawmakers have implemented historic changes designed to expand private-sector access to retirement savings programs. For employers, Human Resource leaders, and corporate CFOs, these changes require regular auditing of plan status to prevent costly regulatory penalties.

State-Mandated Auto-IRAs vs. Private Qualified Plans

State programs, such as California’s CalSavers, Illinois’ Secure Choice, and New York’s Secure Choice Savings Program, require companies that do not offer a qualified employer retirement plan to register and facilitate payroll deductions into a state-sponsored Roth IRA.

These mandates apply strictly based on the company’s Full-Time Equivalent (FTE) count. Employers must act quickly because missing these deadlines triggers severe non-compliance fees ranging from $100 to $750 per employee.

The Impact of SECURE Act 2.0 Section 101 on New Plans

Passed at the federal level, the SECURE Act 2.0 aims to make automatic enrollment the default for all newly-created employer-sponsored plans. If an employer sets up a new 401(k) or 403(b) plan after December 29, 2022, they must support mandatory auto-enrollment starting in 2025.

However, the federal law includes a few critical safety valves for small, developing businesses:

  • Startup Exemption: Businesses in business for less than 3 years are exempt from mandatory auto-enrollment rules.
  • Small Business Protection: Employers with 10 or fewer workers are not subject to Section 101 auto-enrollment.
  • Grandfathering: Existing retirement programs created prior to December 29, 2022 are completely grandfathered.

Action Steps for Corporate Leaders

To maintain compliance, HR professionals and legal counsels should audit their employee headcount, business start-up anniversary date, and plan setup date. If active state mandates apply to your firm and you do not yet provide a qualified plan, partnering with a certified financial planner or 3rd-party administrator (TPA) to launch a private plan can help you bypass the state auto-IRA rules altogether while maximizing employee benefits.