Connecticut launches mandatory retirement program for private sector employees

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After several years of anticipation, the Connecticut Retirement Security Authority (CRSA) has issued a state pension scheme this will potentially affect up to 600,000 people in the private sector who do not have access to employer-sponsored plans.

Many employers across the state will be required to take action under this new program. Learn more

For some background, in 2016 Connecticut lawmakers passed legislation creating the Connecticut Retirement Security Authority to help ensure adequate retirement savings among the state’s workforce. The CRSA was tasked with creating a public savings program for private sector employees within the state. This matches similar legislation passed in many states across the country. However, Connecticut is one of the first to implement a state-sponsored retirement program so far.

This new program set up by the CRSA is MySavingsCTS. Under this plan, private employers with five or more employees who have been paid more than $5,000 in a calendar year will be required to participate, unless they already offer a pension plan. qualifying retirement savings. Qualifying plans include “a plan Internal recipe code section 401(a), a qualifying annuity plan under section 403(a), a tax-sheltered annuity plan under section 403(b), a simplified employee retirement plan under section 408(k), a SIMPLE IRA plan under section 408(p), or a government deferred compensation plan under section 457(b).

The program will be introduced in a series of three waves with different application deadlines. Which wave an employer will belong to is determined by the number of employees. Employers can determine which wave they belong to on the MyCTSavings FAQ page. The program officially opened on April 1, and employers are free to apply anytime before the application deadline.

MyCTSavings will operate like a Roth IRA, which means employees can contribute up to $6,000 per year or $7,000 if they’re 50 or older. Employers are required to participate in the program; however, they will not contribute any funds to the program. Instead, employers will only be required to release information provided by the CRSA and remit payroll deductions.

Skilled employees must be enrolled in the program within 60 days of the release of the information provided by CRSA, unless the employee takes steps to opt out. To qualify, an employee must be 19 years of age or older, perform work in the state of Connecticut, and be employed by the employer for at least 120 days. Employers can register for the program or apply for an exemption on the MyCTSavings website.

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