Deadline for Second State-Run Retirement Plan Approaches
Employers with 26 and 99 workers have until October 31 to sign up with the Connecticut state-run retirement plan or withdraw from it.
The second round of employer deadlines is now in effect throughout the state. The registration deadline for businesses with five to 25 employees was March 30, 2022.
The Connecticut Retirement Security Authority introduced MyCTSavings in May 2022.
If they don’t provide their employees with a retirement plan, Connecticut employers with five or more employees who were each paid a minimum of $5,000 in the previous calendar year are compelled by law to join the program.
Employers who provide their staff with qualifying retirement plans are excluded from participation, but they must still declare them.
A qualified annuity plan is a tax-sheltered annuity program under Section 403(b), a SIMPLE IRA plan under Section 408(p) is a simplified employee pension plan under Section 408(k), a qualified employer-sponsored retirement plan under Section 401(a) (including a 401(k) plan), and a governmental deferred compensation plan under Section 457(b) are all examples of employer-sponsored retirement plans that qualify.
Employers are neither charged fees nor obliged or allowed to contribute to the scheme. To be eligible for the state-run plan, employees must have been with a covered employer for at least 120 days. Moreover, they have to be at least 19 years old.
Once enrolled, employees can handle the majority of account operations online and are responsible for speaking directly with the plan administrator regarding their investments.
Payroll deduction IRAs do not qualify as employer-sponsored plans.
The pre-tax benefits offered by most private sector organizations’ plans are not available under the state-run plan.
All qualified workers will be registered in the program automatically. Once enrolled, employees have the option to leave it.
Enrolled employees will automatically see a 3% deduction from their gross salary, but they can manually change it at any time.
The state-run retirement plan is a Roth IRA. It lacks the pre-tax advantages of other retirement plans provided by several private sector entities.
The Employee Retirement Income Security Act establishes basic requirements for most retirement and health plans to safeguard enrollees but does not apply to the state plan.
The initiative will automatically enroll eligible employees with a 3% default withdrawal from their gross pay. Employees can change their contribution rate or drop out of the program.
The retirement account of an employee is transferable. They keep their accounts even if they switch jobs.
According to the law, covered employers must:
- Provide the program administrator with the following information about each employee: Names, Social Security or taxpayer-identification numbers, dates of birth, addresses, and email addresses.
- Set up payroll deductions for employees and send employee contributions to the administrator.
- Check employee opt-out and contribution decisions before each payroll submission.
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For over 30-years Joe Carreno of The Retirement Advantage has been a Federal Employee Retirement System specialist (FERS) as well as a Florida Retirement System specialist (FRS) independent advocate. An affiliate of PSRE (Public Sector Retirement Educators), a Federal Contractor & Registered Vendor to the Federal Government, also an affiliate of TSP Withdrawal Consultants. We will help you understand your FERS & FRS Benefits, TSP & Florida D.R.O.P. withdrawal options in detail while recognizing & maximizing all concurrent alternatives available. Our primary goal is to guide you into retirement with no regrets; safe, predictable, stable, for life. We look forward to visiting with you.
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