Retire Ready NJ

RetireReady NJ (https://taxclientadvisory.com) is a state-sponsored retirement plan that’s designed to help more private-sector employees save for the future. Participation in this program or another qualified retirement plan is mandatory for businesses that meet certain criteria.

RetireReady NJ
A business with 25 or more employees (at one time during the previous calendar year) and has been in business for at least 2 years is required to sign up for Retire Ready NJ if they do not offer a retirement program.

• Employers with 25-39 employees must register by November 15, 2024
• Employers with 40 or more employees must register by September 15, 2024

Employers may have their own plans such as

• A defined benefit plan
• 401 (k) or 403 (b)
• Simplified Employee Pension (SEP) plan
• Savings Incentive Match Plan for Employees (SIMPLE) plan

Employers are given an access code by mail or email. Using the code, an employer must register on the site for the program or provide an exemption code if they already offer a plan. There are step by step instructions on the NJ Retire Ready site for signing up. Employers are not permitted to make contributions on behalf of employees. All employees must opt in or out and the contributions will start on the first pay period selected by the employer upon registration.

Here are the highlights. There is nothing on the site that says you need to register if you have less than 25 employees so it appears that you only have to register or provide an exemption code if you have 25 or more employees. Registration seems relatively straight-forward and will likely be done through most of the common payroll providers. There is no cost to employers and employees are able to opt out if they do not want to contribute.

Why is RetireReady NJ being implemented?

Legislators in NJ passed RetireReady NJ to close the retirement savings gap that exists between employees of large business and those of small businesses. In fact, studies show that only 28% of businesses with fewer than 10 employees offer retirement plans¹.

How does the RetireReady NJ savings program work?

RetireReady NJ allows employees to contribute a portion of their pretax earnings to an individual retirement account (IRA) via payroll deductions. They are automatically enrolled at a 3% contribution rate, unless they opt out or change their rate, and may contribute $6,000 maximum to the plan per year in accordance with IRS guidelines.

What are some additional features of the RetireReady NJ plan?

• Employers cannot match employee contributions
• Participants may not borrow from their savings
• The maximum contribution limit for employees 50 and older is $7,000
• Plans are portable if employees change jobs