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Connecticut has created the MyCTSavings program (the “Program”) which is designed to help address the growing retirement savings crisis. All private-sector employers with five or more employees will be required to participate in the Program or offer an employer-sponsored alternative that meets the state’s minimum requirements. With its implementation, eligible employers will need to meet certain registration deadlines. The law requires a retirement program be established, but it is funded by the employee.

Connecticut’s Program is very similar to programs found in several other states, which are seeking to address the same issue.

Why Now?

According to state records, over 600,000 private-sector employees in Connecticut have no access to an employer-sponsored retirement savings plan and for those who do have plans and are nearing retirement age, the average account balance across the U.S. is less than $15,000.

To help combat this retirement savings shortfall, participants in the Program are essentially creating a self-funded Roth IRA. The hoped is this new Program will assist employees to create a financially secure retirement without relying entirely on Social Security benefits.

What Employers Need to Know

Connecticut will require participation by all private-sector employers with five (5) or more employees and who do not currently offer a retirement plan to employees. Employers with four or fewer employees are exempt from the Program but may choose to opt in if they so desire.

Employees who have made over $5,000 in the prior calendar year shall automatically be enrolled by their employer into the Program with a starting contribution level of 3% of the employee’s wages.  It should be noted, employers are not permitted nor required to make any contributions to an employee’s account.

An employer’s deadline to register in the Program is based on its size:

• Employers with 26 to 99 employees: Oct. 31, 2022; and
• Employers with 5 to 25 employees: March 31, 2023

Employers are required to register or certify exemption if they already offer a retirement plan at https://myctsavings.com/.

Note, employers with 100 or more employees were required to comply with the terms of the new Program by June 30, 2022.  If this is you, we encourage you to contact the Connecticut Retirement Security Authority for information on getting compliant or call your counsel for assistance.

What Your Employees Need to Know

Employees of eligible employers will be able to participate in the Program provided they:

• Are at least 19 years old;
• Are employed with the same employer for at least 120 days; and
• Have been paid more than $5,000 in the prior calendar year from the same employer.

Pursuant to the Program, all employees will be automatically enrolled in the Program but can voluntarily opt out. Employees will also have the option of changing the percentage of income they contribute from the standard rate of 3%.  However, employee contributions will be capped at the annual IRS contribution limit for a Roth IRA.

Finally, should an employee change jobs, she will be permitted to continue to make contributions into this account or roll it over into another retirement account.

The Fine Print

Employers with 25 or fewer employees do not need to wait for their deadline to comply.

Additionally, all eligible employers must:

• Provide each eligible employee with information about the Program within 30 days of the employee’s hire date;
• Document that the materials have been provided to employee; and
• Timely deduct and remit employee contributions to the Program.

Failure to timely enroll and submit contributions could lead to an employer receiving civil penalties the amounts of which have yet to be determined by the Connecticut Retirement Security Authority.

To learn more about the Program and your obligations as an employer visit https://myctsavings.com/.

Brody and Associates will continue to monitor and provide updates on the MyCTSavings Program and notify our readers of any changes.

Brody and Associates regularly advises management on complying with the latest local, state and federal employment laws.  If we can be of assistance in this area, please contact us at info@brodyandassociates.com or 203.454.0560.