Submitted by Two River Benefits Consultants, LLC

Assembly bill 4134 bill creates the NJ Secure Choice Savings Program Fund -The last line of the bill states that this act shall take effect immediately. Your company is eligible, if during the previous calendar year employed 25 or more employees in the state, has been in business at least 2 years, and has not offered a qualified retirement plan under sections 401a, 401k, 403a, 403b, 408k, 408p or section 457b of IRS Code of 1986 in the preceding 2 years. Companies with 25 employees or fewer can participate voluntarily in the state program.

This means every employer 25 lives and above is required to offer each employee an IRA and automatically enroll 3% of their pay to send to the state program. If your company has fewer than 25 employees, your company is exempt.

The IRA State Plan administration, and New Jersey Board to oversee it is not set up yet by the state, so complying immediately is a bit of a stretch unless you have a current 401k plan and want to offer this type of program through your 401K. There are penalties for non compliance for employers who, without reasonable cause, fail to enroll employees who have not opted out of the program.

Fines are noted as follows:

• 1st Calendar year 2019 during which a violation occurs- a written warning from the Department
• 2nd Calendar year 2020- A fine of $100
• 3rd and 4th Calendar year 2021 and 2022.- A fine of $250 for each employee who was not enrolled or opted out of the enrollment.
• 5th calendar year 2023 and beyond- A fine of $500 for each employee who was not enrolled or opted out of the enrollment

Don’t hold your employees money if you participate. The fines get really large if you do this.

An employee is defined as any individual 18 years or older, who lives in the state or is employed by an employer in New Jersey, and whose wages are subject to withholding. The bill provides that employees be enrolled within 24 months after the effective date of the bill- so by March 28, 2021. Employees must be enrolled within 3 months of date of hire, unless the employee opts out.

The bill stipulates that employers and the State will not be Fiduciaries on the plans. I am not sure how they will avoid that as the fiduciary status of employees involved in retirement and IRA’s is the purview of the SEC, but that will be determined as this moves along.

These type laws are coming in many States. California has a similar program to New Jersey called Calsavers. Other States exploring these programs or having passed laws are Pennsylvania, Illinois, Maryland and others. The Federal government has bills pending currently called Savings for the future act by Democrats, and the Secure act of 2019 by Republicans. Be assured that this is not going away any time soon for employers, as both Republicans and democrats support these bills. The government is trying to push away this liability from themselves as many employees do not save for retirement, and the government cannot afford to pay for the liability that awaits them if Americans do not save more money moving forward.

It will become complicated for employers as the Federal government is expected to pass some type of new law in 2019. Make sure you have someone who understands how your staffing company works. Two River Benefits can help you with the administration of these plans. We are happy to help all Staffing companies with the enrollment issues, as we understand automatic enrollments.