Imagine waking up to a compliance notice from the labor department in another state, because you missed the rollout of a new mandatory retirement program for some of your employees. As of June 2025, 20 states have implemented or will soon implement mandatory retirement plans for businesses of all sizes. No matter where your headquarters is located, this could affect you if you have employees in one of the impacted states. Here's what you need to know to stay in compliance and how Candoor can help.
What Are State Retirement Mandates?
State retirement mandates require private employers to offer some sort of retirement savings option to their workers. These are typically implemented through a payroll deduction into a Roth or traditional IRA. These laws are intended to close the coverage gap for employees who work at smaller companies who may not have access to workplace retirement plans.
To simplify compliance, some states have launched their own partnership programs, such as CalSave in California or OregonSaves. These are state-facilitated plans that handle investments, recordkeeping, and employee communications. Employers are mainly responsible for enrolling workers and submitting contributions.
As of June 2025, 20 states have already legislatively passed mandatory 401(k) or IRA plans, and 14 are up and running. In addition, two US cities and an additional ten states are on the verge of implementing mandates within the next two years. Nineteen of the remaining 20 states are making legislative moves toward implementing retirement mandates as well. (South Dakota is the one holdout.) The trend is clear. Retirement planning is becoming a regulatory expectation and is no longer just a "nice-to-have" perk.
States That Already Have Mandates in Place
Of the 14 state mandates that are already active, 12 are auto-IRA plans. Washington has a voluntary marketplace plan, and Massachusetts has a voluntary open multiple employer plan (MEP). Each state plan has its own unique attributes.
For example, CalSavers automatically enrolls employees at a default 5 percent contribution unless they opt out, and the contributions escalate by 1 percent per year for a maximum of 8 percent. Businesses with 5 or more employees that don't offer an internal plan must enroll with CalSavers. OregonSaves auto-enrolls at a default 5 percent contribution, but it escalates by 1 percent per year for a maximum of 10 percent. All Oregon employers, regardless of size, must register with OregonSaves if they don't have a qualified retirement plan.
The rules vary from state to state. With more states adopting and implementing mandatory retirement plans over the next few years, it's going to create new compliance headaches for multi-state employers.
States With Active Mandates
These states already require employers (meeting certain thresholds) to offer retirement programs or enroll employees in a state-facilitated plan.
- California – CalSavers
- Colorado – SecureSavings
- Connecticut – MyCTSavings
- Delaware – Delaware EARNS
- Illinois – Secure Choice
- Maryland – MarylandSaves
- Maine – MERIT
- Massachusetts – CORE Plan (nonprofits only, voluntary)
- New Jersey – Secure Choice
- Oregon – OregonSaves
- Vermont – VT Saves
- Virginia – RetirePathVA
States With Mandates in Development
These states have enacted laws and are in the process of rolling out their retirement savings programs.
- Georgia – Peach State Saves (Voluntary)
- Hawaii – Hawaii Retirement Savings Program (Mandatory)
- Minnesota – Minnesota Secure Choice Retirement Program (Mandatory)
- Missouri – Show-Me MyRetirement Savings Plan (Voluntary)
- Nevada – Nevada Employee Savings Trust (Mandatory)
- New Mexico – Work and Save IRA (Voluntary)
- New York – Secure Choice Savings Program (Mandatory)
- Pennsylvania – Keystone Saves (Mandatory)
- Rhode Island – RI Savers (Mandatory)
- Washington – Washington Saves (Mandatory)
In addition, 25 other states are currently considering legislation to enact retirement savings programs.
Does It Affect Your Business Even If You’re Not in One of Those States?
If you have employees who live and work in mandated states, you are required to offer a qualified retirement plan to them. Even if your headquarters is located elsewhere, you're on the hook for any employees in Illinois, New York, Colorado, or other states with active mandates.
Scenario 1: Remote Worker in California
Your business might be based in Utah, which currently doesn't have a retirement mandate. But you've hired a remote specialist who lives and works in Los Angeles. Because California mandates employer registration with CalSavers for businesses without a qualified retirement plan, you have one of two options:e
- Register with CalSavers and facilitate payroll deductions
- Offer a qualified plan, such as a 401(k), to exempt yourself
Scenario 2: Satellite Office in Illinois
Your company might be located in Texas (no retirement mandate), but you operate a satellite hub in Illinois. Any business in operation in Illinois for two or more years and with five or more employees must offer a retirement plan or enroll in the Illinois Secure Choice plan. You are required to:
- Enroll in Illinois Secure Choice
- Facilitate payroll deductions for the Illinois employees
- Provide opt-out instructions and program details
Penalties for Non-Compliance
Every state that has implemented mandatory retirement plans also has a system of monetary fines in place for non-compliance. This is why it's so important for HR departments to stay on top of these changes.
Virginia's mandatory plan is RetirePath VA. Employers in operation for 2+ years and who have more than 25 employees must register with RetirePath or certify their reason for exemption. Failure to comply can result in automatic penalties of $200 per employee, per year.
In California, employers can be fined $250 per employee for failure to register by the yearly deadline. If non-compliance continues for 90 days, an additional $500 per employee fine is assessed. Your maximum exposure is capped at $750 per employee for the first year alone.
In Oregon, failure to register with OregonSaves can result in a $100 per employee fine. The fines are capped at $5,000 per calendar year.
The penalties vary from state to state, but non-compliance will be painful.
Options for Small Businesses Under State Mandates
You basically have two options if you're a small business and you fall under one of these new mandates. You can enroll in a state-provided program like CalSavers or RetirePath VA for employees in those states, or consider a private provider like Human Interest through Candoor.
The benefits of Human Interest include:
- Payroll integration
- Automated compliance
- Customizable plans to meet your business needs
- Better employee experience with intuitive tools and mobile access
- Dedicated support that state-run plans can't offer
Next Steps
Many jurisdictions now have their own deadlines, eligibility rules, and penalties for non-compliance with the new state 401(k) mandates. It's important to know what's required, and when. Candoor and Human Interest can take the guesswork out of the setup and administration of a small business retirement program for you. Whether you're just getting started or ready to upgrade from a state-run program, get in touch with Candoor to find a solution that works best for your business!