Maine Gov. Janet Mills signed into law legislation that creates an automatic IRA for workers whose employees don't offer retirement plans.
The governor acted Thursday, one week after the state's House of Representatives and Senate approved the measure with strong support.
Starting April 1, 2023, employers with 25 or more eligible employees must offer the program in which participants will make contributions by payroll deduction.
On Oct. 1, 2023, the program will extend to employers with 15 to 24 eligible employees. By April 1, 2024, the program will cover employers with five to 14 eligible employees.
Any employer in the latter two groups can offer the program starting April 1, 2023. Any employer with fewer than five employees can offer the program, too.
The law requires employers to offer the auto-IRA, but they aren't considered fiduciaries and aren't required to contribute money to participants' retirement accounts.
Participant contributions will be in the form of a Roth IRA. Initially, covered employees must contribute 5% of pay, but they can drop out of the program at any time and they may contribute more or less, the law says.
A covered employee who opts out "will be automatically re-enrolled with the opportunity to opt out again at regular or ad hoc intervals" determined by a Maine State Retirement Board created to run the program, the law says. The board could add auto-escalation to the program, raising participant contributions by 1% of pay per year to reach a cap of 8%.
The nine-member retirement board will begin monthly meetings in May 2022 to establish rules for administering the program and for developing an investment policy.