MarylandSaves, a state-backed automatic IRA program, has officially been launched.
The program, established under a Maryland law passed in 2016, went live Sept. 15 after years of preparation. Now, established businesses that use an automatic payroll system or service are required either to offer a retirement plan or to sign their employees up for the MarylandSaves program.
Employers will have no payment or fiduciary obligations, have no federal reporting requirements and will pay nothing to MarylandSaves for the service.
While employees will be automatically enrolled in the program, they can opt out any time. The initial contribution rate to their personal WorkLife Savings Account is 5% of pay, and participants can elect lower or higher rates. Default contributions will automatically escalate 1 percentage point annually to a maximum of 10%.
"MarylandSaves is an advance on traditional retirement savings," said MarylandSaves Board Chairman Joshua Gotbaum, in a news release. "It's automatic savings from each paycheck, savings that help with life's emergencies now and can keep helping after people retire and need it most."
MarylandSaves will be administered by a team composed of Vestwell and Bank of New York Mellon. Assets will be managed by BlackRock, State Street Global Advisors, Lincoln Financial Group and T. Rowe Price Group.