The House of Representatives and the Maine Senate passed a law that would create an automatic IRA for workers whose employers do not offer retirement plans.
The bill, which House and Senate approved on June 17 with overwhelming support, now goes to Gov. Janet Mills.
Although the law requires employers to offer an IRA car, they are not considered confidential and do not have to contribute money to participants ’pension accounts.
Starting April 1, 2023, employers with 25 or more eligible employees must offer a program in which participants will pay contributions by deducting wages.
On October 1, 2023, the program will be extended 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 last two groups can offer the program starting April 1, 2023. The program can also be offered by any employer with less than five employees.
Participant contributions will be in the form of a Roth IRA. Initially covered employees must give 5% of salary; but they can drop out of the program at any time and can contribute more or less, the bill says.
An employee covered by the service who resigns “will automatically be re-enrolled with the option to re-unsubscribe at regular or ad hoc intervals” determined by the State Retirement Board of the State of Maine, created to run the program, the law said.
The board could add an automatic escalation to the program, increasing participant contributions by 1% per year, to reach the 8% ceiling, the law says.
The nine-member pension committee will begin monthly meetings in May 2022 to establish rules for program management and investment policy development.