On March 28, 2021, New Jersey Gov. Phil Murphy signed the New Jersey Small Business Retirement Marketplace Act, which requires qualifying employers to automatically enroll their employees in the New Jersey Secure Choice Savings Program. While enrollment in the program began on March 28, 2021, qualifying employers are not required to enroll their employees in the program until the end of 2021.
All profit and non-profit New Jersey employers who employed at least 25 workers during the past calendar year, have been in business for at least two years, and do not offer their employees the ability to participate in a qualified retirement plan (e.g., a 401(k) or 403(b) plan) qualify. Employers with less than 25 employees may participate, but are not required to do so. Only W-2 employees are eligible to participate, meaning employers are not required to offer the program to independent contractors (i.e., 1099 employees).
Under the program, all W-2 employees are automatically enrolled and contribute 3% of their pay (through an automatic payroll deduction by the employer) to the program. The maximum annual contribution for employees is $6,000 for employees under 50 years old. This amount increases to $7,000 for employees over 50 years old. Employees may choose to opt out.
Employers are required to provide enrollment packets and information about the program to all eligible employees, including new employees within 30 days of hire, and withhold and remit employee contributions to the program. Employers must also track employee eligibility, enroll new employees within three months of hire, track and honor opt-out requests, offer an annual open enrollment period, and submit an employee census to the program annually.
The penalties for failing to comply with this law are progressive and become rather harsh. In the first calendar year, failure to comply results only in a written warning. However, failure to comply in a second year results in a fine of $100 per employee, which increases to $250 per employee for the third and fourth years, and up to $500 per employee for the fifth and every subsequent year. Employers who fail to remit contributions to the program are subject to a $2,500 fine for the first offense, and a $5,000 fine for each subsequent offense.
Qualifying employers should take steps immediately to ensure that they are in compliance with this law by the end of the year. This may be as simple as contacting their payroll provider. If you have any questions about this development or how it could impact your business, including if your business qualifies, please contact: