Connecticut is launching its automatic-IRA program as a pilot beginning in September, according to a recent announcement from the state.
The program, MyCTSavings, has been several years in the making. The state established a retirement security board designed to explore an auto-IRA system in 2015.
The program is slated to launch on a mandatory basis for employers next year.
Connecticut is among 11 states and cities that have enacted auto-IRA legislation, and it will be among the few to go live.
Currently, three programs are up and running, including those in Oregon, California and Illinois. Collectively, those systems have brought in more than $276 million in assets, according to data from Georgetown University’s Center for Retirement Initiatives, although they are still young. On June 30, California began requiring companies with more than 50 employees to register unless they already provide retirement plans for their workers.
Connecticut’s system will begin allowing employers to register in September, with payroll contributions going into the accounts starting in October, according to information from the state.
Like other auto IRAs, Connecticut’s requires workers to opt out if they do not want to participate. Once they’re automatically enrolled, 3% of their total pay will go into age-appropriate target-date funds in the Roth accounts, unless they opt for a different amount.
States began developing auto-IRA systems several years ago, largely in response to Congress’s lack of success in building a national auto-IRA program during the Obama administration. Such accounts are necessary, proponents have said, as many private-sector workers, particularly those at small businesses, do not have access to employer-sponsored plans.
More than 600,000 private-sector workers in Connecticut currently do not have retirement plans, according to the state.
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Andrew is half-human, half-gamer. He’s also a science fiction author writing for BleeBot.