MarylandSaves: Employer's guide to Maryland's retirement savings mandate

What is MarylandSaves?

Maryland Small Business Retirement Savings Program and Trust was introduced in the Maryland House of Representatives in 2016, but wasn’t available to the public until September 2022. It was designed to ease the burden of small businesses offering an employee retirement plan, while increasing retirement savings options for an estimated one million private sector employees without access to a retirement plan. MarylandSaves offers a Roth Individual Retirement Account (Roth IRA) to eligible employees, including an emergency savings account.

Signups for MarylandSaves began September 15, 2022, and employers can register at any time. Businesses that registered before December 1, 2022, were eligible for a $300 Annual Report Filing Fee Waiver. Those that sign up in 2023 are eligible to request a waiver for 2024.

All employees of a registered company are automatically enrolled in MarylandSaves, with the choice to opt-out of the program within 30 days of their initial enrollment.

Is MarylandSaves mandatory for employers?

In a nutshell, Maryland employers are required by state law to actively participate in the program if the following conditions apply:

• Your business is currently registered to conduct business in the state of Maryland
• You have at least one W-2 employee
• You currently do not offer a qualified retirement savings program to your employees
• You have been in business in Maryland for at least two years
• You currently pay your employees through an automated payroll system

There are some exemptions for participating in the program, which we’ll cover next.

Are there exemptions?

If you already offer one of the following retirement plans, you are exempt from participating in MarylandSaves:

• 401(k) or a 401 (a) plan
• 403(a) qualified annuity plan
• 403(b) tax-sheltered annuity plan
• 408(k) Simplified Employee Pension
• 408(p) SIMPLE IRA
• 457(b) governmental deferred compensation plan

In addition, businesses that have not been operational for a minimum of two years are exempt from the requirement, as are sole proprietors and independent contractors. However, both of the latter have the option of voluntarily participating in MarylandSaves.

If your business is exempt, it must be certified online by filling out the Certify Exemption form on the MarylandSaves website.

Let’s learn more about how the program works and how participating employees can save for retirement.

What type of program is MarylandSaves?

Simply put, MarylandSaves offers a traditional Roth IRA to program participants, with 5% of gross pay automatically withheld from employee paychecks upon enrollment. The initial $1,000 contributed to the plan will be directly deposited into the Emergency Savings Fund, which is invested in the Guaranteed Investment Contract issued by the Lincoln National Life Insurance Company and carries a guaranteed interest rate.

Once an employee has contributed $1,000, all subsequent invested deposits will be directed toward a Target Retirement Date option, which is based on the employee’s date of birth and expected retirement. There is also a Bond Index option and a Global Growth Stock option that employees can choose to invest their contributions in.

All employees participating in MarylandSaves must meet Roth IRA eligibility requirements, including:

• If single, your Modified Adjusted Gross Income must be under $153,000 for 2023
• If married, your Modified Adjusted Gross Income must be under $228,000 for 2023
• If under the age of 50, you must not exceed annual contributions of $6,500 for 2023
• If over 50, you must not exceed annual contributions of $7,500 for 2023

In addition, Maryland citizens may be able to self-enroll in MarylandSaves without an employer, although they are required to make an initial contribution of $500 into the retirement account, or establish a recurring contribution through their bank of at least $5.

How do employers register for the program?

Registration for MarylandSaves began in September 2022 and currently continues, with employers able to register their business at marylandsaves.com. New registrants need to have their State Department of Assessments and Taxation (SDAT) number along with their MarylandSaves Access Code. Has your business not yet received an Access Code? You can request one here.

During the registration process, you’ll need to complete the following:

• Provide basic company contact information such as company name, DBA, application, business address, mailing address, and telephone number
• Provide details about your current payroll system such as pay frequency and your current pay schedule
• Employers can choose from three options on how contributions will be remitted:
  • Bank Account via ACH — with the designated amount pulled automatically from your bank account.
  • Paper check
  • ACH Push — though uncommonly used, you’ll manually direct the ACH transfer when it’s due

• Provide payment setup details, which is required if you’re using the Bank Account via ACH payment option

• Review payment instructions if using a paper check or ACH push to remit employee contributions
• Provide employee data. All employees must have a valid Social Security number or ITIN number to participate. Other required employee details include the employee’s date of birth and mailing address. Employers can add all of their employees at once and upload it as a Microsoft Excel file, with instructions available on how to create and upload the file

An ‘Onboarding Complete’ message is received when the registration process is finished. Once completed, employers will have access to the Employer Dashboard, where current employees can be managed, new employees added, and employee contribution details edited if or when necessary.

Are there fees to participate in MarylandSaves?

There are no fees for employers to participate in MarylandSaves and contributions to an employee’s Roth IRA are prohibited by Maryland statute. Employees do have to pay some administrative fees, which are automatically taken out of their retirement account. Expenses include an asset-based fee of 0.18% that is assessed annually, as well as a $30 annual account fee that is charged at $7.50 each quarter.

More resources for Maryland employers

If you require additional information about MarylandSaves, be sure to check out these resources:

• MarylandSaves policies, participation, and governing statute
• MarylandSaves certify exemption and claim filing fee waiver
• MarylandSaves help center
• Employer fact sheet
• Program rules