Understanding Minnesota’s New Business Retirement Plan Law

Minnesota has introduced a new law to help more workers save for retirement. Here’s a breakdown of what you need to know about the Minnesota Secure Choice Retirement Program:

Who Needs to Participate?

If you run a business in Minnesota with five or more employees and you don’t already offer a retirement plan, this new law affects you. Starting in 2025, you will need to enroll your employees in the Secure Choice program. This will be done in phases, starting with larger businesses and then smaller ones.

How Does It Work?

Employees will contribute a part of their paycheck into individual retirement accounts (IRAs). By default, the contributions will go into a Roth IRA, which means taxes are paid upfront. However, employees can choose to make pre-tax contributions instead, adjust their contribution rate, or opt out entirely.

Key Dates and Phases

The program is set to start on January 1, 2025, but it will roll out in phases. Larger businesses will need to comply first, with smaller businesses following later. The entire rollout is expected to be completed within two years.

What Employers Need to Do

Employers must:

  • Enroll eligible employees.
  • Withhold the contribution amounts from employee paychecks.
  • Remit these contributions to the program.
  • Provide employees with information about the program.

Employers won’t need to contribute their own money to the employees’ retirement funds but must ensure proper administration to avoid penalties. After the first year, penalties can be imposed for non-compliance, but there will be an initial warning period.

Alternative Options

Affected businesses that do not wish to participate in the State plan must establish their own retirement plan, such as a SIMPLE IRA or 401(k). Our firm is available as a resource for businesses in the Mankato, Minnesota region and throughout the state and has extensive experience establishing and servicing retirement plans for small and medium-sized businesses.

Please reach out if you have any questions regarding this mandate or the establishment of a retirement plan.