Learn more about the states that require employers to offer retirement savings plans to their employees. Get the employee size requirement and other helpful resources.
Solution
More states now require employers to offer a way for workers to save for retirement. Many programs use automatic enrollment to help people—especially low- and moderate-income workers—build savings. Gusto helps you stay compliant by supporting both state auto-IRA programs and 401(k) plans.
Before you start
Review these items so you set up the right option.
- Check your state’s rules and deadlines.
- Requirements vary by state and employer size. Always review your state’s retirement regulations or contact your state program for final guidance.
- Confirm tax treatment.
- Many state auto-IRAs use post-tax (Roth) contributions; confirm with your state program.
- Decide your path.
- You can use a state auto-IRA or a compliant 401(k).
Option 1: Set up a state auto-IRA in Gusto
Use this section if your state mandates an auto-IRA.
You either add a post-tax deduction in payroll (per your state rules) or, if supported, connect your auto-IRA provider to Gusto.
Option 2: Set up a compliant 401(k) in Gusto
Use this if you prefer a 401(k) that meets your state’s exemption criteria.
You can set up manual 401(k) deductions in Gusto or offer retirement benefits through a Gusto partner:
Contact partners directly for details on supported state programs and plan design.
FAQs Q: How do mandates apply to companies with employees in multiple states?
A: A few things to consider:
- Employers must enroll employees in a retirement plan if they live in a state with a mandate and meet the size requirement.
- Out-of-state employees cannot join another state’s plan (e.g., Oregon employees can’t join California’s CALSavers plan).
- To meet all state rules, employers can offer a 401k plan through providers like Guideline.
Q: Who counts as an "employee"? Only full-time or W-2 workers?
A: Double-check your state's program.
- Most states require all W-2 employees to be offered a plan. Virginia is the only state that excludes part-time employees (working fewer than 30 hours/week).
- 1099 contractors are not included in the mandates.
Q: I just started my business. When do I need to follow the rules?
A: It depends—check your state’s program for details.
- If your state’s plan hasn’t launched yet, you usually have 2 years before the rules apply.
- If the plan is already active and the deadline for your company size has passed, you usually have until the end of the next calendar year to comply.
Q: What if I hire more employees during the year? When do I need to comply?
A: If you add enough employees to meet the mandate, you typically have until the end of the next calendar year to follow the rules. Check your state’s plan for specifics.
Q: What type of retirement plans do states offer?
A: Most state plans are Roth IRAs, which are funded with after-tax contributions. Contribution limits update annually.
- No employer contributions are allowed for Roth IRAs.
- Roth IRAs have lower limits than 401ks ($7,000 vs. $24,000 in 2024).
- Employees are responsible for checking if they qualify after enrolling.
