Legislation pending in the Maryland General Assembly uses more carrot than stick to entice private employers in the state to offer a retirement savings program for their employees.
If the employer meets the requirements in the legislation — namely that the business adopts or maintains either an auto-IRA program or a full blown employer-sponsored retirement plan — then their annual reporting fee ($300 in most cases) is waived. The bill also creates a state-run auto-IRA program that businesses can use as an option to meet the requirements. The bill only applies to employers with 10 or more full-time employees that use an automated payroll system or service.
The legislation is the product of stakeholder deliberations that have been taking place in Maryland over the course of the past few years. In 2014, then-Gov. Martin O’Malley (D) created the Task Force to Ensure Retirement Security for All Marylanders. The task force, chaired by former Lt. Gov. Kathleen Kennedy Townsend (D), issued a report in February 2015 that amounted to a call for state action to address the retirement plan coverage gap in the private workforce, but was light on specifics. Then in September 2015, the leaders of the Maryland General Assembly created the Commission on Maryland Retirement Security & Savings to drill down on the real reasons small businesses were not offering retirement plans for their workers.
Next Steps
Now that the Maryland General Assembly has held its legislative hearings on the bill, the next step is for the bills to move through the committees of jurisdiction in the few weeks remaining in the 2016 legislative session, which is scheduled to end in mid-April.
If the committees vote on the legislation in the coming weeks, the prospects for passage are good since the Democratic leadership in the General Assembly is on board. And while Gov. Larry Hogan (R) could oppose the measure, the Democrats have enough members to override a veto.
It remains to be seen how the political process will play out, but we will keep you posted.
Andrew Remo is the American Retirement Association’s Director of Congressional Affairs.
If the employer meets the requirements in the legislation — namely that the business adopts or maintains either an auto-IRA program or a full blown employer-sponsored retirement plan — then their annual reporting fee ($300 in most cases) is waived. The bill also creates a state-run auto-IRA program that businesses can use as an option to meet the requirements. The bill only applies to employers with 10 or more full-time employees that use an automated payroll system or service.
The legislation is the product of stakeholder deliberations that have been taking place in Maryland over the course of the past few years. In 2014, then-Gov. Martin O’Malley (D) created the Task Force to Ensure Retirement Security for All Marylanders. The task force, chaired by former Lt. Gov. Kathleen Kennedy Townsend (D), issued a report in February 2015 that amounted to a call for state action to address the retirement plan coverage gap in the private workforce, but was light on specifics. Then in September 2015, the leaders of the Maryland General Assembly created the Commission on Maryland Retirement Security & Savings to drill down on the real reasons small businesses were not offering retirement plans for their workers.
Next Steps
Now that the Maryland General Assembly has held its legislative hearings on the bill, the next step is for the bills to move through the committees of jurisdiction in the few weeks remaining in the 2016 legislative session, which is scheduled to end in mid-April.
If the committees vote on the legislation in the coming weeks, the prospects for passage are good since the Democratic leadership in the General Assembly is on board. And while Gov. Larry Hogan (R) could oppose the measure, the Democrats have enough members to override a veto.
It remains to be seen how the political process will play out, but we will keep you posted.
Andrew Remo is the American Retirement Association’s Director of Congressional Affairs.
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