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MD Adopts State-Run Savings Program

Maryland Gov. Larry Hogan (R) signed into law legislation on May 10 that will create a state-run retirement plan for workers not covered by a retirement plan at work.

The bill (SB 1007) establishes the Maryland Small Business Retirement Savings Program and Trust, which creates incentives to encourage private-sector employers to make the program available to their employees.

Employers that participate in the program, or otherwise offer a retirement savings arrangement to their employees as specified in the bill, are exempt from the state’s $300 annual filing fee for corporations and business entities after the program becomes operational. The bill, which applies only to employers with 10 or more full-time employees that use an automated payroll system or service, also creates a state-run auto-IRA program that businesses can use as an option to meet the requirements. However, actual implementation could be as far off as 2018.

Legislative History

In mid-April, with time running out on its 2016 legislative session, the Maryland House passed the bill by a veto-proof majority. Coupled with a unanimous vote in support of the measure by the state Senate earlier the same week, it was virtually inevitable that Hogan would sign the bill into law.

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.

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.

Other State Initiatives


In recent years, state governments have become focused on increasing access to retirement plans for private sector workers. Maryland is the latest state — behind Illinois, Massachusetts, and Oregon — to pass similar legislation in the past few years. Washington State and New Jersey have both launched small plan marketplaces.

Furthermore, California and Connecticut are making serious pushes to finalize their own programs as the states wrap up their 2016 legislative sessions in the coming weeks.

Approximately half the states are currently considering measures to close the retirement coverage gap.