Hawaii latest state to pass retirement savings plan bill

Hawaii latest state to pass retirement savings plan bill

By Lurah Bassey
on
Business Practices | Legal

If a Hawaiian bill is signed by Gov. David Y. Ige, the state will be the last to require private sector employers to offer pension plans.

Hawaii’s Retirement Savings Act would establish a state-run IRA program that would be offered beginning July 1, 2024 by employers who have been in business for more than two years and have one or more employees. It does not apply to companies that have offered a tax-based pension plan in the last two years. While the bill would require employers to automatically enroll covered employees in the state program, they would have the option to opt out.

Major financial group’s retirement security survey for the first two quarters of 2021 found that 87% of respondents from 396 pension plan sponsors said auto-enrollment increased participation and 80% said their employees were saving at a younger age.

Hawaii’s proposed retirement savings program would be facilitated by a nine-member retirement savings board. The council will be responsible for providing in its 2025-26 annual report any findings, recommendations, or proposed legislation “on the feasibility of expanding program eligibility to Hawaii’s independent workforce, including self-employed workers. “, says the bill.

The default contribution amount would be 5% of each employee’s salary or wages, according to the bill. However, employees could contribute more or less “as long as the amount does not exceed the applicable contribution dollar limits under the Internal Revenue Code.” The board may choose to increase the program contribution rates annually.

In April, AARP Hawaii Director Keali’i Lopez voiced her support for the bill in an op-ed published by the Hawaii Tribune-Herald and the Honolulu Star-Advertiser to help 215,000 workers who do not have a 401(k) or similar savings option at their job, according to AARP.

“Many of them work for small companies that find it too complicated, time-consuming and expensive to offer retirement savings programs to their workers, even though many of them want to offer their employees a way to save for retirement,” Lopez wrote.

In recent years, 14 states have passed laws requiring the provision of pension plans. Most state plans target small businesses with five to 100 employees. A federal pension bill passed the House earlier this year but has not moved forward since.

Collision industry employers nationwide may also consider the Society of Collision Repair Specialists’ 401(k) Multiple Employer Plan (MEP) as an option in addition to the state program that may be Free.

CSIS 401(k) plan advisors interview plan providers, develop a plan, and spend time ensuring legal compliance is achieved, removing all of that added liability from store owners.

Plan advisor Coley Eckenrode previously told Repairer Driven News that multiple companies participate in the SCRS plan, so the total plan balance and number of employees are higher. And it has already been negotiated that as certain benchmarks are reached, such as the number of dollars or participants, employees will see price reductions.

To learn more about CSIS’s 401(k), visit scrs.com/401k or contact Eckenrode at 804-327-0425 or coley.eckenrode@vamllc.com. Plan Advisor Scott Broaddus can also be reached at 804-327-0424 or scott.broaddus@irongate-capital.com.

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Featured Image Credit: pinkomelet/iStock

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