New Jersey poised to create auto-IRA program

The Garden State would be the sixth state to create such a retirement program, and experts say it's likely others will join the ranks this year

Feb 28, 2019 @ 4:57 pm

By Greg Iacurci

New Jersey is poised to become the latest state to establish a so-called auto-IRA program to help residents save for retirement.

New Jersey's state Assembly passed a bill this week that would create the New Jersey Secure Choice Savings Program, an automatic-enrollment, payroll-deduction, individual retirement program, following a similar action in the state Senate last week. The bill is now on the desk of governor Phil Murphy, who is expected to sign it into law.

Nearly a dozen states and cities have passed legislation to create retirement programs for private-sector workers, and others are likely to follow suit this year, according to experts.

"There is momentum, and it's continuing at a steady pace," said David John, a senior policy adviser in AARP's Public Policy Institute. "There are many more in the pipeline."

These states are trying to spur retirement savings through the workplace, where research shows individuals are most likely to save. Nearly 2 million private-sector workers in New Jersey — more than half of the state's workforce in the private sector — don't have access to a workplace retirement savings plan, according to AARP.

Such workers, the states fear, won't have adequate retirement savings and will therefore risk straining state budgets as they require more assistance.

New Jersey's auto-IRA program would be similar to others in California, Connecticut, Maryland, Illinois, Oregon, and Seattle, Wash. These programs require private-sector employers of a certain size to offer a retirement plan to their employees, whether a 401(k)-type plan or a state-facilitated auto-IRA. Employees would be automatically enrolled into the IRA program, whose record keeping and investment management functions are farmed out to private companies.

Programs in Oregon and Illinois are currently enrolling employees, and California's is in a pilot phase.

New Jersey's program would require employers with 25 or more workers to participate. Workers would be automatically enrolled at a 3% contribution rate, but could opt out of the plan or change the rate.

New Jersey had previously legislated a marketplace, which helps employers shop around for different retirement plan options; it appears that New Jersey's auto-IRA would replace the marketplace. Washington State, which also has a marketplace, is currently considering legislation to do something similar to New Jersey, experts said.

States appear not to be intimidated by a perceived hurdle imposed by Republicans in 2017, when President Donald J. Trump signed a resolution shooting down an Obama-era regulation meant to promote the creation of state auto-IRAs.

New York 's governor, Andrew Cuomo, last year signed a law creating a state IRA program, which is voluntary for employers. New York City is considering an auto-IRA option. Vermont and Massachusetts are instituting state multiple employer plans, which could make it easier for employers to offer retirement plans.

Angela Antonelli, executive director at Georgetown University's Center for Retirement Initiatives, said 14 states and cities have already introduced legislation in 2019 to create a retirement program, the majority of which are auto-IRAs. That includes some states, such as Montana and Maine, where there hadn't previously been any legislative action.

Since 2012, all but six states have introduced some sort of retirement-program legislation, Ms. Antonelli said.

"Hawaii is fairly far down the path at the moment, and there are other states looking at it fairly seriously," Mr. John said.


What do you think?

View comments

Upcoming event

Nov 19


New York Women Adviser Summit

The InvestmentNews Women Adviser Summit, a one-day workshop now held in six cities due to popular demand, is uniquely designed for the sophisticated female adviser who wants to take her personal and professional self to the next level.... Learn more

Most watched


Young advisers envision a radically different business in five years

Fintech and sustainable investing are two factors being watched closely by some of the 2019 class of InvestmentNews' 40 Under 40.


Young professionals see lots of opportunity to reinvent the advice experience

Members of the 2019 InvestmentNews class of 40 Under 40 have strategies to overcome the challenges of being young in a mature industry.

Latest news & opinion

New Jersey fiduciary rule: Pressure leads to public hearing, comment deadline extension

Industry push results in chance to air grievances on July 17 and another month to present objections.

InvestmentNews' 2019 class of 40 Under 40

Our 40 Under 40 project, now in its sixth year, highlights young talent in the financial advice industry. These individuals illustrate the tremendous potential of those coming up in the profession. These stories will surprise, entertain, educate and inspire.

Galvin to propose fiduciary rule for Massachusetts brokers

The secretary of the commonwealth is proposing a fiduciary standard in response to an SEC investment-advice rule he views as too weak.

Summer reading recommendations from financial advisers

Here are some books that will keep you informed and entertained during summer's downtime

4 strategies for Roth conversions

There's never been a better time to do a Roth conversion, and here are several ways to go about it.


Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting It'll help us continue to serve you.

Yes, show me how to whitelist

Ad blocker detected. Please whitelist us or give premium a try.


Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print