The Colorado SecureSavings Program and Delaware EARNS today announced it would establish a partnership that makes automatic IRA accounts accessible to private-sector workers.
Vestwell, in partnership with BNY Mellon, will serve as the program administrator, providing recordkeeping, custodial, and administrative services to employers and employees in participating partner states.
The first state will be joining the Partnership for a Dignified Retirement, which aims to provide financial security for smaller states. The program is currently led by Colorado and includes Maine’s Retirement Investment Trust (MERIT) program, who Vestwell also serves as administrator for.
Delaware’s program will be tied to state employees rather than plan sponsors, meaning that workers will have access to their retirement account at all points in their career. The program is also fee-free for employers, with employee participation being voluntary.
“The Delaware EARNS Program Board was pleased to support this historic interstate collaboration to bring a much-needed retirement savings vehicle to Delaware workers,” said Delaware EARNS Board Chair Fayetta M. Blake. “Through joining this interstate effort, we’ll greatly accelerate the launch of the EARNS program. Not only will we save start-up time and costs, but we’ll also allow Delaware participants to benefit from economies of scale that will help them grow their savings over time.”
In a statement, Vestwell emphasized how such partnerships can bridge the gap for workers wanting retirement plan access, but who do not have the resources to save for the long-term. According to an analysis by the Georgetown University Center for Retirement Initiatives, 39% of private sector employees in Delaware currently do not have access to retirement savings through their employer.
“We’re excited to continue spurring innovation in the state savings space and support the expansion of state partnerships as a new way to bridge the access gap for individuals looking to save for their futures,” said Douglas Magnolia, Chief Customer Officer and President of Vestwell State Savings. “Delaware’s engagement with Colorado SecureSavings is representative of the next phase of state auto-IRA retirement programs– by partnering with another state with up-and-running savings programs, smaller states can expedite their program launch and get their residents access to these retirement accounts more quickly.”
The latest announcement comes as new findings show the influence of automatic IRAs on employers. A study released last week by human resources (HR) platform Gusto found auto-IRA compliance deadlines are leading small business employers to offer retirement plans at a faster rate.
For example, Colorado lawmakers passed a requirement this year that mandated companies with five or more employees to participate in a public or private retirement plan by June 30. Ahead of that deadline, Colorado saw an increase in the number of companies with five or more employees offering a 401(k) plan, from 25.3% to 38%.
In comparison, states without an auto-IRA requirement, including Arizona, Utah, Nevada, Kansas, and Nebraska, saw limited growth, moving from 20.4% to just 21.2%.
Currently, Delaware law requires employers with five or more workers to provide a private retirement plan or sign up for their state program by December 31.
SEE ALSO:
- Washington Joins States Enacting Auto-IRAs
- State Auto-IRAs Driving Small Employer 401(k) Adoption
- New Jersey Selects Vestwell to Administer Latest State Auto-IRA
- 3 More States Advance Auto-IRA Programs
Amanda Umpierrez is the Managing Editor of 401(k) Specialist magazine. She is a financial services reporter with over six years of experience and a passion for telling stories and reporting news. Amanda received her degree in journalism and government and politics at St. John’s University. She is originally from Queens, New York, but now resides in Denver, Colorado with her partner. In her free time, Amanda enjoys running, cooking, and watching the latest drama show.
