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Everything You Need to Know About The Maine Retirement Investment Trust (MERIT) Auto-IRA Savings Program

Sixteen US states have established or enacted legislation to establish auto-IRA savings programs.

Maine was one of the most recent to enact a solution, the Maine Retirement Investment Trust “MERIT” Auto-IRA program, designed to provide a retirement savings option for employees who may not have access to employer-sponsored retirement plans. This initiative aims to help workers save for their future while offering a solution for employers. Maine partnered with the already existing Colorado SecureSavings program to bring the initiative to Maine. The implementation of these auto-IRA savings programs are in an effort to bridge the “coverage gap” or lack of access to a workplace savings program.

We believe that it is important to understand the MERIT Auto-IRA program, some of the specific requirements for employers, the key deadlines for compliance, and some possible alternatives to the MERIT solution.

What is the MERIT Auto-IRA Program?

The MERIT (Maine Employee Retirement Investment Trust) Auto-IRA program is a state-sponsored retirement savings plan designed to make it easier for employees to save for retirement. This program allows eligible employees to contribute a portion of their paycheck into individual retirement accounts (IRAs) automatically, without requiring a traditional employer-sponsored retirement plan.

Employer Requirements:

If you are an employer operating in Maine, it's of the utmost importance to understand your responsibilities under the MERIT Auto-IRA program:

  • Employers with five or more employees who do not offer an employer-sponsored retirement plan are generally required to participate in the MERIT Auto-IRA program
  • Employers must facilitate the automatic enrollment of eligible employees in the program.
  • Employees will have the option to opt-out if they do not wish to participate.
  • Employers are responsible for setting up payroll deductions to transfer employee contributions to the MERIT Auto-IRA accounts.
  • Employers must stay up-to-date with program requirements and deadlines to ensure compliance.

Key Deadlines for Compliance:

Originally signed into law in 2021, the program took effect in October under a pilot. Employers will be able to start offering the program broadly in the second quarter of 2024. To ensure a smooth transition and compliance with the MERIT Auto-IRA program, employers should be aware of the following key deadlines:

  • April 30, 2024
    • Deadline for employers with >15 employees without a workplace retirement savings plan to register.
  • June 30, 2024
    • Deadline for employers with 5-15 employees.

How the program works:

  • Once enrolled, 5% of your employee’s after-tax paycheck will be deducted and deposited in a Roth IRA, which can then follow them from job to job.
  • Employers are not required to match employee contributions.
  • Registration is via an online portal.
  • Employees can change contribution rates or even opt-out.

Is Maine’s MERIT auto-IRA program right for your business?

While bridging the retirement savings coverage gap is important for the retirement security of Maine’s workforce, MERIT is generally less flexible and customizable to fit your employees' needs, unlike other employer-sponsored retirement plans like 401k, 403b, pension, etc.

Now may be the time for employers to consider setting up a retirement plan solution with the assistance of a retirement plan adviser like OneDigital. Knowing your employees and their needs is essential to success. Taking control of your plan solution allows you to connect with your employees more directly, give them the necessary resources, and help with recruiting and retention efforts.

If you are interested in learning more about what your options are to set up your own company’s retirement plan that would allow you to forgo the Maine MERIT auto-IRA, as well as learn about the benefits of working with a retirement plan advisor, please reach out to us today!

Investment advice offered through OneDigital Investment Advisors LLC, an SEC-registered investment adviser and wholly owned subsidiary of OneDigital.