Maryland Assembly Contemplates Retirement Plan Mandate
Legislation that would require Maryland employers to adopt payroll deduction savings plans for their employees got a full bicameral at a Feb. 25 hearing in the Maryland General Assembly.
Both the Maryland House Economic Matters Committee and the Maryland Senate Budget and Taxation Committee considered legislation
that would require private employers with more than five employees to offer a payroll deposit retirement savings arrangement for their employees or be subject to a $250 fine for each employee who is eligible to participate in a plan.
Like the recently enacted legislation in Illinois, the Maryland bill would create a state-based payroll deduction IRA program, called the Maryland Secure Choice Retirement Savings Program, that private employers could use to satisfy the requirement.
The Maryland legislation differs from the Illinois law in two key ways, however:
- It allows for the board created under the program to establish a state-based 401(a) profit-sharing plan designed to accept employer contributions into accounts that would be administered separately from the state-based IRA program.
- It does not include language that would create an online clearinghouse employers could use to identify private sector providers offering plan products that fulfill the requirement in the legislation.
Brian Graff and Judy Miller, the American Retirement Association’s Executive Director and Retirement Policy Director, respectively, participated in the legislative hearings to provide perspective on how private retirement providers that serve the small business retirement plan market view the legislation.
Graff and Miller emphasized that creating a state-based 401(a) profit sharing plan would subject the Maryland program to the extensive reporting, disclosure, fiduciary duty or other requirements of ERISA that could make compliance with the legislation onerous to both the state and private businesses in Maryland. They also emphasized that the lack of an online clearinghouse in the legislation is a missed opportunity to provide Maryland employers with an easy way to access the high-quality retirement plan products offered by financial service companies based in Maryland.
The hearings also included testimony from former Lt. Governor Kathleen Kennedy Townsend, who chaired the state’s Task Force to Ensure Retirement Security for All Marylanders, and Josh Gotbaum, the former Director of the Pension Benefit Guaranty Corporation.Andrew Remo is ASPPA’s Congressional Affairs Manager.