Draft Rule for Maine Retirement Savings Program Issued

The Maine Retirement Savings Program is getting closer to implementation. The Maine Retirement Savings Board has proposed a rule that would set the nuts and bolts of program operation. 

Gov. Janet Mills (D) signed the Act To Promote Individual Retirement Savings through a Public-Private Partnership (LD 1622) into law June 24, 2022. That law requires the Maine Retirement Savings Board to adopt rules for program operation. 

This rule addresses (1) the procedures and requirements for covered employers to register with the program, (2) the establishment of and investment in such accounts for covered employees and individual program participants, (3) the procedures covered employers must follow to comply with the underlying legislation, and (4) the information required for program account holders. 

Among the specific requirements the rule sets are the following. 

Registration 

By or before its registration date, an employer shall either join the Maine Retirement Savings Program or adopt a specified tax-favored retirement plan. 

Dates. The rule states that the dates by which employers are to register are as follows:

• for all covered employers with 15 or more covered employees, April 30, 2024. 
• for all covered employers with 5 to 15 covered employees, June 30, 2024.

Fines. The fines for each year of failing to meet registration requirements are: 

• From July 1, 2025, to June 30, 2026, $20 per covered employee; 
• From July 1, 2026, to June 30, 2027, $50 per covered employee; and
• From July 1, 2027, and after, $100 per covered employee.

Onboarding

Rules for onboarding are as follows. 

Onboarding Employers. Covered employers shall submit the following onboarding information to the program administrator via the program website or an acceptable submission method: 

• covered employer name and assumed business name, if any; 
• federal employer identification number; 
• covered employer mailing address; 
• name, telephone number and email address of an individual designated by the employer to serve as the point of contact; and 
• any additional information identified by the program as necessary to complete onboarding.

Onboarding Employees. Remitting employers are to do the following regarding adding employees to the program: 

• On initial registration, all covered employees employed for at least 120 days must be registered with the program. 
• After initial registration, new covered employees must be registered as soon as practicable, but no later than an individual’s 120th day of employment at a participating employer.
• Self-employed individuals and voluntary participants may onboard with the program if they meet the qualifications to open an IRA and provide the required information via the secure portal the board provides.

Restrictions 

The following restrictions apply: 

• Business entities that offer a specified tax-favored retirement plan may not register with the program nor onboard employees into it. 
• Business entities without a specified tax-favored retirement plan, that have been in business for fewer than two years and have five or more employees, are not required to onboard with the program until the employer is in business for two consecutive years. 

Participating employers shall not: 

• Prohibit, restrict, or discourage an employee from participating. 
• Provide account holders with advice or direction regarding investment choices, contribution rates, automatic escalation, or any other decision about the program. 
• Remit any payroll deduction contributions for any onboarded employee who opted out of the program. 
• Exercise any authority, control, or responsibility regarding the program other than those specifically described in the rule. 
• Contribute to an account holder’s account.

Opting Out 

Covered employees have the right to opt out of participating in the Maine Retirement Savings Program. The draft rule provides that:

• A covered employee onboarded into the program by a remitting employer may opt out at any time. 
• No account will be established if a covered employee opts out. 
• Covered employees onboarded by remitting employers are deemed to have read and understood the program information content, which includes instructions about how to opt out. 
• Those who opt out may re-elect to participate at any time by requesting that the remitting employer provide the required onboarding information.

Public Comments and Public Hearing

The Maine Retirement Savings Board will accept public comments on the proposed rule through Oct. 2, 2023. Written comments may be submitted at Mainesaves.org, by email sent to i[email protected], or by mail or hand delivery to MERIT, c/o Office of State Treasurer, 39 State House Station, Augusta, ME 04333. Written comments must be received by Oct. 2, 2023, at 5:00 PM. 

The Maine Retirement Savings Board will hold a public hearing about the proposed rule at 1:15 PM on Sept. 20, 2023.