Last Updated: November 14, 2024

In Minnesota, nearly 1 out of every 5 people is age 65 or older, and almost a third of those people live on an annual income of $35,000 or less. This makes retirement planning and financial security for seniors an increasingly important topic in the state.

To address the need for a reliable savings option, the state of Minnesota has passed legislation to establish a state-facilitated retirement savings program for private-sector employees. The Minnesota Secure Choice Retirement Program will provide workers across the state with the means to save for retirement.

In this article, we’ll answer some questions you may have about the Minnesota Secure Choice Retirement Program and explain how it affects Minnesota businesses.

How Does the Minnesota Secure Choice Retirement Program Work?

The Minnesota Secure Choice Retirement Program is a state-funded effort to provide an accessible retirement savings system for employees in the state. Set to launch in 2026, the program will promote financial stability and inclusivity, helping individuals secure their long-term finances as they transition into retirement.

Minnesota business owners who meet certain criteria will be required by law to offer a qualified, employer-sponsored retirement plan or enroll their employees in the program. A Roth IRA will be the default account, but employees may elect to make contributions on a pre-tax basis for deposit in a traditional IRA account.

The program is overseen by a board of directors comprised of representatives from different industries who are well-versed in retirement planning.

Which Businesses Are Affected?

Employers who meet the following criteria are required to register for the program or certify an exemption:

• Employs five or more workers
• Have been in business for a minimum of one year
• Does not currently offer a qualified, employer-sponsored retirement plan to their employees

Registration Deadline

The Minnesota Secure Choice Retirement Program is expected to launch in 2025.

Penalties

Once the program launches, non-compliance may result in penalties.

Who is Eligible to Save With the Minnesota Secure Choice Retirement Program?

Most individuals who are 18 years or older and satisfy any other criteria established by the program’s board of directors are eligible to participate in the Minnesota Secure Choice Retirement Program.

The program is voluntary for employees, and they can change their contribution amount or opt out at any time.

Conclusion

The Minnesota Secure Choice Retirement Program represents a notable development in retirement planning for Minnesota workers. Automatic enrollment and contributions made directly through payroll deductions simplify the process of setting aside funds for retirement.

Once it launches, the program will require businesses with five or more employees that have been operating for at least one year to either participate in the Minnesota Secure Choice Retirement Program or certify an exemption, so it’s important for Minnesota employers to familiarize themselves with the program details and requirements.