According to the New Mexico State Treasurer’s Office, 67% of private-sector workers have no retirement savings, about twice as high as the national average. For employees in the state, expanding access to workplace retirement savings could make a huge impact on financial security.

The state of New Mexico has passed legislation to establish a state-facilitated retirement savings plan for employees. The New Mexico Work and Save Program will help to address the more than 62% of private-sector workers in the state, ages 18 to 64, who don’t have access to employer-sponsored retirement plans.

In this article, we’ll answer some questions you may have about the New Mexico Work and Save Program and explain how it will affect New Mexico businesses.

How Does the New Mexico Work and Save Program Work?

The New Mexico Work and Save Program is a state-facilitated retirement savings initiative. The program will operate as a voluntary savings program and marketplace, meaning that participation is voluntary for both employers and employees. If an employer chooses to participate in the state-run auto-IRA program, employees are then automatically enrolled in the plan unless they opt out. Automatic deductions from their paychecks into a Roth individual savings account (Roth IRA) encourage saving for retirement by making it as effortless as possible.

With the New Mexico Work and Save Program marketplace, employers will also access other retirement savings options, such as a 401(k), 403(b), and MEP. A financial literacy module will be offered to explain the options available for businesses in the state.

The program is overseen by the New Mexico Work and Save Board.

Which Businesses are Affected?

All New Mexico Businesses, regardless of size, may elect to facilitate the New Mexico Work and Save Program.

Registration Deadline

The New Mexico Work and Save Program has not yet launched, so a registration deadline has yet to be determined.

Penalties

Since participation in the program is voluntary for both employers and employees, there are no associated penalties.

Who is Eligible to Save With the New Mexico Work and Save Program?

All full-time and part-time employees, including self-employed individuals, who are 18 years or older and employed by an eligible employer can save with the New Mexico Work and Save Program.

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

Conclusion

The New Mexico Work and Save Program represents a notable development in retirement planning for New Mexico workers. With automatic enrollment and contributions made directly through payroll deductions, it simplifies the process of setting aside funds for retirement.

The program enables businesses of any size to participate in the New Mexico Work and Save Program, so it’s important for New Mexico employers to familiarize themselves with the program details and requirements.