New Jersey Secure Choice

Saving for retirement is not always easy for workers in New Jersey, this is because up to
47% of them do not currently have access to an employer-sponsored retirement plan
(according to Pew Charitable Trusts 2016 Research). To help more employees get on
track for retirement savings, New Jersey has implemented a new law mandating
employers to provide a retirement plan for their employees. The New Jersey Secure
Choice program is a state-sponsored retirement savings plan for businesses to offer
employees in place of a 401(k) (or another qualified plan). While the program is meant
to be helpful, business owners need to understand the details of the program to
determine if it’s the right plan for their business. See below for a list of Frequently
Asked Questions about New Jersey Secure Choice.

What is New Jersey Secure Choice?

New Jersey Secure Choice is a mandate requiring all New Jersey employers who have
been in business for 2+ years and who have 25+ employees to provide a retirement
plan to their employees. The mandate will be effective starting March 2021 and
requires business owners to either sponsor a 401(k) plan (or other qualified
retirement plans) or adopt the state-run New Jersey Secure Choice retirement plan
by the end of 2021.

How does the New Jersey Secure Choice plan work?

The New Jersey Secure Choice plan is a payroll-deducted IRA that is run by the state of
New Jersey. If an employer adopts the New Jersey Secure Choice plan, all their W-2
employees are eligible to participate (including part-time workers). The program is
auto-enrolled at 3%, which means that unless employees proactively opt-out, they will
be automatically enrolled to contribute 3% of pre-tax income into the plan.

What features are included in the New Jersey Secure Choice

Plan?
• The New Jersey Secure Choice plan includes the following features:
• Auto-enrollment at 3% (i.e. employees will be automatically enrolled to
contribute 3% in the plan unless they proactively opt-out annually)
• Annual contribution maximum of $6,000 ($7,000 for those 50 or older)
• Pre-tax contributions (no Roth option)
• Does not allow loans.
• Does not allow employer contributions.
Do employers have to offer the New Jersey Secure Choice
Plan?
New Jersey business owners do have to offer a retirement plan (if they’ve been in
business for 2 or more years and have 25 or more employees), but it doesn’t have to be
the New Jersey Secure Choice Plan. Business owners who offer a 401(k) (or other
qualified retirement plans) are exempt from the mandate. Other qualified retirement
plans could include 403(b), SEP IRA, and SIMPLE IRA.

How does New Jersey Secure Choice compare to other plan

options?
See how New Jersey Secure Choice compares to other retirement plan options:

401(k) Plan SIMPLE IRA SEP IRA

Does New Jersey Secure Choice Apply to All Businesses?

New Jersey Secure Choice applies to any New Jersey employer who has 25 or more W-
2 employees and has been in business for 2 years or more. This applies to for-profit and
non-profit businesses.
When is the deadline to implement a retirement plan in New
Jersey?
The deadline to implement a retirement plan in New Jersey depends on how many W-2
employees your business has:

What are the penalties for non-compliance with New

Jersey Secure Choice?
Companies that fail to comply with the New Jersey Secure Choice mandate could
be subject to a fee of up to $500 per eligible employee.

The good news, it is easy to comply by setting up a 401(k) plan (or another qualified
plan).

How much does New Jersey Secure Choice cost?

The New Jersey Secure Choice plan cost is up to 0.75% of assets; this fee is deducted
from each employee account balance. For example, if an employee has $100K in the
retirement plan, up to $750 a year will automatically be deducted out of their balance.
There is no direct cost to the employer, but there are some administrative tasks that
need to be carried out by the sponsor on an annual basis.

What do employers have to do to administer the New Jersey

Secure Choice plan?
• New Jersey Secure Choice creates some administrative burden for the employer.
Employers must:
• Submit an employee census to New Jersey Secure Choice annually
 • Track eligibility status for all employees
• Provide enrollment packets to all employees 30 days after the date of hire.
• Track whether each employee has opted in or out.
• If an employee doesn’t opt-out within 30 days of notification, set up a 3% payroll
deduction.
• Answer questions from auto-enrolled employees.
• Repeat auto-enroll process annually for all employees who have opted out.
• Hold open enrollment every 2 years.
• Auto-enroll anybody who has not been participating for at least 1 year (these
have to be tracked)

CFS provides affordable, hassle-free solutions that reduce the administrative burden on
employers.