Secure Choice program not scheduled to start until 2026
Minnesota small business owners may remember that in 2023, the state Legislature passed a new mandate called the Secure Choice Retirement Program (SCRP).
The program requires all employers with five or more employees to either i) offer their employees their own employer-sponsored retirement plan or ii) a state-run retirement plan known as SCRP. requires automatic enrollment of employees.
We are aware of the active efforts of large payroll management companies to encourage small business owners to participate in retirement plans. These marketing pitches falsely suggest that SCRP obligations begin on January 1, 2025.
NFIB MN recently met with the SCRP Chairman and staff and explained that SCRP obligations will not come into effect for employers of any size from January 1, 2025.
At this time, SCRP will not begin until January 1, 2026 at the earliest.
Source: Minnesota Secure Choice Retirement Program Board of Directors, October 4, 2024
The SCRP Act requires that the program be launched in at least two phases, with the final phase commencing within two years of the first phase.
NFIB MN continues to oppose the SCRP law and advocate delaying implementation of its obligations for as long as possible. Although we have won an exemption for the smallest employers (1-4 employees), we continue to push for the mandatory participation threshold to be increased and more small businesses to be exempted.
We will update members on the implementation timeline as more information becomes available.
Learn more about SCRP here: Secure Choice Retirement Plan – LCPR
Background on the Secure Choice Retirement Program:
Once fully implemented, the SCRP will encourage employers with five or more employees who do not sponsor an employee retirement savings plan to enroll their employees in state-facilitated individual retirement account programs. obligatory to do so.
Employees may opt out of participation by notifying their employer. Employers that continue or begin sponsoring their own plans are exempt.
The SCRP is governed by a seven-member board of directors comprised of state employees, governor appointees, and members appointed by the Minnesota Pension and Retirement Legislative Commission.
The program will be launched in at least two stages. The board is responsible for developing investment options, establishing default investment options, setting minimum contribution rates and automatic escalation schedules, and establishing systems to facilitate payroll deductions.
Employer obligations under this program include:
Provide information to employees about the program prepared by the board at least 30 days before the first paycheck for which deductions can be withheld. Automatically enroll employees in the program unless they choose not to participate. Facilitate the transfer of participating employees’ contributions through payroll deductions or mechanisms established by the Board of Directors.
Several other states have enacted or have already implemented legislation establishing similar state-facilitated retirement programs. To see what Minnesota’s version looks like, you can view the Illinois Secure Savings program, which began operating in 2018, here: Illinois Secure Choice (ilsecurechoice.com).
Read the full text of the Secure Choice Retirement Plan Act here: Ch. 187 MN Act
