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The MarylandSavers Retirement Plan

April 03, 2024

# The MarylandSavers Retirement Plan: Navigating Mandatory Requirements and Exploring Alternatives

The state of Maryland has introduced a significant shift in the retirement savings landscape for employers and employees alike. With the MarylandSaves program, a new mandate requires most Maryland employers to offer some form of retirement savings plan. This initiative aims to bridge the retirement savings gap for workers in the state, ensuring that more individuals have access to mechanisms that enable them to save for their golden years. However, while MarylandSaves presents many opportunities, it also raises questions about its limitations and the potential benefits of exploring alternative options.

## Understanding MarylandSaves

MarylandSaves is a state-mandated retirement savings program that targets small businesses and their employees. Under Maryland law, eligible employers who have been in operation for at least two years, have at least one W-2 employee, and utilize an automated payroll system are required to participate in the program. The initiative mandates that these employers either offer their own retirement plan or enroll in the state-provided Roth IRA plan.

Importantly, while participation in MarylandSaves or an alternative plan is mandatory, employers are not obligated to contribute toward the plan. This feature is designed to minimize the financial burden on small businesses, making it easier to comply with the requirements without incurring significant additional costs.

## Shortcomings and Considerations

Despite its noble intentions, MarylandSaves is not without its shortcomings. One potential limitation is the program's reliance on a Roth IRA structure, which may not be the optimal savings vehicle for all employees. For instance, employees who would benefit more from the tax treatment of traditional 401(k) plans might find the Roth IRA less advantageous. Additionally, the program's one-size-fits-all approach may not meet the diverse needs of all businesses and their employees.

Employers may also have concerns about the administrative aspects of enrolling in MarylandSaves, managing contributions, and ensuring compliance with state regulations. While the program aims to be self-financing through fees, the long-term implications of these costs for both employers and employees remain an area of consideration.


## Exploring Alternatives and Leveraging Tax Credits


For employers seeking more flexibility or tailored options beyond what MarylandSaves offers, exploring alternative retirement savings plans is a viable route. Options such as traditional 401(k) plans, SIMPLE IRAs, or SEP IRAs might better suit the needs of certain businesses and their workforce. Each of these alternatives comes with its own set of features, benefits, and regulatory requirements.

Fortunately, the introduction of the Secure Act 2.0 has made it more financially feasible for small businesses to establish new retirement savings plans. The Act provides significant tax credits for small employers who start a retirement plan, covering up to 100% of the costs associated with establishing and administering a plan, including participant education. These tax credits can alleviate much of the financial burden of launching a new retirement plan, making it an attractive option for employers who wish to offer something different from the MarylandSaves Roth IRA.

## Conclusion

While MarylandSaves represents a critical step forward in expanding access to retirement savings for Maryland workers, employers must carefully consider the program's implications for their businesses and employees. Employers can navigate the new mandate effectively by understanding the requirements, acknowledging the program's limitations, and exploring alternative options while leveraging available tax credits. Ultimately, the goal should be to select a retirement savings solution that aligns with the business's and its employees' needs, ensuring a brighter financial future for all involved.

## Ready to Explore Your Retirement Plan Options?

Navigating the complexities of retirement savings plans, understanding the nuances of MarylandSaves, and exploring alternative options can be challenging. But you don't have to do it alone. Whether you're considering compliance with MarylandSaves or looking into setting up a different type of retirement plan that better suits your business and employees, professional guidance can make all the difference.

At George Wealth Management, we specialize in helping businesses like yours find the retirement savings solutions that fit their unique needs. George Vieth and our team of professionals are dedicated to providing personalized advice tailored to your specific circumstances. We can help you understand the benefits and limitations of MarylandSaves, discuss alternative retirement savings plans, and leverage the Secure Act 2.0 tax credits to minimize the cost of starting a new plan.

For a comprehensive review of your personal situation, always consult with a tax or legal advisor.Neither Cetera Advisor Networks LLC nor any of its representatives may give legal or tax advice.