Minnesota Passes State-run IRA Program for Small Businesses

Recently passed legislation will require MN businesses with five (5) or more employees to use a State-run IRA program if they do not currently offer retirement benefits.

Background & Requirements

On Friday, May 19th, Minnesota Governor Tim Walz signed into law a state-sponsored retirement plan for private sector employees lacking an employer-sponsored option.

The legislation, “Minnesota Secure Choice Retirement,” mandates that any employer with five (5) or more employees be required to participate in a state-run IRA program if they currently do not offer a retirement benefit (e.g., 401(k), 403(b), SIMPLE or SEP IRA, etc.) to their employees.

Minnesota is the 12th state to launch an auto-IRA program and follows the lead of states like California, Illinois, and Oregon.

What’s Changing?

While details are still emerging, key provisions of the bill include:

Automatic enrollment and auto-escalation of deferrals
The ability for participants to opt-out
The ability for participants to change deferral rates
Roth (default) or Pre-tax contributions
Multiple investment options are offered through the State Board of Investment
Distribution options at the time of retirement or termination of employment

Contribution limits would follow annual IRS limits for IRAs – $6,500 ($7,500 for savers over 50) for 2023.

Which Option is Best for Your Business?

If you’re a small business owner with five or more employees not currently offering a retirement benefit, now is a good time to review your options and find a benefit that best fits your business. Contact Abbey Street today to schedule a consultation.

Sources and References

Legislative Commission on Pensions and Retirement: https://www.lcpr.mn.gov/

“Minnesota Secure Choice Retirement Program”: Staff Bill Summary

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Minnesota Passes State-run IRA Program for Small Businesses

Background & Requirements

What’s Changing?

Which Option is Best for Your Business?

Sources and References

About The Author

Blake Faust

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