Minnesota Passes State-run IRA Program for Small Businesses

Blake Faust

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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About The Author

Blake Faust

Blake Faust has nearly a decade of retirement plan industry experience and holds the Certified Financial Planner™, Accredited Investment Fiduciary®, Chartered Retirement Plan Specialist®, and Certified Plan Fiduciary Advisor™ designations.

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