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Maryland $aves Workplace Retirement Program Implements Pilot in 2022

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  • Last Updated: 03/24/2022
Los habitantes de Maryland obtendrán el beneficio de un plan de jubilación patrocinado por el estado después de que este encomendara a los empleadores a proporcionarles una opción.
Maryland is moving forward with a state-sponsored retirement program - Maryland $aves - to address the growing retirement crisis in the United States. A pilot program was implemented in 2022 with a launch later that same year.

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The Maryland Small Business Retirement Savings Program (Maryland $aves) will create benefits for employers and employees. Originally set to start in mid-2020, the program was delayed by the COVID-19 pandemic. A pilot has been implemented with a program launch of September 2022.

Similar to nearly a dozen other states that enacted state-sponsored programs, the Maryland legislature adopted the Maryland $aves program – signed into law by the governor in 2016 – to address the growing retirement crisis in the United States.

Why does Maryland need a state-sponsored retirement program?

Nationally, near-retirement households have a median retirement account balance of $14,500, while 62 percent of households with working individuals between the ages of 55-64 have less than one times their annual income saved for retirement1. Also, less than 25 percent of those working for a company that employs less than 10 people have access to a payroll-based retirement plan, whether that is due to limited resources or lack of time to administer by the employer. These statistics, from a National Institute of Retirement Savings report, are particularly relevant to Maryland, where small businesses make up nearly 70% of employers and employ 17 percent of the state’s non-governmental workers2.

The Maryland $aves program can help start to reverse the trend for employees, while offering employers a recruiting and retention tool.

What employers should know about the Maryland $aves program

Maryland requires all employers with automatic payroll processing to participate in the Maryland $aves plan that enables employees to contribute through payroll deferral. There are exemptions for several businesses:

  • Startups that have operated for fewer than two years
  • Businesses that offer or have offered within the past two years a voluntary payroll-based retirement savings plan such as a 401(k)
  • All government entities (federal, state, and local)

Employers who offer the IRA-based retirement savings plan or another qualified plan will have the $300 annual report filing fee waived. Employers can opt out of offering Maryland $aves if they offer their own employer-sponsored retirement plan.

Employers are not required to make contributions toward the plan – for matching or administration. Maryland $aves is intended to be self-financing from fees collected on funds invested in the IRAs.

What employees should know about the Maryland $aves program

The Maryland $aves program does stipulate requirements for employees, as well, including:

  • Participants must be 18 years old
  • Employees don’t have access to an employer-sponsored retirement savings plan

Employees will be enrolled automatically but can opt out of participating in the program at any time. The board has proposed an initial default contribution amount of 5% of employee compensation per paycheck. There is also an annual auto-escalation of 1%, up to a max of 10%. Employees will have the ability at any time to change the amount they want to defer through payroll.

The initial $1,000 contributed will go into an Emergency Savings Account for the employee. 

Looking forward

The board in charge of launching Maryland $aves currently is working toward finalizing policies and regulations for how the program will run. Paychex will continue to monitor the legislation and provide updates when information is available.

Maryland businesses do not have to wait for the program to launch and can open a retirement plan such as a 401(k) through a provider such as Paychex to satisfy the mandate.

1National Institute of Retirement Savings, “The Continuing Retirement Savings Crisis”

2U.S. Census Bureau, “Data by Enterprise Employment Size: U.S. & States.”


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* Este contenido es solo para fines educativos, no tiene por objeto proporcionar asesoría jurídica específica y no debe utilizarse en sustitución de la asesoría jurídica de un abogado u otro profesional calificado. Es posible que la información no refleje los cambios más recientes en la legislación, la cual podrá modificarse sin previo aviso y no se garantiza que esté completa, correcta o actualizada.