Preparing for Potential Updates to RetireReady NJ
New Jersey’s state-sponsored retirement program, RetireReady NJ, is on the verge of expanding. Originally required for businesses with 25 or more employees, new legislation moving through the state government would lower that threshold to just one. If enacted, nearly every private-sector employer in New Jersey without a retirement plan would be responsible for registering with the state or certifying an exemption. For business owners, especially those managing small teams, it’s important to understand how the program works and how the proposed changes may affect operations. To help clients, prospects, and others, Klatzkin has summarized the key details below.
What Is RetireReady NJ?
RetireReady NJ, also known as the New Jersey Secure Choice Savings Program, was created to provide workers with access to a retirement savings account when their employer does not offer a plan. The program launched in mid-2024 and requires certain employees to automatically enroll eligible employees in a state-facilitated Roth IRA.
In its current setup, businesses facilitate payroll deductions and the state manages account administration. Accounts are individually owned; they are also portable, which allows employees to keep retirement savings even with job changes.
Current Program Requirements
Currently, the mandate applies to New Jersey businesses with 25 or more employees that have been in operation for at least two years and lack a qualified retirement plan in place. Employers that meet these criteria must either register for RetireReady NJ or file an exemption.
Employees are eligible if they are at least 18 years old and have worked for the employer for 90 days or more. Enrollment is automatic unless the employee opts out. By default, 3% of wages are contributed to a Roth IRA, but employees can adjust their contribution amount or choose a traditional IRA instead.
Employers are not permitted to contribute to the account. Contributions are funded entirely by the employee and are subject to federal IRA limits. For 2025, the limit is $7,000 for workers under 50 and $8,000 for those 50 or older.
Businesses with 40 or more employees were required to register by September 15, 2024. Those with 25 to 39 employees had a deadline of November 15, 2024. Penalties apply to those who fail to comply. In the first year, businesses receive a written warning. In the second year, the penalty is $100 per employee. In years three and four, the fine increases to $250 per employee. From year five onward, the penalty reaches $500 per employee.
Proposed Changes Under A5358
Assembly Bill A5358, introduced in early 2025, would expand the program. The bill proposes reducing the minimum employer threshold from 25 employees to just one. If passed, all private-sector employers without a qualified retirement plan would be expected to participate or certify an exemption. The legislation would take effect approximately three months after the enactment.
The bill introduces administrative changes. These include revising how administrative fees are structured and clarifying that public board members may remain in the role until a successor is appointed. It also includes establishing procedures for distributing funds to designated beneficiaries.
The bill also moves responsibility for providing informational materials from employers to the state program, and it gives employees more flexibility to enroll or update their contribution levels. Language related to enforcement has been updated for clarity, and technical corrections are included to improve consistency with other state laws.
Next Steps
Businesses that already offer a qualified retirement plan are not required to participate but must formally certify an exemption. Those without a plan should prepare to register and integrate the necessary changes into the payroll process. With the proposed expansion, even businesses with just one employee would need to take an action.
Staying current with legislation and program updates will help businesses avoid penalties and maintain compliance. For many, RetireReady NJ offers a path to retirement savings without the costs of setting up a full 401(k) plan. However, some businesses may decide that a private plan is the best option.
Frequently Asked Questions
Can employers contribute on behalf of employees?
No. RetireReady NJ is structured as an individual IRA program. Only employees can contribute. Employers facilitate payroll deductions but are not permitted to fund employee accounts.
What if the number of employees changes seasonally or drops below the threshold?
Under current law, the threshold is 25 employees. If a business consistently falls below that number and no longer meets eligibility, it is not required to participate. However, if the proposed legislation passes, all businesses with at least one employee will be covered, regardless of seasonal fluctuation.
Can employees opt for a traditional IRA instead of a Roth?
Yes. While employees are automatically enrolled into a Roth IRA, they can request to switch to a traditional IRA through the program administrator.
Do businesses need to update payroll processes to comply?
Most employers will need to coordinate with their payroll provider to ensure contributions are properly withheld. Many payroll providers already support integrations for state auto-IRA programs like RetireReady NJ.
Contact Us
Business owners are encouraged to consult with an advisor to assess their options and determine the best approach for meeting employee needs and complying with state requirements. If you have questions about the information outlined above or need assistance with another tax or accounting issue, Klatzkin can help. For additional information call 609-890-9189 or click here to contact us. We look forward to speaking with you soon.