New Jersey Business Owners May Face Penalties for Non-Compliance

Many workers in New Jersey don’t have retirement savings. To address this matter, the state of NJ passed legislation that requires employers with 25 or more employees to provide their workers with the option of having a retirement account. Soon, your New Jersey clients will need to adopt the state-run IRA program, RetireReady NJ, or an alternative that could potentially provide greater advantages: such as an ePlan Services 401(k).

If your clients fail to comply with this new legislation, they may face penalties. It’s up to you to guide them in the right direction. But don’t worry, we’ll provide you with the necessary information to give your clients the guidance they need.

Key Takeaways:

• The New Jersey government created the state-run IRA, RetireReady NJ, to give New Jersey workers access to retirement savings.
• Employers with 25 or more employees, in business for more than two years, and do not currently offer a retirement plan, must comply with this new legislation or face penalties.
• ePlan Services can provide your clients with a plan that provides flexibility and potential tax savings.

What is the New Jersey mandate?

New Jersey created RetireReady NJ as a solution to the retirement savings issue within the state. Currently, 1.7 million New Jersey workers are without a retirement savings account. The state-administered program is an IRA designed to automatically enroll eligible employees and give them a chance to save for the future.

Many companies may think their only option is to choose the state’s IRA—but that’s not the case. Other, powerful retirement savings options—like an ePlan Services 401(k)—meet the mandate’s requirements. If your New Jersey business-owner clients choose not to comply, they could face stiff penalties.

What are the penalties for non-compliance?

Your clients who choose not to comply will initially receive a warning letter from the state government. But these warnings won’t last long. If your clients still do not comply, these are the penalties they could potentially face:

• The second year of non-compliance can result in a fine of $100 per employee.
• The third and fourth years can result in a fine of $250 per employee.
• Lastly, the fifth year or more can result in $500 per employee.

For example, a company of one hundred employees could be fined $110,000 over five years for violating the state’s mandate.

What is the ePlan Services difference?

While RetireReady NJ offers business owners a hands-off retirement plan that meets the state’s requirements, ePlan Services allows employers to adopt a 401(k) with higher contribution limits, employer contributions, and may allow them to qualify for tax credits.

How can you help your clients make a smart choice?

You are in a prime position to steer your clients away from their initial objections and in a direction that will bring benefits to their companies and employees. ePlan Services gives your clients an alternative to the limited New Jersey state-administered IRA.

As your clients’ trusted advisor, you can show them all that an ePlan Services 401(k) has to offer including:

• Easy plan setup – everything can be completed online.
• Higher contribution limits – an ePlan Services 401(k) allows for contributions of up to $23,000 compared to an IRA that only allows contributions of up to $7,500.
• Potential tax breaks – employers who adopt a 401(k) can receive tax credits for starting a new plan, implementing auto-enrollment, and adding an employer contribution.

How can you help determine your clients’ potential tax credits? Use the ePlan Services tax credit estimator to show your eligible clients how much they can save in real-time. All you have to do is set up a consultation appointment, ask them a few key questions about their businesses, enter the information, and press calculate. In minutes, your clients’ estimated tax savings will appear right in front of them. They’ll be thrilled, and you’ll position yourself as a hero!

Conclusion:

RetireReady NJ is expected to launch in Summer 2024, meaning now is the time to save your New Jersey clients from making a costly mistake. Don’t miss out on the chance to encourage them to do the beneficial thing for their company by adopting an ePlan Services 401(k) retirement plan.