Back in 2016, Connecticut enacted legislation that established the Connecticut Retirement Security Program, a state-run Individual Retirement Arrangement (IRA) program administered by the Office of the State Comptroller. After a slow start, this mandatory program officially launched in March 2022. The program requires that private-sector employers with five or more employees in Connecticut — at least five of whom have been paid more than $5,000 in the previous calendar year — join MyCTSavings if they do not already offer a qualified, employer-sponsored retirement plan for their employees.

While employer registration opened April 1, 2022, compliance with the program was phased in based on the size of the business, starting with employers having more than 100 employees. The deadline for the last phase — small businesses with between 5 and 25 employees — passed on March 30, 2023. However, in an April 5 press release, the State Controller’s office announced that although more than 3,400 businesses have already registered for the program, the extension would allow the state to “continue to build on this momentum.”

Employers that offer a qualified, employer-sponsored retirement plan for their employees are exempt from compliance with the program but must certify their exemption on the MyCTSavings portal.

Refresher on Current MyCTSavings Requirements for Covered Employers

While the final registration deadline has been extended, Connecticut employers, especially small businesses, may want a refresher on some of their key obligations under this program:

• Covered employers may register for the program directly on MyCTSavings.com. There are no employer fees to participate in the program. After registering, the employer will receive information and instructions regarding the program to be disseminated to employees.
• Once an employer has registered, it must enroll its employees so they can review their plan options. New employees can enroll after 120 days. Employees are automatically enrolled unless they choose to opt out within 30 days of enrollment.
• Employers must remit payroll contributions for enrolled employees. Employers are not required or permitted to make employer-sponsored contributions to the program.
• Employers are required to facilitate the program only. The Office of the State Comptroller is responsible for making decisions about the investment options available to participants of the program.

What are the penalties for non-compliance?

The Office of the Comptroller will monitor businesses for compliance with the program and, if a business falls out of compliance or fails to register, the Office could investigate and impose financial penalties. Further, an employer that fails to timely remit payroll contributions may incur penalties, including assessments for wage and hour violations.

What’s next?

On January 26, 2023, Connecticut legislators proposed H.B. 6552, which would make various changes to the Connecticut Retirement Security Program. If enacted, H.B. 6552 would reduce the length of time an employee must work for their employer to be considered a “covered employee,” from 120 days to 60 days. H.B. 6552 would also shield employers from liability under the program by specifying that employers: (1) are not a fiduciary of the program; (2) do not bear responsibility for the administration, investment or investment performance of the program, and (3) are not liable for investment returns, program design, or benefits paid to program participants. The bill would also protect an employer from liability for an employee's decision to participate in the program or for any relevant investment decisions related to an employee’s participation in the program.

Lastly, H.B. 6552 would explicitly allow the Office of the Comptroller to adopt regulations about program enforcement, including regulations authorizing financial penalties and civil actions. In addition to the proposed legislation, the Comptroller’s Office recently proposed regulations that, if adopted, would expressly authorize employees, the Labor Commissioner, or the Office of the Comptroller to bring a civil action against employers that fail to comply with the program requirements, and would authorize courts to award costs and reasonable attorneys’ fees for such violations.

Employer Takeaways

If they haven’t done so already, Connecticut employers with more than five employees should:

• register their business with MyCTSavings or claim an exemption by August 31;
• provide required program information to employees;
• begin deducting employee contributions and remitting them to the state in a timely manner; and
• direct employees seeking advice about the program or investment options to visit MyCTSavings.com or call 833.811.7436.