Mandatory IRA Bill Headed to Connecticut Governor

By Martha W. Kessler

May 17 — Legislation that would require most private-sector employers in Connecticut to participate in a state-run individual retirement account program into which they would automatically enroll their employees is headed to the governor's desk after amendments to the program were adopted during a special session of the legislature.

Opponents of the measure say it will impose a significant burden on employers while backers of the plan say it will encourage residents who lack access to an employer-sponsored plan to save for retirement.

States seeking to require employers to establish such “automatic IRAs” received a green light from the Obama administration late last year with the release of rules designed to relieve concerns that state-directed retirement programs would be preempted by federal law (221 PBD, 11/17/15).

The original version of the bill (P.A. 16-29) was passed by the Connecticut House on April 26 by a vote of 76-63 ( (81 PBD, 4/27/16)). Consideration of the measure by the Senate was delayed after Gov. Dannel P. Malloy (D) expressed concern over language in the bill that would require the state to offer a single savings plan.

However, after legislative leaders agreed to adopt modifying language that will provide multiple private-sector plan options as part of a budget implementation bill that was to be taken up during a special session, the measure was passed by the Senate on April 30 after Lt. Gov. Nancy Wyman (D) cast a tie-breaking vote. The IRA bill was transmitted to the governor May 13.

The legislature returned during a special budget session May 12 and 13 to adopt a fiscal package for 2017 that includes a budget implementation bill (S.B. 502) containing language that amended the original IRA bill.

The original legislation passed in April would create the quasi-public Connecticut Retirement Security Authority to establish a program for IRAs for eligible private-sector employees, who would be automatically enrolled in the plan unless they opted out.

The bill's requirements would apply to all private-sector employers with at least five workers who each made at least $5,000 in the preceding calendar year. Covered employees are those who have worked for a qualified employer for at least 120 days and are at least 19 years old.

Qualified employers would have to automatically enroll each covered employee in the program no later than 60 days after the employer provided the employee with informational material on the program. If an employee didn't affirmatively opt in, the employer would have to enroll the worker with a contribution of 3 percent of the employee's taxable wages. A covered employee would be able to opt out of the program by electing a contribution level of zero.

The amending language contained in the budget implementation bill adopted in May requires the authority to offer retirement choices provided by multiple vendors and places a cap on annual fees, among other things.

The budget implementation bill was passed by the Senate May 12 and the House May 13 and will be transmitted to the governor.

A spokesman for Malloy told Bloomberg BNA May 16 that the bills are under review and declined to specify when the legislation might be signed.

To contact the reporter on this story: Martha Kessler in Boston at

To contact the editor responsible for this story: Jo-el J. Meyer at

For More Information

The IRA legislation is at

The budget implementation bill containing the IRA revisions (Sec. 96-103) is at