More states require employers to offer retirement savings plans through auto IRA programs

Millions of private-sector workers in the United States still lack access to a workplace retirement savings plan, but that is beginning to change as more states require employers to offer automatic IRA programs.

More than 50 million workers currently do not have access to plans like a 401(k). In response, a growing number of states have adopted so-called “auto IRA” mandates. These programs require many employers who do not offer retirement plans to automatically enroll employees in individual retirement accounts funded through payroll deductions.

Oregon launched the first statewide program in 2017. Today, 15 states have active auto IRA programs, with two more preparing to launch theirs and several others considering similar legislation.

New York is among the newest states to implement a program. Businesses must register depending on their size, with deadlines varying by number of employees. Most employers with at least 10 workers must comply, while very small businesses or those operating for less than two years are typically exempt.

Auto IRAs are generally Roth accounts funded with after-tax contributions. Workers are automatically enrolled, with a portion of each paycheck — often starting around 3% to 5% — deposited into retirement investments such as target-date funds. Contribution rates may gradually increase over time unless employees choose to opt out or adjust their savings.

Employers usually do not contribute to the accounts or manage investment decisions, which are handled by state programs.

Beginning in 2027, some workers may also receive a federal Saver’s Match that could add up to $1,000 annually to retirement accounts for eligible contributors.

While experts say auto IRAs will not fully solve retirement insecurity, they are expected to help more workers begin saving and potentially improve long-term financial stability.

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