Program aims to help more Minnesotans retire with greater financial cushion

Establishment of a Minnesota Secure Choice Retirement Program is the genesis of a new law aiming to benefit private-sector employees who have no opportunity to save for their retirement through an employer-sponsored retirement plan, such as a 401(k).

Sponsored by Rep. Jamie Becker-Finn (DFL-Roseville) and Sen. Sandy Pappas (DFL-St. Paul), a law effective May 20, 2023, calls for an employer of at least five employees that does not sponsor a retirement plan to transmit a percentage of the employee pay on an after-tax or pre-tax basis to a state-sponsored individual retirement account. An employee must be at least age 18 but will not be required to participate.

Employees will direct their dollars toward various investment funds offered through the State Board of Investment. Annual minimum and maximum contribution rates and an escalation schedule will be set by a seven-member board of directors created by the law. The state will have no liability for the payment of, the amount of, or losses to any benefit to any program participant. Covered employees will always be 100 percent vested in their accounts.

The board must file an annual report including “plan outcomes, progress toward savings goals established by the board, statistics on the number of participants and participating employers and covered employees who have opted out of participation, plan expenses, estimated impact of the program on social safety net programs, and penalties and violations and disciplinary actions for enforcement.”

One-time funding of $5 million from the General Fund is provided to establish and administer the program that must begin by Jan. 1, 2025.

HF782*/SF413/CH46

HF0782* / SF0413 / CH46