Rhode Island. USA
Connecticut joined Rhode Island yesterday to launch a new interstate auto-IRA partnership between Connecticut’s MyCTSavings and the forthcoming Rhode Island RISavers program, which is a pilot retirement program administered by Vestwell and is expected to launch in the spring of 2025.
In March 2022, Connecticut mandated a state auto-IRA program that required employers with at least five employees and had been in existence for at least a year to enact. In June, Rhode Island passed an auto-IRA program for private sector employees, making New England states complete with auto-IRA programs.
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This state collaboration symbolizes a regional, collective effort to close the retirement savings gap for workers. Benefitting both states, the new partnership will reduce fees paid by participating employees and allow for the opportunity to build future partnerships.
The new Rhode Island mandate creates a state-facilitated IRA-based retirement program creates a state-facilitated IRA-based retirement program designed to be exempt from the Employee Retirement Income Security Act.
State-mandated retirement savings programs have continued to gain momentum and bridge the gap for many small businesses struggling to afford administrative burdens. Since 2012, every state except Alabama has either enacted or introduced legislation that would establish state-facilitated retirement savings programs. State-facilitated plans have accumulated more than $1.78 billion in assets, according to the Center for Retirement Initiatives at Georgetown University.
Vestwell, a third-party administrator, will run the Rhode Island program in coordination with the state’s treasury, adding to the firm’s list of 10 other state-facilitated automatic IRA programs that includes Connecticut, Colorado, New Jersey and Oregon.
Retirement accounts opened through the RISavers program are “portable” so savers will have the ability to choose their contribution rate. Contributions will be processed as a payroll deduction to make participation easy for employers and employees alike.
Since launching in 2022, MyCTSavings has surpassed 6,600 enrolled employers, 29,000 employees saving, and $33 million in assets.
“After a lifetime of hard work, everyone deserves access to a dignified retirement,” said Connecticut Comptroller Scanlon. “Today’s historic partnership between Connecticut and Rhode Island will help make that a reality for the residents of both states.”
“Rhode Island has taken the first step to closing the retirement savings gap. Everyone should have the ability to retire with dignity and financial independence,” said Rhode Island General Treasurer James A. Diossa.
Related: State auto-IRA mandates nudge firms to launch their own 401(k)s
“Vestwell is excited to see the expansion of partnerships between states as a pathway to efficiently scale and provide access to retirement savings,” said Douglas Magnolia, President of Vestwell State Savings. “These vital savings programs empower more individuals with the tools they need to build a brighter financial future. We look forward to working with Rhode Island and Connecticut to bring this partnership to life in 2025.”
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Lynn Cavanaugh
Lynn Varacalli Cavanaugh is Senior Editor, Retirement at BenefitsPRO. Prior, she was editor-in-chief of the What's New in Benefits & Compensation newsletter. She has worked for major firms in the employee benefits space, Vanguard and Willis Towers Watson, as well as top media companies, including Condé Nast and American Media.
