How Maine's State Retirement Program Impacts Employers and Employees
MERIT's Impact on YOU
Welcome to the future of retirement savings in Maine!
The Maine Retirement Investment Trust (MERIT) program is changing the game, ensuring a brighter and more secure financial future for employees across the state. On this page, discover how MERIT will impact both employers AND employees. We will cover:
What is Maine's state retirement program?
Maine’s new state retirement program, known as Maine Retirement Investment Trust or MERIT, requires covered employers to offer a tax-qualifying employer-sponsored retirement plan to their employees or they must provide their covered employees the option to contribute to a state-sponsored retirement plan.
The state plan will be set up as a Roth IRA. A Roth IRA is a retirement account that is funded with after-tax dollars. This means individuals can withdraw funds on a tax-free basis, since taxes were paid at the time of contribution.
What is a covered employer?
According to the law, a covered employer is:
- Any for profit or non-profit entity in operation during the current and prior calendar year.
- Has 5 or more W-2 employees in the state of Maine.
- Yes, cannabis businesses must participate as well.
What is a covered employee?
According to the law, a covered employee is:
- Any employee 18 years of age or older.
- Any type of employee: part-time, full-time, seasonal, temporary.
- Has taxable wages in the state of Maine.
What is a tax-qualifying employer-sponsored plan?
- Any tax-qualifying plan under IRC Section 401(a), 401(k), 403(a), 403(b), 408(k), 408(p), or 457(b). For example, a SIMPLE IRA or Traditional 401(k) is a tax-qualifying plan.
- The specific structure and eligibility rules of your plan do not matter, as long as you have a plan in place.
- Even if a qualifying plan is in place, employers must still take action to mark themselves as exempt from the plan.
What are the implementation dates?
Employers with 15+ employees must register by April 30th, 2024
Employers with 5-14 employees must register by June 30th, 2024
How will MERIT impact employers?
- Be the "Facilitator" of the program
MERIT will have no financial cost to employers. Furthermore, employers will have no fiduciary responsibilities for the plan. Employers will simply facilitate the plan on the employees behalf. Employers cannot contribute to an employee’s account.
- Employers will receive an email to register for the portal
Starting in late January 2024, employers will begin receiving emails (or letters) to register for the program. Employers will take their registration code and go to the MERIT website. If an employer has a tax-qualifying employer-sponsored plan in place, they can mark themselves as exempt from the plan. If not, the employer can upload a list of their employees into the state run program. Employers must log into the site and make a selection.
- Make payroll contributions
Once an employer has registered with MERIT they will be able to designate their payroll provider as a teammate and authorize the payroll provider to take actions on their behalf. After employees have been setup in the plan, employers can work with their payroll vendor to setup payroll contributions correctly.
- Ongoing program maintenance
As new employees come and go from the business, employers need to enroll or remove them from MERIT.
Check out this page at MaineSaves.com for more information.
How will MERIT impact employees?
- Employees will be automatically enrolled in the plan
Once employers have registered their employees in the plan, a Roth IRA account will be opened for each individual. The employee will have 30 days to make any changes to the plan before contributions will be taken from their pay.
- Changes can be made to the account
In those first 30 days, or anytime after, employees can log in to their account and make any changes. If employees do nothing, the default contribution amount will be 5% will be taken from their pay. But employees can change this amount anywhere from 1% up to 100% of their pay. Contributions will automatically increase each January by 1% up to a maximum of 10%.
Changes can also be made to the investment types of the account. There are four different types of investments: Target Date Funds, Capital Preservation Funds, Bond Index Funds, and International Equity Funds.
- Can choose to opt-out all together
If an employee does not want to participate, they can log into their account and choose to opt-out of the plan. Be alert, employees will be automatically reenrolled at intervals to be determined by the state, so they will need to opt-out again if they choose to do so.
- Employees own their account
The MERIT Roth IRA account will be tied to the individual. If an employee changes jobs, or leaves a job, the money and account go with them.
Check out this page at MaineSaves.com for more information.
What to do next?
Now that you know what Maine’s retirement program is all about, and how it will impact employers and employees, let’s take a look at some next steps to compliance.
What should employers do next?
- Be on the lookout for your registration email or letter from MERIT.
- Employers with a 401(k) in place may be automatically exempted by MERIT. If you do not receive notification from MERIT, you can call 1-833-608-8811 to confirm that MERIT registered an exemption for you.
- YOU MUST TAKE ACTION. Log in to the site and either enroll in the program or mark yourself as exempt.
- Communicate to your employees about the plan and their options.
- Work with your payroll provider to make sure contributions are set up correctly.
What should employees do next?
- Look for an email from MERIT once your employer registers you for the program.
- YOU MUST TAKE ACTION. Log into your account and make changes or opt-out if you wish. If you do nothing, 5% of your pay will be automatically withdrawn.
- Continue to monitor your account. Yearly contribution increases will take place if you do nothing.
- Work with your employer if you have questions.
Maine's state retirement program resources
Watch our latest webinar on MERIT
We hosted a webinar on October 24th about the MERIT program and all of the latest changes. We were joined by Beth Bordowitz, the Executive Director of the Maine Retirement Board, and she provided her insights into the program.
Watch it at your convenience!
Download our Guide to Compliance
This eGuide will provide all of the details you need to know about the program.
Follow our Employer Checklist to MERIT
If you are a client of Paper Trails, this checklist will guide you through registration and help you manage the program.
Distribute our Employee Checklist to MERIT
Provide a copy of this checklist to your employees to help them create their account, and make decisions on their retirement future!
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