Delaware EARNS Program
In 2022, Delaware passed legislation requiring employers with five or more employees to offer options for retirement savings to their employees. This legislation hasn’t received a lot of publicity and employers are not being notified.
The legislation, Delaware Expanding Access for Retirement and Necessary Savings (“EARNS), has two main components;
- Employers with five or more employees are required to offer a retirement plan option
- Delaware is offering a state-run retirement plan for employees to contribute into through their paychecks, at no cost to employers, if the employer does not have a retirement plan (SIMPLE, 401K, etc.) already in place
The employers who are affected by EARNS are:
- Employers who employ 5 or more W-2 workers (full or part-time)
- Employers who do not currently offer a qualified retirement plan to their employees
- Employers who have been in business at least six months
EARNS went into effect this year and the deadline for employers to register is October 15, 2024. By October 15, you have to register as an employer at EARNSDelaware.com/register. Once registered, you will receive an access code in the mail. You must go online to certify that your company is either exempt from the program, already has an established retirement plan, or will be establishing one, or your employees are opting out. If you do not wish to establish a plan with one of the pension companies and offer that option to your employees, they will be choosing the state’s option which is a Delaware run Roth IRA plan.
Once a plan is established your responsibility as the employer is to register, set up a payroll deduction and send your employees’ deferrals to the pension company (or state).
We suggest that you draft a letter for your current and future employees to sign to claim they are not interested in contributing to a retirement plan. If your employees do not elect out, you will be required to withhold their retirement deferral from their paychecks and direct the money to the Delaware EARNS plan.
If you decide to set up a plan, you will need to draft a form for the employees to sign saying how much they want to defer to their retirement.
Remember, even if you already have a plan, you still need to register at the website above and inform the state by October 15. We attached a copy of the letter received after registration, for example.
We are sure there will be questions regarding this legislation and the requirements of you as an employer.
Please call our office to discuss.