New Jersey's retirement mandate — officially the NJ Secure Choice Savings Program, now known as RetireReady NJ — requires employers with 25 or more employees who have been in business for at least two years and do not already offer a qualified retirement plan to automatically enroll workers in a state-administered IRA program. The penalty for non-compliance is $100 per employee per year, up to $5,000 annually.
But the mandate is just the floor. The real question for most Central NJ business owners is not whether to comply — it is which plan design actually makes sense for your business, your key employees, and your own retirement.
RetireReady NJ is a state-facilitated payroll-deduction IRA program. Covered employers must register, automatically enroll eligible employees at a default contribution rate of 3 percent of wages, and facilitate payroll deductions. Employees can opt out. The program uses a Roth IRA structure and is administered through a third-party platform. Employers have no fiduciary liability under the state program — but they also have no ability to customize, match contributions, or use the plan as a business tax strategy. For many owners, the mandate is the trigger to finally establish a proper qualified plan.
The three most common plan types for Central NJ small businesses each serve different situations. A SEP-IRA is the simplest — contributions only from the employer, up to 25 percent of compensation, no employee contributions, no testing requirements. Best for sole proprietors and very small businesses where the owner wants maximum personal contributions with minimal administration. A SIMPLE IRA allows both employer and employee contributions, requires a mandatory employer match, and has lower administrative burden than a 401(k). A 401(k) is the most flexible — higher contribution limits, profit sharing capability, Roth option, and the ability to design the plan to maximize contributions for owners and key employees through safe harbor and cross-tested structures.
For business owners over 45 with high income and a desire to shelter significant pre-tax dollars, defined benefit and cash balance plans can allow contributions of $100,000 to $300,000 per year — far beyond what a 401(k) alone permits. These plans require actuarial certification and have ongoing funding requirements, but for the right business profile they are among the most powerful retirement and tax planning tools available. Medical practices, dental offices, law firms, and professional service businesses in Central NJ are common candidates. This is one of the areas where a retirement health review often surfaces the most value.
If you sponsor a 401(k) or other qualified plan, you are a plan fiduciary. That means you have a legal obligation to act in the best interests of plan participants, select investment options prudently, monitor plan costs, and ensure the plan document is current and compliant with SECURE 2.0 and other recent legislation. Most small business owners are unaware of the full scope of their fiduciary obligations. A retirement health review includes a basic fiduciary posture check and flags any obvious compliance gaps.
A 15-minute review of your current retirement plan — or the mandate gap if you have no plan. Covers compliance status, plan design options, and what top Central NJ owners are doing.