New Jersey lowered the program’s legal threshold on April 1. Employers with 10 to 24 workers still lack a registration date. Current data show an 18.42% early opt-out rate and an average 3.22% payroll deduction.
MORRISTOWN, NJ – New Jersey has legally expanded its workplace retirement-savings program to businesses with as few as 10 employees, potentially bringing automatic payroll savings to more than half a million additional workers. The state, however, has not set a registration or enforcement date for the newly covered employers.
The change comes from P.L. 2025, c. 379, which Gov. Mikie Sherrill approved on Jan. 20. Its threshold amendments took effect on April 1, 2026, the first day of the third month after enactment.
The effective date is not the same as a compliance deadline. RetireReady NJ’s current employer page tells businesses with 10 to 24 workers to prepare for “upcoming changes” and says the state will introduce the program to them over time, under a schedule to be announced.
That distinction matters for small employers deciding whether they are already late. In March board minutes, Executive Director Todd Hassler said the program had “not assigned an implementation date.” In May, he said staff expected to begin developing and publishing a timeline after completing data-sharing work with the state Department of Labor and Workforce Development. As of Aug. 11, the board had posted a July agenda but no July minutes or new registration schedule.
Who will be covered
The amended law covers a for-profit or nonprofit employer that maintained at least 10 New Jersey employees throughout the previous calendar year, has operated for at least two years and did not offer a qualified retirement plan during the preceding two years. Qualifying private plans include 401(k), 403(b), SEP and SIMPLE plans. Public employers are excluded. Businesses with fewer than 10 employees may join voluntarily.
RetireReady is an employer-facilitated IRA, not an employer-sponsored pension or 401(k). A covered employer must register, provide employee information, make the payroll deductions selected for each worker and send the money to the program. The employer cannot contribute or match employee savings, recommend investments or act as a plan fiduciary.
Workers receive a 30-day notice and are enrolled unless they opt out. The default account is a Roth IRA funded with 3% of gross pay after tax. Under the amended law, the default rate rises by one percentage point each January until it reaches 10%, unless the worker selects another rate or opts out. Participants may lower the rate to 1%, choose a Traditional IRA, stop contributions or rejoin later.
The default investment initially holds contributions in a capital-preservation fund for about 30 days and then moves them to an age-based target-retirement fund. Account values can rise or fall and are not guaranteed by New Jersey or insured by the Federal Deposit Insurance Corporation.
How many employers and workers will be added
The best state estimate is about half a million workers. New Jersey has not published a verified count of affected businesses.
The bill’s sponsors said the lower threshold could reach approximately 515,000 additional residents. Hassler later told the board that it would cover more than 500,000 additional people and nearly double the program’s covered population. Those are estimates of potential reach, not projected active accounts.
The nonpartisan Office of Legislative Services said the number of New Jersey businesses with 10 to 24 employees, and the number of people they employ, was not readily available. It cited about 174,000 New Jersey establishments with fewer than 20 workers and 675,000 employees in 2022, but that pool includes firms below the 10-worker threshold and employers that already offer a plan. Establishments also are not always the same as distinct businesses.
The need is concentrated at smaller workplaces. Nationally, 55% of private-industry employees at establishments with one to 49 workers had access to a retirement benefit in March 2025, compared with 86% at establishments with 100 to 499 workers, according to the U.S. Bureau of Labor Statistics. The figures include pensions and defined-contribution plans and are not specific to New Jersey.
What current participation looks like
The state’s latest program analytics, covering activity through March 31, 2026, provide the clearest answer to how workers use automatic enrollment.
RetireReady reported 27,096 funded accounts, $19.89 million in assets and 1,487 registered employer accounts, 908 of which were actively submitting payroll deductions. Among workers in their first 30 days, 18.42% took action to opt out. That measure is an early opt-out rate, not the share that will remain in the program indefinitely.
The average payroll deduction was 3.22%, only slightly above the former 3% default. Future averages may change as the new automatic annual increases take effect and newly covered workers enter the program.
Penalties begin with a warning
The law sets escalating maximum penalties for an employer that, without reasonable cause, fails to enroll a worker by the prescribed time. The first calendar year brings a written warning. The second carries a $100 total fine. The third and fourth carry $250 for each employee not enrolled, and the fifth and later years carry $500 per unenrolled employee.
A registered employer that fails without reasonable cause to deduct and remit required contributions can face $2,500 for a first offense and $5,000 for each later offense. Employers have 90 days to protest a proposed penalty and receive a hearing. The program may reduce or eliminate the statutory maximum when doing so serves the law’s retirement-savings purpose.
For the 10-to-24-worker group, that penalty schedule cannot be tied to a calendar date until the state announces the group’s implementation and compliance deadlines.
What the 0.75% fee pays for
RetireReady’s current saver disclosure lists an annual program-administration fee of approximately 0.75% of assets, or 75 cents for each $100 in an account. Underlying investment expenses come on top of that charge.
The default target-retirement option has a 0.08% underlying-fund expense, producing a total annual cost of 0.83%. That equals about $8.30 a year for each $1,000 invested. Other program options currently range from 0.765% to 1.80% in total annual asset-based fees.
The program’s 2025 independent audit says the 0.75% goes to administrator Vestwell Government Savings and covers part of the cost of technology, recordkeeping and other day-to-day administration. New Jersey separately paid Vestwell $950,000 in November 2025 under its seven-year administration contract; the audit says that payment did not come from participant assets.
Program operations still rely on state appropriations. The Office of Legislative Services reported that New Jersey had allocated $11 million since fiscal 2022 for development, implementation and management, with about $6.6 million spent by Jan. 9, 2026. The amended law now permits a different maximum fee structure of $26 per account plus 0.25% of the balance. Program officials said it would require a board-approved implementation plan. The current participant disclosure still lists the 0.75% charge.
Low-cost private IRAs can be cheaper. A self-directed Fidelity retail Roth IRA has no account fee or opening minimum, while its Freedom Index 2065 target-date fund has a 0.12% expense ratio, or about $1.20 per $1,000 a year. Transaction, advisory and investment charges can still apply to private accounts.
The comparison reflects different services. RetireReady supplies automatic enrollment, a payroll connection, employer and saver technology, recordkeeping and customer support. A private IRA generally requires the worker to open, fund and manage the account. RetireReady also has no employer match, a feature some private workplace plans provide.
The account follows the worker
Changing jobs does not erase the account or require a withdrawal. The program description says the worker keeps control after moving out of state, joining an employer with its own retirement plan or retiring.
The owner may leave the money in RetireReady, make direct contributions from a personal bank account, roll eligible assets into another IRA or retirement plan, or withdraw them. Taxes, penalties and a $50 outbound rollover fee may apply in some circumstances. A worker with multiple IRAs must also track the combined federal contribution limit, which is $7,500 in 2026, or $8,600 for people age 50 and older.
Roth savings and a low-income budget
There is no single account structure that fits every low-income worker. RetireReady’s Roth default has a clear tax rationale for someone whose current federal income-tax rate is low: Roth contributions are not deductible, while qualified withdrawals are tax-free. The IRS also says a return of Roth contributions is not taxable, although earnings on a nonqualified withdrawal can be taxable and an additional early-distribution tax may apply.
A Traditional IRA can provide a federal deduction when the saver qualifies, but that deduction may have little immediate value to a worker who owes little or no federal income tax. New Jersey adds no state-level incentive to choose Traditional contributions because the state does not allow an IRA-contribution deduction. New Jersey excludes qualified Roth distributions from state income.
Account type is only part of the decision. A worker without cash for a car repair, medical bill or missed shift may place greater immediate value on a liquid emergency reserve. The Consumer Financial Protection Bureau describes that reserve as cash set aside for unplanned expenses. RetireReady’s investments can fluctuate, and withdrawing earnings early can carry tax costs. The program lets workers reduce deductions, opt out and rejoin, giving them a way to adjust as their finances change.
The next posted Secure Choice Savings Board meeting is Sept. 11, 2026. Newly covered employers can monitor the RetireReady NJ employer page or call the program’s employer assistance line at 855-929-4387 while awaiting the registration and enforcement schedule.