New MyCTSavings Retirement Program Available to Connecticut Residents Working in the Private Sector
Tim Ryan, 68, retired from his role as CFO of a Fortune 500 company over a decade ago, living comfortably off a good pension and his contributions to a 401 (k) plan sponsored by the employer.
In recent years, he has volunteered for AARP Connecticut to facilitate savings for others.
“It seems like so many people these days, especially if they work for a small business, just don’t have the same opportunity,” says the Trumbull resident. Most large companies have replaced pensions with 401 (k), he notes, and many small ones cannot afford to offer retirement savings benefits.
But workers can get help from a new state-facilitated retirement savings option that goes into effect this year. Ryan fought and promoted the program, called MyCTSavings.
The Connecticut program aims to help approximately 600,000
employees in the sector who do not have access to a retirement savings plan at work. More than a dozen states have passed laws creating similar programs.
Employees can benefit from automatic payroll deductions from a Roth Individual Retirement Account (IRA) managed by Sumday, a subsidiary of BNY Mellon.
Although the program is voluntary for employees, companies with five or more workers must access it if they do not have a qualified retirement savings plan.
Start of program phases
The Connecticut Retirement Security Authority (CRSA), the quasi-public agency overseeing the program, will roll it out in phases starting this year, although there is no specific timeline, said the CRSA chairman and State Comptroller, Kevin Lembo. Big business will come first.
Lembo says taxpayers will also benefit in the long run, as people who are unprepared for retirement are more likely to need government assistance to meet basic needs as they age.
Half of the state’s households are at risk of not being able to afford their daily expenses in retirement, says John Erlingheuser, director of advocacy for AARP Connecticut.
According to the AARP Public Policy Institute, Connecticut households with older residents spend about $ 26,000 per year on food, utilities, and health care.
“What we do know is that if people can save for their retirement through payroll, they are 15 times more likely to save,” says Erlingheuser.
Employees will automatically have 3 percent of their paychecks paid to the Roth IRA, unless they opt out. They can increase or decrease their contribution at any time, choose investment options and take the savings with them if they change jobs.
Persons 19 years of age and over with earned income who have worked for at least 120 days are eligible.
Employers will only be responsible for distributing information material to workers and adding a per item deduction to their paychecks.
Businesses will not have to pay fees or contribute to the plans. The program will be funded by a small administrative fee paid by participating workers.
“We tried to make it as easy as possible,” Lembo says.
Natalie Missakian is a writer living in Cheshire, Connecticut.
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