Pelham
It’s hard for a small business to offer all of the perks that a large business can. Legislation passed in 2023 in Nevada may help employees take advantage of retirement savings incentives.
Michael Pelham, from the State of Nevada Office of the State Treasurer, shared information on this new program with the Rotary Club of Minden - including the covered employers and employees.
The Nevada Employee Savings Trust program was authorized in 2023 with the passage of SB305 in an effort to decrease barriers to retirement savings when employers do not offer it. Data has shown that 80 percent of Nevada businesses with 10 or less employees, and 67 percent with 10-24 employees, do not offer retirement plans.
The NEST program has identified the qualifying businesses and will provide them with a registration number. The businesses upload their employee roster and contact information which auto enrolls employees in Roth IRAs in this state facilitated (not state run) program. Currently, 17 states have enacted similar state facilitated auto enrolled programs. All businesses in Nevada who
Have six or more employees,
Have been in business 3 or more years,
Do not currently offer retirement plans or engage in similar programs with a chamber of commerce or trade associations
will have their employees auto enrolled in the NEST program. This requirement is for employees who have been employed for more than four months and are 18 years of age or older.
Employees will have 30 days to opt out. If the employee does nothing, the default will be a 5 percent contribution to a ROTH IRA retirement savings. Another default is a 1 percent increase each year up to 10 percent.
Administrative fees are currently set at $26 per year of which $22 goes to the investment firm and $4 to the state to cover implementation and maintenance costs. Since these accounts are ROTH IRA’s and taken from post tax earnings, employer matching of contributions is prohibited.
An employee can opt out within the first 30 days and then not again until the annual renewal time period.