Beginning in 2027, most WA employers must enroll in the Washington retirement program—Washington Saves—or offer an alternative plan.
Only 53% of workers currently participate in a retirement plan. Over a dozen states have established state-mandated retirement plans to get more workers to save for retirement.
Now that Washington State will be joining the mandatory retirement party in 2027, there’s one big question you may have—is my business prepared?
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What is Washington Saves?
Washington Saves is a state-sponsored retirement program for employees in Washington. The state requires that eligible employers enroll employees in the auto-IRA program or offer a qualifying alternative retirement plan.
Washington signed the state-mandated retirement program into law in 2024, but the program won’t begin taking effect until July 1, 2027.
How will the program work? Once the program officially kicks off, employers will withhold a percentage of each employee’s wages through automatic payroll deductions. Contributions might be a pre-tax deduction (traditional IRA) or a post-tax deduction (Roth IRA), depending on what the state allows.
Employers do not contribute to an employee’s IRA plan. Only employees can contribute to their IRAs with the state. Employees can choose to opt out or end their participation at any time.
Do I have to enroll in the Washington state retirement program?
You must participate in the Washington retirement program if you:
- Have been in business in Washington State for at least two years and have a physical presence,
- Don’t offer a qualified retirement plan to covered employees with continuous employment of one year or more, AND
- Had employees work a combined minimum of 10,400 hours during the previous calendar year
Pay close attention to #2—you do not need to enroll in Washington Saves if you offer an approved, qualifying alternative plan.
What are qualifying alternative plans?
Qualifying alternatives to state-sponsored retirement programs typically include:
- 401(k) plans
- 403(a) qualified annuity plans
- 403(b) tax-sheltered annuity plans
- 408(k) SEP plans
- 408(p) SIMPLE IRA plans
- 457(b) governmental deferred compensation plans
You may consider enrolling in an alternative plan over the state-mandated plan to get benefits like tax credits and seamless integration with payroll.
If you don’t comply, you will be penalized
Now for the scary part—penalties. If you fail to enroll in Washington Saves or offer a qualifying alternative, you’ll face the following penalties after January 1, 2030:
| Penalty | Violation |
|---|---|
| $100 | First willful violation |
| $250 | Second willful violation |
| $500 | Maximum penalty for subsequent violations |
Employees can file a complaint with the Washington State Department of Labor & Industries (L&I) if they think you violate your responsibilities.
Employers subject to complaints filed before January 1, 2030 will receive technical assistance from the department.
Employers subject to complaints filed on or after January 1, 2030 will receive an educational letter from the department instructing how to comply.
Only willful violations are subject to the civil penalties (i.e., $100 – $500) after January 1, 2030.
Washington retirement checklist for employers
Beginning in 2027, your administrative responsibilities for Washington Saves (or a qualifying alternative) begin.
If you don’t want to offer a qualifying alternative, you must do the following to comply with the Washington state retirement plan mandate:
- Register with Washington Saves
- Provide relevant information about covered employees to the state
- Distribute program information and disclosures to employees
- Automatically enroll covered employees in Washington Saves (but allow workers to opt out!)
- Withhold employees’ contributions from their paychecks and remit to the program (the default rate will be between 3% and 7%)
Should I enroll in the state program or offer a 401(k) plan?
Washington Saves is designed to help employees save for retirement while minimizing administrative burdens for employers.
But is the state-mandated retirement plan the right choice for your business? It depends.
There are several benefits of offering a qualifying 401(k) plan to your employees instead, such as:
- 401(k) tax credits that may cover your plan costs
- The ability to make employer contributions
- Seamless integration with payroll
- Affordable plan options
- More control over your employee benefits
Streamline the way you offer 401(k) plans. Patriot has partnered with Vestwell to offer affordable retirement plans that integrate with our online payroll. Plus, get a free trial of Patriot’s award-winning software when you sign up today!
This is not intended as legal advice; for more information, please click here.
