Washington Saves Program: What Employers Need to Know

Washington State has introduced the Washington Saves program, which will take full effect by July 1, 2027. Under this initiative, businesses that do not currently offer a retirement plan will need to provide employees with access to an auto-IRA program. The program aims to improve retirement savings by enabling automatic payroll deductions for employee contributions.  If you are an employer in Washington State being proactive to evaluate current plans and prepare to offer this benefit to your employees is critical.

Eligibility and Requirements

To qualify, businesses must meet the following criteria:

• Operate in Washington for at least 2 years.
• Have employees who collectively worked 10,400 hours in the previous year (equivalent to five or more full-time employees).
• Enroll employees ages 18 or older with at least one year of continuous service.

Employees have the option to opt out of the program, allowing them to choose whether or not to participate in the retirement savings initiative. Additionally, the program includes automatic contribution increases to encourage consistent savings growth. To ensure compliance, penalties will be enforced for businesses that fail to meet the program’s requirements, creating a structured framework for retirement savings management.

Implementation and Business Considerations

The rollout of Washington Saves will be phased based on business size to facilitate a smooth transition. Given this requirement, it is expected that:

• More businesses may create their own retirement plans to avoid mandatory enrollment in the state plan.
• Retirement benefits will become more important to employees as they become more aware of them due to the news and requirements of Washington Saves.
• To stay competitive, businesses may need to enhance their retirement plans as employee expectations shift.

Tax Incentives for Businesses

Currently, tax incentives are available for businesses that create new retirement plans. However, these incentives may not be available indefinitely, as congressional support for them could be revoked. With more states implementing similar mandatory retirement programs, it is anticipated that these tax credits will be claimed quickly.

Employers considering setting up a new retirement plan may benefit from acting sooner rather than later to take advantage of these incentives.

Planning for Compliance

Businesses should review their current retirement plan offerings and assess whether adopting a 401(k) or SIMPLE plan aligns with their objectives before the Washington Saves implementation deadline. Staying informed about compliance requirements and available options will help businesses navigate this transition effectively.

More information about the Washington Saves Program can be found here.

Securing tax credits before they disappear is critical—now is the time to act.

With incentives available for a limited time and state-mandated programs on the horizon, taking proactive steps today can save you money and give you more control over your benefits strategy. If you would like to explore your business options for setting up a retirement plan, contact us to ensure your business is prepared.