401(k) Plans & 403(b) Plans
Many states are now requiring businesses to enroll employees in qualifying retirement programs. Numerous states currently have mandated plans in place, while many more are planning to include similar requirements within this year and the next year. Penalties for non-compliance can be as high as $5,000 per year. Some states* require companies with 25 or more employees to be registered for a retirement plan before December 2022. Few other states* have similar requirements for employers with 5 or more employees.
401(k) vs 403(b)
401(k) Plan
- Available to for-profit companies
- Employees contribute pre-tax income
- May have employer match
- Contribution limits: $19,500 (2021)
- May offer loans or hardship withdrawals
- Investment options may include stocks, bonds, and mutual funds
403(b) Plan
- Available to non-profit organizations, public schools, and some governmental organizations
- Employees contribute pre-tax income
- May have employer match
- Contribution limits: $19,500 (2021)
- May offer loans or hardship withdrawals
- Investment options may include annuities and mutual funds
Similarities
- Both plans help employees save for retirement
- Contributions are made on a pre-tax basis
- May offer employer matching contributions
- May allow for loans or hardship withdrawals
| *State-by-State Mandate | |||
|---|---|---|---|
| California |
5 or more employees |
Enroll by June 30, 2022 |
|
| Colorado |
5 or more employees |
Beginning in 2023 |
|
| Connecticut |
5 or more employees |
Enroll during 2022 |
Illinois |
16-24 employees 5-15 employees |
Enroll by Nov. 2022 Enroll by Nov. 2023 |
| Maine |
25 or more employees 15-24 employees 5-14 employees |
Enroll by Apr. 1, 2023 Enroll by Oct. 21, 2023 Enroll by Apr. 1, 2024 |
|
| Maryland |
Not Yet Finalized |
Beginning Sept. 2022 |
|
| New Jersey |
25 or more employees |
Enroll by Dec. 28, 2022 |
|
| New York |
10 or more employees 5 or more employees |
Enroll by Aug. 9, 2023 Enroll by Oct. 21, 2023 |
|
| Oregon |
4 or fewer employees |
Enroll by early 2023 |
|
| Virginia |
Not Yet Finalized |
Beginning in Jul. 2023 |
|
