Critter Corner: Maryland Officially Launches State-Run Retirement Program

Dear Angel,

My husband and I live in Maryland and are both still working. We are doing the best we can when it comes to saving for retirement. His work doesn’t have a program in place at this time. I heard something about a new state-run retirement program in Maryland that is starting this month. What is it all about?

Thanks!

Rita Urrment

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Dear Rita,

Maryland has officially opened its state-sponsored retirement program, providing individuals and small business owners with a new way to save for emergencies and retirement.

With MarylandSaves, employees can set up a Roth IRA, what the program calls a WorkLife Account, that they can contribute to. The program is governed by the Maryland Small Business Retirement Savings Program. Virginia already has a similar plan in place called VirginiaSaves.

Under the law, all employers who have been in operation for at least two calendar years, have at least one W-2 employee, and use an automated payroll system, are required to offer their employees some sort of retirement savings plan. It can be a traditional pension, a 401(k) plan, a 403(b) plan, a SEP plan, a SIMPLE IRA plan, or a WorkLife account from MarylandSaves.

The MarylandSaves has no employer fees, and employers are not required nor permitted to contribute to the program. Employees will be automatically enrolled and will have 30 days to opt out.

• Currently, there are nearly a million employees working full-time without access to a retirement or emergency savings option in Maryland.
• Under Maryland law, established businesses that use an automatic payroll system are required either to offer a retirement plan or to sign their employees up for the MarylandSaves program.
• The accounts are under each individual’s control, with multiple investment options to choose from. You can decide at any time to change your savings rate, change your investment options, or opt out entirely. You can also withdraw your money or take your account with you when you change jobs.
• If you decide not to opt out, 5 percent of your paycheck will be automatically saved. The first $1,000 will be contributed to an emergency savings fund, and contributions beyond that will be invested in a target-date fund based on your age.
• MarylandSaves is developing the ability in the future to enable participants to automatically convert their WorkLife Savings Accounts to a monthly paycheck when they are ready to retire, in an amount estimated but not guaranteed to last a saver’s lifetime, the release states.
• The program is also developing a feature to offer the option to withdraw money from your MarylandSaves account as you near retirement age to help you postpone filing for Social Security benefits; if you defer and don’t file for Social Security at age 62, it increases your payment by approximately 8 percent each year until age 70. Using your WorkLife Savings Accounts to create a “Social Security bridge” could mean getting more Social Security payments when you do file.
• The “Social Security bridge” and “managed payout” options are not expected to be available for several years, and the program will notify participants if those options are adjusted.

Whether you are personally ready for retirement or not, it is important to plan ahead regardless of what stage you are in so you are ready when the time comes! Learn more about the MarylandSaves program for savers here.

Planning for Retirement

Retirement planners generally work with people ages 55 and older who are within 10-20 years or so of their desired retirement age. Besides being a Certified Elder Law Attorney, Mr. Farr is also an experienced retirement planning advisor and long-term care financial advisor, providing these services through his affiliation with Protection Point Advisors.

To get started on retirement planning, estate planning, or long-term care planning, contact the office to make an appointment for an initial consultation with Evan Farr.

Hope this helps!

Angel