Connecticut Tightens Enforcement of MyCTSavings Retirement Program

Quick Hits

• Effective July 1, 2025, Connecticut’s Public Act No. 25-30/S.B. No. 1221 has introduced a three-strike enforcement process for the Program, with escalating annual penalties for noncompliance. Penalties range from $500 to $1,500, depending on the size of the employer.
• The law continues to apply to employers with five or more employees, maintaining the same eligibility criteria and default contribution rates. Employers with qualifying retirement plans are exempt from the law’s key requirements.
• Since its inception, the Program has required automatic enrollment of covered employees, but effective July 1, 2025, the new law implements more specific requirements for the automatic enrollment process. Employers that are not exempt from participation in the Program may want to evaluate and update their enrollment procedures and protocols, and ensure staff are trained to avoid inadvertent violations and financial penalties.

On April 1, 2022, Connecticut launched the Program to provide retirement savings opportunities to workers who may not have access to more formal employer-sponsored retirement plans. Employers with five or more employees working in Connecticut are required to participate in the Program if they do not otherwise maintain a more formal retirement plan; employers that do maintain a formal retirement plan are expected to certify that their retirement plan satisfies the statutory criteria for exemption. The Program is similar in operation to mandated state-run retirement savings programs adopted by a number of other states and is funded by after-tax payroll deduction contributions made by covered employees; no contributions by employers are permitted. Contributions are deposited in Roth individual retirement accounts, and participating workers may invest their contributions in one or more of the mutual fund or other investment options selected by the state Comptroller, the state agency with administrative responsibility for the Program. For covered employers and employees, participation in the Program is automatic, but covered employees may decline to participate or elect a higher or lower contribution rate.

What Has Changed

The law now establishes a three-strike enforcement process with annual penalties:

• First violation: Notice from the Comptroller
• Second violation: Second notice
• Third violation: Final notice

Penalties for each year of noncompliance (after ninety or more days):

• $500 for small employers (five to twenty-four employees)
• $1,000 for medium employers (twenty-five to ninety-nine employees)
• $1,500 for large employers (one hundred or more employees)

The law also incorporates the federal Saver’s Match, allowing eligible low-income employees to receive federal contributions into their Program accounts. The law states that the Comptroller will provide an applicable retirement savings vehicle able to receive such contributions.

What Hasn’t Changed

Despite the implementation of the three-strike violation process, several key aspects of the Program remain the same:

• the law still generally applies to employers with five or more employees in Connecticut as of each October 1 to whom it paid at least $5,000 in wages during the preceding calendar year;
• covered employees are still eligible after 120 days of employment and must be at least nineteen years old (except for personal care attendants who provide care to patients through a state-funded program);
  • Note: Private personal care attendants working in a private capacity or for a private health care facility are still eligible under the typical 120 days of employment standard for eligible employees. 
• the statutory default contribution rate remains 3 percent of wages if the employee does not make an election, but recent action by the Connecticut Retirement Security Program Advisory Board has approved an increase in the default minimum contribution rate to 5 percent, as well as a cap on the maximum default rate of 10 percent;
• employers that maintain any of the retirement programs described in Section 219(g)(5) of the Internal Revenue Code of 1986 (e.g., tax-qualified retirement plans such as 401(k) and pension plans, 403(b) tax-sheltered annuity plans, simplified employee pension plans, and SIMPLE plans, among others) are exempt from the requirement to provide prescribed information about the program to or enroll their employees in the Program;
• qualified employers are not required or permitted to contribute to employee accounts or collect Program fees from employees, although participation in the Program will entail certain recurring recordkeeping responsibilities regarding employee and payroll data, and employers are required to promptly remit payroll deductions to the Program’s designated third-party administrator.

Tips for Employers

The Program has included automatic enrollment provisions since its inception, but the new law expands on those provisions by incorporating the automatic enrollment requirements included in Section 414A(b)(3)(A) of the Internal Revenue Code of 1986 – these are the requirements that apply to employer-sponsored tax-qualified retirement plans such as 401(k) plans. With these modifications in place, the Program will technically have a 3 percent minimum and a 10 percent maximum default contribution rate and a contribution escalator that automatically steps up default contributions in 1 percent annual increments to at least 10 percent but not more than 15 percent absent affirmative direction from the employee. However, the Program’s Advisory Board has recently approved an increase in the default 3 percent rate to 5 percent, effective July 1, 2025. In addition, the Advisory Board approved a 10 percent cap on the contribution escalation requirement. Thus, unless a covered employee elects otherwise, as of July 1, 2025, the default contribution rate will be 5 percent, and the rate will step up in 1 percent increments annually to a maximum of 10 percent.

To ensure compliance, covered employers may want to consider auditing their enrollment procedures. This may involve updating existing internal protocols, keeping track of compliance deadlines to prevent the issuance of violations and financial penalties, and reviewing and updating enrollment policies and processes. Retraining and educating staff responsible for these processes is crucial to compliance.

Ogletree Deakins’ Stamford office will continue to monitor developments and provide updates on the Connecticut and Employee Benefits and Executive Compensation blogs as additional information becomes available.

Editor’s Note: This article was updated on August 5, 2025, to provide additional details on the Connecticut Retirement Security Program.

Follow and Subscribe
LinkedIn | Instagram | Webinars | Podcasts