Washington State Opens Online Retirement Plan Marketplace
posted by Fisher 401(k) May 10, 2018
Following soon after Oregon’s launch of the nation’s first-ever state-run retirement plan, Washington state has launched another first with a new online retirement plan marketplace. Designed for both employers and individuals, Washington Retirement Marketplace aims to offer access to retirement saving services for 131,000 businesses that don’t currently offer a retirement plan to their employees.1
The marketplace comes following the passing of bill SB 5826 in 2015, with state officials citing a desire to equip all Washingtonians with access to a retirement account in order to save for a dignified retirement, including the employees of small businesses and even individuals working as contractors.2 Using the Retirement Marketplace, employers and individuals alike can shop for retirement plans and connect directly with providers. Participation in the online marketplace is entirely voluntary for the retirement plan providers, individuals, and employers who choose to use it, and all contributions made by retirement plan enrollees can be ported to a new plan upon switching jobs.
The Retirement Marketplace launched with five 401(k) plan options for employers, as well as a number of individual retirement account (IRA) options that participants can choose from. In order to qualify for the Retirement Marketplace, all plans must meet certain standards set by the Washington State Legislature, including:3
• Must not charge any administrative fees to employers
• Must not charge individual participants more than 1% in annual administrative fees
• Must pass an annual renewal process to remain in good standing with the marketplace
• Must pass a review by the Department of Financial Institutions or Office of the Insurance Commissioner
By making it easier to access plans that meet these standards, Washington officials hope to increase the number of small businesses which offer retirement plans while also bolstering the state’s economy.
“Successful businesses know the value of saving for the future and helping their employees do the same," said Commerce Director Brian Bonlender in a statement from the Washington Department of Commerce. "When people have a solid financial foundation, it lifts up the entire economy, strengthening communities by helping more workers participate and prosper.”4
The website walks users along paths to help them find retirement plan options best suited for their unique needs. Employers with fewer than 100 employees seeking to start a company-sponsored plan can answer questions about things like their available resources, number of employees, and employer contribution preferences. Individuals wanting IRAs can answer questions about their employment status and plan preferences. Users can then review all plan options or those selected just for them and select a plan. Employers then work with a provider to set up a new 401(k) to offer employees, while individuals are able to then enroll directly with an IRA provider.
Washington is one of several states to express a desire in recent years to play an active role in helping their citizens save for retirement. Nationwide, 35% of workers over the age of 22 do not have access to an employer-sponsored retirement plan, leading state governments to explore options to better prepare workers for a secure financial future.5 Many employers cite their small size and the cost as reasons for not offering retirement plans.6 State marketplaces like Washington’s seek to address this problem in two ways, both by requiring plans to not charge employers any administrative fees and by giving individuals easy access to IRA options independent of their employer.
To read more from our Who’s Helping America Save? series, choose a story:
Oregon Launches Nation's First State-Run Retirement Plan
California’s State-Run Retirement Plan to Proceed, Despite DOL Rule Repeal
Government-Sponsored Retirement Plans—Coming to a State Near You?