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Webinar Summary

The Rise of State-Run Retirement Plans: What Advisors Need to Know Now

Speakers: Angela Antonelli, Research Professor and Executive Director, Georgetown University Center for Retirement Initiatives; Peter Thompson, Program Director, RetirePath Virginia/Commonwealth Savers
Topic Area: Retirement Planning • Small Business Retirement Plans • State Auto-IRAs • Practice Management

Key Takeaways

• State-facilitated retirement programs are expanding as policymakers address the large number of private-sector workers who lack access to an employer-sponsored retirement plan. Georgetown University’s Center for Retirement Initiatives reports that more than 59 million full- and part-time private-sector workers lack workplace retirement savings access.
• As of June 2026, 22 states had enacted state-facilitated retirement programs for private-sector workers, and 17 of those states had programs fully open to eligible employers and workers. Auto-IRAs have become the predominant model.
• State auto-IRAs generally require covered employers that do not already offer a qualifying retirement plan to facilitate payroll deductions. Employees are typically automatically enrolled but can opt out.
• These arrangements are generally designed to minimize employer administration. Employers usually do not select investments or make contributions to employees’ auto-IRA accounts.
• State programs are becoming significant savings vehicles. As of June 30, 2026, Georgetown reported more than 1.3 million funded accounts and $3.31 billion in total assets across state programs, including $3.24 billion in auto-IRAs.
• State mandates can create opportunities for financial advisors. Some employers may determine that a private 401(k), SIMPLE IRA, or other employer-sponsored plan better meets their objectives than the state option.
• Advisors also need to recognize that state auto-IRA contributions remain subject to federal IRA rules, including annual contribution limits and, for Roth IRAs, income eligibility requirements.

Why State Retirement Programs Are Growing

Angela Antonelli framed the expansion of state-facilitated retirement savings programs as a response to a persistent gap in the U.S. retirement system.

More than 59 million private-sector workers lack access to workplace retirement savings, according to Georgetown’s Center for Retirement Initiatives. The problem is particularly important among smaller employers, where workers are less likely to have access to a 401(k) or similar employer-sponsored plan.

Workplace access matters because payroll deduction makes retirement saving substantially easier. Rather than requiring an individual to research an IRA provider, open an account, select investments, and initiate contributions independently, a workplace program can make saving part of the employee’s regular paycheck.

Automatic enrollment takes that concept one step further. Instead of requiring the employee to affirmatively enroll, saving becomes the default while employees retain the right to opt out.

Antonelli placed these programs within the broader retirement system, which can be viewed as having three major pillars:

1. Social Security and other public benefits
2. Employer-based retirement savings
3. Personal savings

When workers do not have access to the workplace component, retirement security becomes more dependent on Social Security and personal savings accumulated independently.

Advisor Takeaway

For advisors, the coverage gap is no longer only a public-policy issue. As more states impose requirements on employers that do not offer retirement plans, retirement-plan access should increasingly become part of conversations with small-business owners.

How State-Facilitated Retirement Programs Work

States have adopted several approaches to expanding workplace retirement savings, including:

• Automatic payroll-deduction IRAs
• Voluntary payroll-deduction IRAs
• Multiple Employer Plans
• State retirement-plan marketplaces or exchanges

The auto-IRA has emerged as the most common model. Georgetown reported that 17 of the 22 states with enacted programs had adopted auto-IRA structures as of June 2026.

Under a typical auto-IRA arrangement, an employer that meets the state's coverage requirements and does not already offer a qualifying retirement plan must facilitate the state program. Employees are generally automatically enrolled but can opt out.

Common features include:

• Payroll-deduction contributions
• Automatic enrollment
• A default contribution percentage
• Roth IRAs as the default account in many programs
• Automatic contribution escalation in some states
• Simplified investment menus
• Target-date funds as common default investments
• Employee ownership and portability of accounts

It is important to distinguish state-facilitated from “state-managed.” Private-sector firms frequently provide administration, custody, recordkeeping, and investment management. Georgetown maintains information on the private vendors servicing individual state programs.

The objective is to give workers access while keeping the employer's role relatively simple.

State Programs Are Reaching Meaningful Scale

The programs remain relatively young, but they are accumulating assets quickly.

As of June 30, 2026, Georgetown reported approximately $3.31 billion in assets across state programs, including $3.24 billion in auto-IRAs, with more than 1.3 million funded accounts.

The significance extends beyond the dollar amount. Many participants are workers who previously did not have workplace retirement savings.

For those individuals, an auto-IRA can become their first experience with:

• Regular retirement contributions
• Investment markets
• Target-date funds
• Roth accounts
• Compound growth
• Long-term retirement planning

Antonelli also discussed the development of interstate partnerships. Several states are sharing program infrastructure rather than independently recreating administrative systems. Georgetown reported two multistate partnership arrangements covering eight of the 17 auto-IRA programs as of 2026.

Advisor Takeaway

The growth of these programs creates a new population of retirement savers. As balances and financial complexity increase, many participants may eventually need advice beyond what the state program itself provides.

Virginia’s RetirePath Program: A Practical Example

Peter Thompson provided a detailed look at RetirePath Virginia, which illustrates how the auto-IRA model works in practice.

Virginia's program launched in 2023. Initially, the law generally covered employers with at least 25 eligible employees, with eligibility tied in part to employees working at least 30 hours per week.

Virginia significantly expanded the program in 2026.

Legislation signed in April 2026 and effective July 1, 2026 reduced the covered employer threshold from 25 employees to five, removed the prior 30-hour-per-week requirement, and established age 18 as the minimum age for covered employees.

Generally, employers potentially subject to RetirePath should determine whether they:

• Meet the employee threshold
• Have been operating for the required period
• Already offer a qualifying employer-sponsored retirement plan

If an employer already offers a qualifying plan, it generally does not need to facilitate RetirePath.

During the webinar, Thompson reported that the program had already enrolled approximately 25,000 workers and accumulated approximately $30 million.

Employer Responsibilities

The employer's role is intentionally limited. In general, participating employers:

1. Register with the program.
2. Provide required employee information.
3. Integrate the program with payroll.
4. Remit employee payroll contributions.
5. Keep employee information current.

The employer does not decide how much the employee should save or provide individualized investment advice.

Advisor Takeaway

State requirements can change quickly. Advisors working with business owners should verify current thresholds and deadlines rather than relying on the rules that applied when a program originally launched.

What Employees Need to Understand

Automatic enrollment is central to the state-program model.

After an eligible worker is added to a program, the employee generally receives information and an opportunity to opt out or modify the default elections.

In Virginia, RetirePath uses a Roth IRA funded through after-tax payroll deductions. Employees can change their contribution elections, and accounts remain portable if the employee changes jobs.

Automatic enrollment can be particularly useful for workers who might otherwise postpone saving indefinitely. At the same time, the automatic nature of the account means employees need education about what they actually own.

They should understand:

• Whether the account is Roth or traditional
• How much is being deducted from each paycheck
• How the money is invested
• Whether the contribution rate automatically increases
• How contributions interact with other IRAs
• What happens when they change employers

The account belongs to the employee, not the employer or state.

Federal IRA Rules Still Apply

One of the most important technical cautions for advisors is that a state auto-IRA remains an IRA for federal tax purposes.

The fact that contributions occur through payroll does not create an additional IRA contribution limit.

For 2026, the federal annual contribution limit for IRAs is $7,500, with a $1,100 catch-up contribution for eligible individuals age 50 or older.

If a worker contributes through a state auto-IRA and also contributes to another traditional or Roth IRA, the combined contributions generally must remain within the applicable federal limit.

Roth IRA income restrictions also remain relevant. For 2026, the IRS Roth contribution phaseout range is $153,000 to $168,000 for single and head-of-household filers and $242,000 to $252,000 for married couples filing jointly.

The state administrator can track contributions made within its own system, but it generally cannot know about IRA contributions a participant makes elsewhere.

Advisor Caution

Advisors should begin specifically asking clients:

“Are you contributing to a state retirement program through payroll?”

Clients may not recognize those deductions as IRA contributions and could inadvertently create excess contributions when also funding a separate IRA.

State Auto-IRAs vs. Private Employer Plans

State auto-IRAs provide simplicity and access, but they do not necessarily offer the features a growing employer or business owner may want.

One significant difference is employer contributions.

In Virginia's RetirePath program, employers facilitate employee contributions but do not make matching contributions to the employee's account.

A private employer-sponsored plan may offer:

• Employer matching
• Profit-sharing contributions
• Higher employee contribution limits
• Greater plan-design flexibility
• Additional opportunities for owners to save
• A potentially stronger recruiting and retention benefit

For comparison, the 2026 employee elective-deferral limit for a 401(k) is $24,500, compared with the $7,500 general IRA contribution limit.

Thompson discussed an employer that initially participated in RetirePath but later wanted to provide employees with an employer match and transitioned to a private 401(k).

That example illustrates an important point: state programs can serve as an entry point rather than the permanent retirement solution for every employer.

State Mandates Can Create Opportunities for Advisors

One concern about state programs is that they might discourage employers from establishing private plans.

Antonelli discussed research suggesting the opposite can occur: once employers are required to address retirement savings, some choose to establish their own private plans.

That creates a significant planning opportunity.

When a business owner receives a state registration notice, an advisor can help move the conversation from:

“How do I comply?”

to:

“What retirement plan is actually best for my business?”

Potential alternatives may include:

• SIMPLE IRA
• SEP IRA
• Traditional 401(k)
• Safe harbor 401(k)
• Pooled Employer Plan
• Other qualified retirement-plan structures

The comparison should consider:

• Number and compensation of employees
• Owner retirement savings goals
• Desire for employer matching
• Recruiting and retention objectives
• Administrative responsibilities
• Contribution limits
• Tax considerations
• Expected business growth

For some employers, the state program will be entirely appropriate. For others, the state mandate may become the catalyst for establishing a more robust private plan.

The Saver’s Match Could Increase the Value of Retirement Saving

Antonelli also discussed the federal Saver's Match, created under SECURE 2.0 and scheduled to replace the existing Saver's Credit beginning with the applicable 2027 tax year.

The provision is designed to provide eligible lower- and moderate-income savers with a federal matching contribution associated with qualifying retirement savings.

This is especially relevant to state auto-IRAs because many participants fall within the income ranges policymakers are attempting to reach.

As implementation approaches, advisors should monitor IRS guidance regarding eligibility, contribution mechanics, tax-return requirements, and how the federal match will interact with different retirement accounts.

Advisor Takeaway

The combination of automatic workplace saving and the Saver's Match could make retirement contributions more valuable for qualifying households. Advisors serving these clients should make sure they understand both opportunities.

Financial Advisors Have an Expanding Role

Advisors generally cannot manage the investments inside a state auto-IRA in the same way they manage a traditional advisory account. That does not eliminate the advisor's role.

Instead, the opportunity exists in several areas.

Educating Savers

Participants may need help understanding:

• Roth taxation
• IRA contribution limits
• Compound growth
• Investment risk
• Target-date funds
• Contribution rates
• Retirement-income needs
• Coordination with other retirement accounts

Advising Small-Business Owners

Employers may need assistance determining whether to remain with the state option or establish a private plan with additional features.

Supporting Future Financial Planning

Today's small auto-IRA account may become a meaningful retirement asset over time.

As participants change jobs, earn more, marry, buy homes, inherit assets, start businesses, or approach retirement, their financial needs will extend well beyond the state program.

State programs may therefore create a new pathway into professional financial planning by introducing millions of previously uncovered workers to retirement saving.

Practical Advisor Takeaways

• Determine whether each business-owner client's state has enacted or launched a state-facilitated retirement program.
• Review employer thresholds and implementation deadlines regularly because requirements can change.
• Contact affected small-business clients before compliance deadlines arise.
• Compare the state program with private-plan alternatives rather than assuming the state option is automatically best.
• Ask individual clients whether they contribute to a state payroll-deduction IRA.
• Coordinate state auto-IRA contributions with other traditional and Roth IRA contributions.
• Watch Roth IRA income limits for higher-income participants.
• Explain to employers that auto-IRAs generally offer fewer employer contribution and plan-design opportunities than private plans.
• Use state mandates as an opportunity to discuss whether a 401(k), SIMPLE IRA, or another retirement plan better supports the business.
• Educate participants about contribution rates, investments, portability, and long-term retirement savings.
• Monitor implementation of the federal Saver's Match beginning in 2027.
• Use Georgetown University's Center for Retirement Initiatives as a resource for tracking individual state programs.

Sources & References

Georgetown University Center for Retirement Initiatives
https://cri.georgetown.edu/

Georgetown University Center for Retirement Initiatives — State Programs
https://cri.georgetown.edu/states/

Georgetown University Center for Retirement Initiatives — State Program FAQs
https://cri.georgetown.edu/states/faq/

RetirePath Virginia
https://www.retirepathva.com/

Internal Revenue Service — 2026 Retirement Plan and IRA Contribution Limits
https://www.irs.gov/newsroom/401k-limit-increases-to-24500-for-2026-ira-limit-increases-to-7500

Internal Revenue Service — Retirement Plans
https://www.irs.gov/retirement-plans

U.S. Department of Labor — Retirement Plans for Small Businesses
https://www.dol.gov/agencies/ebsa/employers-and-advisers/small-business-owners

Compliance Note: This summary is provided for educational purposes only and does not constitute individualized investment, retirement-plan, ERISA, tax, legal, or regulatory advice. State-facilitated retirement programs vary by jurisdiction, and employer thresholds, implementation deadlines, penalties, account design, and other requirements can change. Advisors and employers should verify current requirements with the applicable state program and appropriate legal, tax, and retirement-plan professionals before taking action.