How Maine's State Retirement Program Impacts Employers and Employees
MERIT's Impact on YOU
Welcome to the future of retirement savings in Maine!
The Maine Retirement Investment Trust (MERIT) program is changing the game, ensuring a brighter and more secure financial future for employees across the state. On this page, discover how MERIT will impact both employers AND employees. We will cover:
What is Maine's state retirement program?
Maine’s new state retirement program, known as Maine Retirement Investment Trust or MERIT, requires covered employers to offer a tax-qualifying employer-sponsored retirement plan to their employees or they must provide their covered employees the option to contribute to a state-sponsored retirement plan.
The state plan will be set up as a Roth IRA. A Roth IRA is a retirement account that is funded with after-tax dollars. This means individuals can withdraw funds on a tax-free basis, since taxes were paid at the time of contribution.
What is a covered employer?
According to the law, a covered employer is:
What is a covered employee?
According to the law, a covered employee is:
What is a tax-qualifying employer-sponsored plan?
What are the implementation dates?
Employers with 15+ employees must register by April 30th, 2024
Employers with 5-14 employees must register by June 30th, 2024
How will MERIT impact employers?
MERIT will have no financial cost to employers. Furthermore, employers will have no fiduciary responsibilities for the plan. Employers will simply facilitate the plan on the employees behalf. Employers cannot contribute to an employee’s account.
Starting in late January 2024, employers will begin receiving emails (or letters) to register for the program. Employers will take their registration code and go to the MERIT website. If an employer has a tax-qualifying employer-sponsored plan in place, they can mark themselves as exempt from the plan. If not, the employer can upload a list of their employees into the state run program. Employers must log into the site and make a selection.
Once an employer has registered with MERIT they will be able to designate their payroll provider as a teammate and authorize the payroll provider to take actions on their behalf. After employees have been setup in the plan, employers can work with their payroll vendor to setup payroll contributions correctly.
As new employees come and go from the business, employers need to enroll or remove them from MERIT.
How will MERIT impact employees?
Once employers have registered their employees in the plan, a Roth IRA account will be opened for each individual. The employee will have 30 days to make any changes to the plan before contributions will be taken from their pay.
In those first 30 days, or anytime after, employees can log in to their account and make any changes. If employees do nothing, the default contribution amount will be 5% will be taken from their pay. But employees can change this amount anywhere from 1% up to 100% of their pay. Contributions will automatically increase each January by 1% up to a maximum of 10%.
Changes can also be made to the investment types of the account. There are four different types of investments: Target Date Funds, Capital Preservation Funds, Bond Index Funds, and International Equity Funds.
If an employee does not want to participate, they can log into their account and choose to opt-out of the plan. Be alert, employees will be automatically reenrolled at intervals to be determined by the state, so they will need to opt-out again if they choose to do so.
The MERIT Roth IRA account will be tied to the individual. If an employee changes jobs, or leaves a job, the money and account go with them.
What to do next?
Now that you know what Maine’s retirement program is all about, and how it will impact employers and employees, let’s take a look at some next steps to compliance.
What should employers do next?
What should employees do next?
Maine's state retirement program resources
Our latest webinar on MERIT
We hosted a webinar on October 24th about the MERIT program and all of the latest changes. We were joined by Beth Bordowitz, the Executive Director of the Maine Retirement Board, and she provided her insights into the program.
Watch it at your convenience!