To date, more than one million workers are being covered by auto-IRA programs in the U.S. and with a number of states trying to get the mandatory retirement savings laws passed, it is likely that small businesses might very soon have to change drastically the way they are dealing with employee benefits.
United States (U.S.) internal policy memos reviewed and (hereinafter the “Report”) indicates at least six states that are at the stage of drafting legislation to compel the businesses based on the size of the company to introduce either private retirement plan or or enroll employees in their state-run IRA programs. These forthcoming proposals considerably go beyond the current auto-IRA initiatives where the employers and employees have the right to opt-out.
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States Taking the Lead
Reliable sources from the legislative teams in New York, Pennsylvania, North Carolina, Georgia, Texas, and Arizona disclosed that the drafted bills are on the move to make it all automatic for the qualified small businesses as early as January 2026.
For example, in Pennsylvania, the hypothetical “SecurePA” plan that is implied would impose the auto-enrollment feature for any business with a staff of 10 or more employees. It would be a groundbreaking movement that is expected to affect approximately over 1.2 million of the private-sector workers.
Why This Issue is Significant Now
This move is driven by the growing concern that the traditional 401(k) model is a major factor in the exclusion of a large number of people, in particular part-time workers, the gig economy workers, and the small business employees. As per the U.S. Bureau of Labor Statistics, nearly half of the employees in the private sector still remain unutilized for the workplace retirement plan.
“These are not luxury plans — they’re safety nets,” Dr. Erica Rollins, a research clerk of state savings programs for the Urban Retirement Institute, who has commented, “State programs are stepping in where the federal system has fallen short.”
Pushback from Small Business Advocates
The drive is gaining pace, yet there are still quite a few who don’t like the idea. The Small Business Action Coalition (SBAC) is convinced that forcing people into the plans experiences insignificant membership growth compared to voluntary plans. They say that the administrative burden is significantly higher, which in return has an adverse effect on employment.
James Langford, who is the director of the SBAC, said, “We are in favor of voluntary savings, but the regulation is putting the small businesses at risk by making them retirement plan sponsors without giving them the necessary support to that effect.
At the same time, however, advocates for the state-run programs are of the view that the administrative procedure is insignificant, and the programs are set up to be easily operated “plug-and-play” through a worker paycheck deduction system — in many instances managed by a third-party provider.
What’s Next?
Those in the know believe that by the start of next summer’s legislative sessions, at least three states will be ready to bring their plans into the open and have them ready for implementation by July 2025. According to a panel of experts the proposed measures may spark off federal deliberation on the national automatic-IRA agenda, but the idea could not get a breakthrough in Congress.
The retirement savings discussion has taken a new turn. What started as a voluntary experiment on the state level may emerge as a decision to extend retirement access to millions of U.S. citizens through a national mandate.
If the country is adjusting to the changing times in retirement through public or private projects, one thing is for sure, U.S. retirement may not be non-mandatory in the future.
