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May 7th, 2025
3 min read
If you’re an employer, you’ve probably heard the term "state-mandated retirement plan" tossed around a few times. Maybe you've been ignoring it. Maybe you’ve been meaning to Google it (but TikTok always wins in the end). Or maybe you're just wondering if this is one of those things that will disappear on its own.
Spoiler alert: It won't.
State-mandated retirement programs are here to stay, and more states are joining the movement every year. But don’t sweat it—this guide will break down what they are, what they mean for your business and your employees, and how Paragon Payroll can help make compliance a breeze.
Let’s start from square one. A state-mandated retirement plan is a program that requires eligible employers to offer a retirement savings option to employees. This could mean enrolling employees in a state-sponsored Roth IRA or offering an alternative plan like a 401(k).
Typically, the state-sponsored option is a Roth IRA, where employees contribute post-tax dollars and enjoy tax-free withdrawals in retirement. These plans are employee-funded (no employer contributions required), and the employer’s main role is to facilitate payroll deductions and submit them through the state portal.
Sounds easy enough, right? But like anything that involves regulation and payroll, the devil is in the details.
It depends on your state, your headcount, and how long you’ve been in business. For example:
And more states are rolling out their versions of these programs each year.
[👉 Check this full compliance chart here]
Because only about 10% of employees at small businesses currently have access to a retirement plan. Yikes. The goal is to increase retirement savings among workers and reduce reliance on public assistance later in life. States also want to nudge employers into offering benefits—without mandating employer contributions.
Win-win... kind of.
Sure, it might feel like just another thing to worry about, but there are upsides:
We offer two pathways:
For just $60/month, we handle everything through our isolved integration with PayKonnect.
You do the registering, logging in, uploading, and managing every pay period.
Spoiler: Manual is more work, more risk, and less fun.
Important to note: Even with automation, Paragon does not handle the money movement. That means it’s up to the employer to ensure funds are sent to the state or retirement provider. We handle the deduction, but not the deposit.
You are also the entity responsible for logging into your state portal to approve contributions, if required.
State-mandated retirement plans are not optional—but they don’t have to be a headache either. With a bit of planning and the right tools (hey there, Paragon!), you can turn this requirement into a competitive advantage.
Need help understanding if your business is affected or how to get started? We’ve got your back.
Let's Talk! or email info@paragonpayroll.com to explore your options.
Retirement is serious business. But we’re here to make it a little easier—and maybe even a little fun.