IRA Provider Insights

The State-Run IRA Opportunity Part 2: Notable State Plan Features

Posted by Mark Fleckenstein on Jul 18, 2017 7:30:00 AM

Part 2 of our eBook series "The State-Run IRA Opportunity" focuses on some of the notable features in the different state plan designs. We'll focus on certain features that cut across multiple states' plans.


From state-to-state, the overarching designs of these plans vary. However, many of the states have overlap on more than one aspect of their plan design. Here are some notable features that are seen across multiple state plans:

2.pngPRICE: Most states are aiming for 100 basis points all-in, with no hard dollar fee. Sounds great, but how is any provider going to make money on 100 bps from accounts starting at $0?

INVESTMENTS: Many of these state plans are employing Target Date Funds in some form, sometimes exclusively. The California state plan is offering only U.S. Treasuries for the first three years.

STRUCTURE: Several states have gone with a one-provider, one-plan solution, while others are mixing SIMPLE IRAs, Payroll IRAs and other savings vehicles. Still others are providing a marketplace for employers.

ENROLLMENT: Several states are doing automatic enrollment, which makes the employer a fiduciary. This will cause headaches for providers dealing with employees who want to stop contributing when they realize that money has been withheld from their pay.

EMPLOYERS: The size of impacted employers ranges from “five employees or more” (California) to “100 employees or less” (Washington).

These features are subject to change as the plans move forward, however it is interesting to see the direction in which some states are headed.

Click here to download your state-run IRA eBook

Topics: Payroll IRA Programs for Payroll Companies, State Run IRAs, state-run retirement, Payroll IRAs