Maine’s MERIT Retirement Program: What employers need to know

In recent years, many states have established programs to make it easier for businesses to provide retirement benefits and help employees save money for their futures. Since 2012, at least 48 states and the District of Columbia have taken steps to create, explore, or consider laws for state-run retirement savings programs, and now Maine has joined the list by passing the Maine Retirement Savings Program.

Below, we'll dive into some of the most important things Maine business owners need to know about the program, including:

Why Maine?

Almost half of all private sector employees in Maine — more than 200,000 people — do not have a retirement savings plan. MERIT was created to help more workers in Maine save for retirement and reduce the state's cost to cover public assistance for the aging population.

Maine's decision to enact retirement legislation aligns with other U.S. states that have passed similar laws to address a lack of retirement savings among their populations. CalSavers was established in 2019 to give the more than 7.5 million workers in the Golden State without a retirement plan the option to contribute to a Roth IRA. And Washington Saves was created in 2024 to help the 43% of private-sector employees in the state without a workplace retirement plan save money for their future.

One particularly unique aspect of MERIT is that Maine will share the plan's governing duties with other states. In August 2023, the State Treasurers of Maine and Colorado announced that Maine would join Colorado's already established state-sponsored retirement plan, the Colorado Secure Savings Program. Maine and Colorado will operate their plans independently but share governance responsibilities.

Having multiple states within the same plan could reduce the associated costs for each state, and pass on those savings to plan administrators and participants. New Mexico also plans to join the multi-state plan once their state legislature passes the proper amendments.

How does the MERIT Program work?

Maine business owners will now be required to offer a qualifying retirement benefit or enroll in the MERIT program if they have five or more employees. Here are the basics of the MERIT program:

A Roth IRA differs from other popular retirement accounts, like a 401(k). For employers, a Roth IRA may offer less flexibility than a 401(k) plan. With a 401(k), employers are able to offer a match, which can provide additional incentives for employees to participate, as well as potential tax benefits. Roth IRA plans don't allow employers to contribute. There is no tax deduction for contributions to a Roth IRA, but contributions and earnings can be withdrawn tax-free in retirement.¹

Another big difference between the two retirement accounts is how much you can save. 401(k) plans have higher contribution limits, which means employees can save more with a 401(k) each year than with an IRA.

Is Maine’s MERIT retirement program mandatory?

Yes, the program is mandatory for Maine employers that do not offer a retirement plan, have five or more employees, and have been operating for at least two calendar years. This applies to both for-profit and nonprofit organizations.

Maine businesses that fail to enroll an employee without reasonable cause may be subject to financial penalties each calendar year.

What deadlines do I need to know?

To stay updated on the latest MERIT deadlines, you can register your business on the MERIT website.

What alternatives can I consider?

To meet Maine’s retirement mandate, employers can choose a qualified private retirement benefit, like a 401(k) plan. Employers can switch to a 401(k) plan to replace the MERIT program at any time.

There can be many benefits to a 401(k) plan, including:

As an employer in Maine, you can meet the mandate with the MERIT program or by offering a company-sponsored retirement benefit, like a Guideline 401(k).