Insights
people sitting in a glass office having a meeting

Nevada joined a growing movement in June 2023 when it passed Senate Bill 305. The legislation created the Nevada Employee Savings Trust Program, which aims to help employees without employer-sponsored retirement plans to save for their future. It will require most employers who do not have a 401(k) plan set up for their employees to enroll them in the Nevada Employee Savings Trust. 

Nevada isn’t alone in this endeavor. It’s actually the 11th state to pass such legislation. Other states that have already implemented programs include California, Illinois and Oregon. These states recognized a critical gap in retirement savings. Many workers, especially those in small businesses, lack access to employer-sponsored plans. State-run programs aim to bridge this gap. 

What is the Nevada Employee Savings Trust Program? 

The new law establishes a board of trustees to oversee the program. The board will hammer out the plan’s details before its launch, which can’t happen before July 1, 2025. However, the program will likely be a state-facilitated IRA-based retirement savings option. It will require employers with more than five workers who have been in business for at least 36 months and have not offered a tax-qualified retirement plan to enroll their workers in the Nevada Employee Savings Trust Program or a similar program offered by a trade association or a chamber of commerce.  

The program will likely feature automatic enrollment for eligible employees. They can opt-out, but the default will be participation. Employees will have some flexibility. They can change contribution rates or make emergency withdrawals. The board may also set auto-escalation rates and establish options for converting contributions into fixed lifetime income streams. 

What Nevada executives need to know  

As a Nevada executive, you should start preparing now. Even though the program won’t launch until mid-2025, understanding your options is crucial. Your business qualifies if you have more than five employees and you’ve operated for 36 months without offering a retirement plan. You must either join the state program or provide an alternative. 

Benefits of employer-sponsored plans 

The Nevada Employee Savings Trust Program offers a solution for employees who lack access to an employer-sponsored plan. However, an employer-sponsored plan has distinct advantages over the proposed state-sponsored plan. For example, an employer-sponsored plan gives you more control over plan design, allowing you to tailor it to your company’s and employees’ needs. Employer-sponsored plans also often have higher contribution limits than state-sponsored IRAs. For example, as an IRA-based program, the individual contribution limit under the proposed Nevada Employee Savings Trust Program is $7,000 per individual, consistent with contribution limits of any other IRA. A typical employer-sponsored plan typically offers higher contribution limits, allowing your employees to save more for retirement. An employer-sponsored plan also offers more investment options, while the state plan will likely be limited to three to five investment options.  

Employer-sponsored plans provide tax benefits for both employers and employees. Businesses can usually deduct their contributions for tax purposes, and employees benefit from the tax-deferred growth of their savings. Although tax-deferred growth is also available through IRAs like the state-based program offers, employer-sponsored plans offer additional options. You can choose profit-sharing or matching contributions, which can significantly boost employee engagement and loyalty. 

How BPM can help 

The Nevada Employee Savings Trust Program marks a significant shift. It aims to improve retirement readiness across the state. As an executive, you have important decisions to make. Don’t wait until 2025 to act. Start exploring your options now. Will you opt for the state program or an employer-sponsored plan? Each path has its considerations. That’s where BPM comes in.

We specialize in helping businesses like yours find the right solutions. We understand the nuances of the new Nevada law and can help you understand whether the state program or an alternative is best. If you choose an employer-sponsored plan, we can assist with plan design, implementation and ongoing administration. Our goal is to maximize benefits while minimizing your administrative burden. 

Contact us today to get ahead of the curve and start planning for tomorrow. Your employees’ retirement security is too important to leave to chance. 

 

Subscribe