---
url: 'https://www.fmjlaw.com/minnesotas-new-mandatory-retirement-benefits-program-will-open-in-2025/'
title: Minnesota’s New Mandatory Retirement Benefits Program Will Open in 2025
author:
  name: Adam
  url: 'https://www.fmjlaw.com/author/adam-brownfmjlaw-com/'
date: '2024-10-04T20:07:31+00:00'
modified: '2025-09-30T18:33:53+00:00'
type: post
summary: 'Our HR & Employment Team analyzes what employers need to know.'
categories:
  - Article
  - Thought Leadership
tags:
  - retirement benefits
  - retirement mandate
  - secure choice
published: true
---

# Minnesota’s New Mandatory Retirement Benefits Program Will Open in 2025

## LEGAL UPDATE: The Secure Choice Retirement Program is now set to become “available” on or after January 1, 2026.  Please [click here](https://www.fmjlaw.com/update-minnesotas-secure-choice-mandatory-retirement-program-will-become-available-on-or-after-january-1-2026/) to learn more.

---

In May 2023, the Minnesota Legislature enacted a bill establishing a mandatory retirement program as part of the Minnesota Secure Choice Retirement Program (the “Secure Choice Program”). In doing so, Minnesota has joined a number of other states, including California, Colorado, Oregon, and Illinois, that have recently established state-run retirement savings programs for employees working with employers that do not have their own retirement plans. These programs are intended to benefit employees in the private sector who have no opportunity to save for retirement through an employer-sponsored retirement plan such as a 401(k) plan. 

The Secure Choice Program is codified at Minn. Stat. §§ 187.01 to 187.11. The board of directors of the Secure Choice Program last met on October 4, 2024, and more updates continue to follow. There will be a new webpage dedicated to the Secure Choice Program, but that page has not launched yet. In the meantime, more information can be found at the Minnesota Legislative Commission on Pensions and Retirement (“LCPR”) website at: [https://lcpr.mn.gov/SecureChoice.htm](https://lcpr.mn.gov/SecureChoice.htm).

## **When Will the Secure Choice Program Start?**

This is not necessarily clear. The Secure Choice Program is not permitted to open prior to January 1, 2025, by law. The website for the LCPR now states that the program will open for enrollment in mid- to late 2025, as the Program is in its “formation stage with major activities underway.” Before enrollment can start, the board of directors (the “board”) of the Secure Choice Program must establish processes for enrolling employees, prepare a budget for the cost of administering and operating the program, and determine items such as contribution rates and an escalation schedule, withdrawal and distribution options, and more.

## **How Will the Secure Choice Program Work?**

Employers that do not sponsor a retirement plan for their employees will be required to transmit a percentage of each employee’s pay to a state-sponsored, individual retirement account (IRA). The IRAs established to hold employee contributions by the Secure Choice Program may be either traditional IRAs or Roth IRAs. These IRAs will be subject to the applicable requirements imposed by Sections 408 and/or 408A of the Internal Revenue Code in addition to the requirements imposed by the Secure Choice Program.

Employees have the option to change the contribution percentage or opt out of participation altogether. Employees will have some element of control of their own investment amounts, accounts, and other factors to direct the investment of their accounts into a diversified array of investment funds offered through the State Board of Investment (SBI). There will also be administrative fees assessed against the employees’ accounts. As it is currently proposed, employees will be 100% vested in their accounts at all times.

In theory, there will be minimal cost to employers, except for any incidental costs incurred to modify payroll systems to deduct contributions on either a pre-tax or post-tax basis and send funds to the SBI for deposit into employee accounts. To that end, while there will be some administrative and set-up costs, employers will not be responsible for payments, funding, or actual retirement amounts. 

## **Which Employers and Employees are Covered?**

The Secure Choice Program applies to any person or entity that:

- is “engaged in a business, industry, profession, trade, or other enterprise in Minnesota, whether for profit or not for profit,”

- employs five or more covered employees, and

- “does not sponsor or contribute to and did not in the immediately preceding 12 months sponsor or contribute to a retirement savings plan for its employees.” 

Minn. Stat. § 187.03, subd. 6. 

The statute refers to a number of potential retirement savings plans, including 401(k), 403(b), pension plans, savings match plans, and more. *See* Minn. Stat. § 187.03, subd. 10. If any of these are in place, that employer is not required to participate in the Secure Choice Program. 

The definition of a “covered employee” has been left quite broad, with only a few specific exceptions carved out (for example, employees under the age of eighteen, government employees, and employees covered under the Railway Labor Act do not fall within the Secure Choice program). *See* Minn. Stat. § 187.03, subd. 3. The Minnesota Legislature recently amended the law to include home and community-based services employees. *See* Minn. Stat. §§ 256B.092, 256B.49, and 256B.85. The Secure Choice Program does not address part-time employees or required hours to have worked to determine whether they are a “covered employee.”

Ultimately, this program is intended to apply broadly to both employers and employees.

## **What Will Employers be Required to Do Under the Secure Choice Program?**

Covered employers will inevitably have some additional responsibilities under this new program, which again are intended to be reasonably limited in scope. Minn. Stat. § 187.07 outlines the responsibilities of covered employers, which include:

- Each covered employer must enroll its covered employees in the Secure Choice Program and withhold payroll deduction contributions from each covered employee’s paycheck, unless the covered employee has elected not to contribute.

- “A covered employer must timely remit contributions as required by the board.”

- Covered employers must provide notice to all covered employees, including information prepared by the board regarding the program at least 30 days prior to the date of the first paycheck from which employee contributions could be deducted for transmittal to the program, if the covered employee does not elect to opt out of the program.

## **What Liability, if Any, Will Employers Have Under the Secure Choice Program?**

The statute makes it clear that beyond the duties outlined above, a covered employer has no obligations to covered employees and is not a fiduciary for any purpose under the program or in connection with the Secure Choice Program. Covered employers are not responsible for the administration, investment performance, plan design, or benefits paid to covered employees. Furthermore, a covered employer is not liable to a covered employee for damages alleged to have resulted from an employee’s participation in or failure to participate in the program.

The board of the Secure Choice Program may impose civil penalties against employers that fail to comply with the enrollment, remittance, and information requirements of the program. Written warnings will be provided for the first year of noncompliance. The statute directs the board to recommend employer penalty rules to the LCPR by December 31, 2024.

Employers that may potentially be subject to the Secure Choice Program should be ready to comply with new requirements as they are released. FMJ continues to monitor this situation, and we can help your organization set up a plan for complying with the Secure Choice Program. If you have questions about this issue or anything else related to employment law, please contact [Shannon McDonough](https://www.fmjlaw.com/professional/shannon-m-mcdonough/) or the rest of our [HR & Employment Team](https://www.fmjlaw.com/practice-area/hr-employment/).

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