February 20, 2024
There has been significant concern amongst legislators about the retirement-saving opportunities available to American workers. A recent study by the Pew Charitable Trusts has found that 51% of workers are concerned about running out of money in retirement and 71% wished they had more saved. These findings, common among such studies, reflect the alarming situation many will face in the golden years. It also means taxpayers could be left paying the bill to help those without sufficient means. Over the past few years, Congress has passed several parcels of legislation to make it easier for employees to participate in and benefit from workplace retirement plans including the SECURE Act of 2019 and the SECURE Act 2.0.
For those without access to workplace plans, many states including California, Maryland, Oregon, and Virginia have launched state-sponsored plans. These plans serve as an alternative retirement savings vehicle. Earlier this month, legislation was introduced in the Georgia Senate calling for creating the Peach Save Plan (GA Senate Bill 463). Like other states-sponsored plans, it provides workers with the option to participate when a workplace plan is not available. It is a defined contribution plan which will allow multi-employer participation. To help clients, prospects, and others, Wilson Lewis has provided a summary of the key details below.
Those eligible to participate include an individual or entity engaged in a business, profession, trade, or other enterprise in the state of Georgia with no more than 100 employees. Both for-profit and not-for-profit organizations are eligible to participate. Certain employers are excluded including the federal and state government, county or municipal corporations, and employers that provided a tax favorable retirement plan (other than a Peach Save plan) within the last two years.
Liability Limits
To encourage participation there are limits on the employer’s liability including an employee’s decision on which investment to choose, investment decisions made by the Board of Directors, and plan administration. This includes administration of investments, investment returns, plan performance (including interest rates and other rates of return on any account balance), plan design, or any loss or other consequences.
Only those who a participating employer employs, have wages or other compensation taxed by the state, and are 18 years or older may participate. Excluded individuals include workers covered under the federal Railway Labor Act, who make contributions to a multiemployer pension trust fund, or those working for the federal, state, or local government agencies.
Employee plan contributions will be made through payroll deductions. Distributions will be issued at the written request of a participant and a lump sum shall be paid equal to the total amount in the account at the time. In cases where the participant ceases to be an eligible employee but does not make a written request, then interest will continue to accrue.
The legislation mandates the creation of a Board of Trustees charged with plan management and administration. Members will include the State Auditor, State Treasurer, Commissioner of Administrative Services, one Trustee appointed by the Governor, and two Trustees elected by the Board. The primary responsibilities include designing and implementing the plan, creating the rules necessary to operate the plan, establishing necessary trusts, paying administrative expenses, and collecting all necessary monies.
Contact Us
The Peach Save Plan provides an important retirement saving opportunity to Georgia workers without another option. It is expected there may be additional changes as the legislation works its way through the state government. If you have questions about the information outlined above or need assistance with a tax or accounting issue, Wilson Lewis can help. For additional information call 770-476-1004 or click here to contact us. We look forward to speaking with you soon.