Connecticut Retirement Mandate: MyCTSavings Explained
The Connecticut retirement mandate: who must register for MyCTSavings, the deadline, the penalties, how the auto-IRA works, and the 401(k) alternative.
A founder in Hartford forwarded me a letter from the state with the subject line rewritten in capitals and one question underneath it: does this mean I have to pay for everyone's retirement now. That was his honest reading of the notice. It is the wrong reading, and the gap between the two readings is most of what this page is for.
The Connecticut retirement mandate does not ask you to fund anything. It asks you to pick one of exactly two acceptable answers: register for the state program and run the payroll deductions, or tell the state you already sponsor a qualifying plan of your own. There is no third answer where you read the letter, decide it does not feel urgent, and file it.
What follows is who the mandate covers, the deadline and the annual cycle behind it, what missing it actually costs, how the auto-IRA behaves on a real paycheck, and the honest comparison against starting a 401(k) instead.
I build the people and records tooling for businesses without an HR department at FirstHR, and FirstHR is an onboarding and HR platform rather than a payroll or retirement plan provider. This is general information, not legal or tax advice.
What MyCTSavings Is
MyCTSavings is Connecticut's state-facilitated automatic enrollment Roth IRA program, administered by the Office of the State Comptroller for private sector employees whose employers do not offer a retirement plan. It is a savings vehicle the state runs and you plug into, not a plan you own.
The program sits inside the same family of state auto-IRA programs described in our overview of state retirement program mandates, and the Connecticut version is administered by the Comptroller rather than by a standalone authority (Office of the State Comptroller).
Two things about that structure matter commercially. The accounts belong to the employees, so they follow people to their next job. And because no employer money enters them, the program produces none of the goodwill a match produces, which is a fair reason to consider the alternative later on this page.
Whether the Mandate Applies to Your Business
The test is a snapshot, not a running count. Conn. Gen. Stat. 31-416 defines a qualified employer as an entity doing business in the state that employed five or more individuals in Connecticut on October first of the preceding calendar year and paid at least five of them taxable wages of not less than five thousand dollars during that year.
| Condition | What it actually means | Source |
|---|---|---|
| Five or more individuals employed in Connecticut | Measured on October first of the preceding calendar year, not on the day the letter arrives | Conn. Gen. Stat. 31-416 |
| At least five of them paid $5,000 or more | Taxable wages during that preceding calendar year | Conn. Gen. Stat. 31-416 |
| Private sector only | Federal, state, municipal and municipal housing employers are excluded | Conn. Gen. Stat. 31-416 |
| In existence throughout both years | An employer that did not exist for all of the current and preceding calendar year is outside the definition | Conn. Gen. Stat. 31-416 |
| No qualifying plan of your own | A plan or arrangement described in IRC 219(g)(5) removes the duty to enroll employees | Conn. Gen. Stat. 31-422 |
The employee side has its own definition and it is not about hours. A covered employee is someone employed by a qualified employer for at least one hundred twenty days, aged nineteen or older, performing services within the state, which means a long-serving part-time person is generally in and a brand new full-time hire is not yet.
The full statutory text sits in the general statutes (Connecticut General Assembly), and the wider state picture is on our Connecticut compliance hub.
One dated expansion is worth knowing about. From July 1, 2026, the definitions reach personal care attendants and the consumers who receive their services under a state-funded program, with a thirty day service requirement rather than one hundred twenty (2026 Supplement to the General Statutes).
Because the test runs against a date that has already passed by the time you think about it, run it once a year and keep the answer. The record below holds the snapshot numbers and where they came from, the four coverage questions, the check on whether your own plan still qualifies, and what you did with the access code.
The Deadline and the Annual Cycle
The original staged launch deadlines are long gone, and what remains is an annual cycle keyed to August 31. Employers that become newly covered are notified by the state and are expected to register or certify an exemption by that date, which for most businesses arrives the summer after they crossed the October first threshold.
Those last two numbers come straight from Conn. Gen. Stat. 31-422, and they are the easiest ones to miss. Materials go to an employee within thirty days of hire or of becoming eligible, and automatic enrollment follows within sixty days of the materials, unless the Comptroller prescribes another period.
The practical failure mode is drift rather than defiance. A business hires a fifth person in September, crosses the October first snapshot without registering the significance, hears nothing for ten months, then receives a notice in the summer and treats it as a solicitation. By then the clock has been running the whole time.
What Noncompliance Actually Costs
Noncompliance that runs ninety days past the final notice costs a civil penalty of up to $500 a year for the smallest covered employers, up to $1,000 and $1,500 at larger sizes, and the penalty repeats annually rather than landing once. Public Act 25-30, effective July 1, 2025, moved the state from bringing civil actions to assessing civil penalties directly through the Comptroller.
| Maximum civil penalty per year | Applies at | Trigger |
|---|---|---|
| Up to $500 | The smallest covered employers | Each year noncompliant for ninety calendar days or longer after the final notice |
| Up to $1,000 | Once you reach the twenty-five employee threshold | Same |
| Up to $1,500 | Once you reach the one hundred employee threshold | Same |
Two failures trigger the sequence, not one. Failing to enroll covered employees is the obvious one. Failing to transmit contributions you already withheld is the other, and it is the more dangerous of the two because withheld money that has not been remitted is an employee's money sitting in your account.
How the Auto-IRA Mechanics Actually Work
The state sets the default rate, the escalation, the account type and the investment default, and the employee controls everything else, so very few of the decisions are yours.
The escalation deserves a second look because it is the part employees ask about. A saver who never touches anything sees the deduction climb by one point every January until it reaches the cap. Public Act 25-30 aimed at exactly that behavior when it tied the default contribution level for savers enrolled from July 1, 2025 to Internal Revenue Code Section 414A(b)(3)(A).
The default investment is an age-appropriate target date fund under Conn. Gen. Stat. 31-423. Under the program's default, savings sit in a capital preservation money market fund for the first sixty days after the initial contribution. After that, the balance and every later contribution go to the target date portfolio.
The investment defaults are the state's choice, not your selection or your recommendation, and saying so plainly when an employee asks is both accurate and protective.
What You Do on Payroll, and What You Never Do
Your entire operational role is roster hygiene plus a payroll deduction you did not set. Conn. Gen. Stat. 31-422 requires you to transmit a withheld contribution on the earliest date it can be transmitted, and no later than ten business days after it came out of the paycheck.
The second box, what the employer never does, is the point of this page. Conn. Gen. Stat. 31-422 states that no employer shall be permitted to make a contribution to the program, which is stronger than saying contributions are optional.
You are barred from putting money in, which is precisely why this arrangement is not the same thing as sponsoring a plan and does not carry the sponsor duties that come with ERISA-covered plans.
Practically, that means the questions employees bring you are not yours to answer. Whether to stay in, which portfolio to hold, whether a Roth is right for their tax position: all of it belongs to the program and to the employee's own advisor. Pointing at the program contact details is the correct answer, not a dodge.
What is yours is the paper trail, and it is small enough to keep in one workbook. The log below tracks who became covered and when they were given the materials, every withheld amount against its ten business day clock, and the monthly checks that catch a stale roster before the program does.
| A | B | C | D | E | F | G | H | I | J | K | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| 1 | Employee | Hire date | Date 120 days of service met | Age 19 or older | Performs services in CT | Program materials given (within 30 days) | Automatic enrollment date (within 60 days of materials) | Current contribution rate | Opted out (date) | Termination date | Roster updated in the program |
| 2 | [Employee name] | [MM/DD/YYYY] | [MM/DD/YYYY] | Yes | Yes | [MM/DD/YYYY] | [MM/DD/YYYY] | [rate the program reports] | [MM/DD/YYYY] | ||
| 3 | |||||||||||
| 4 | |||||||||||
| 5 | |||||||||||
| 6 | |||||||||||
| 7 | |||||||||||
| 8 | |||||||||||
| 9 | |||||||||||
| 10 | Note | Apply the rate the program reports. Do not set, adjust or advise on it. |
Nick Anisimov, FirstHR founder
Dwight SchruteSales3 people
Darryl PhilbinWarehouse1 person
Kelly KapoorCustomer Service1 personCertifying an Exemption With Your Own Plan
Sponsoring a qualifying plan exempts you from enrolling employees, but it does not exempt you from responding. Conn. Gen. Stat. 31-422 removes the duty for an employer maintaining a retirement plan or arrangement described in Internal Revenue Code Section 219(g)(5), or another arrangement approved by the Comptroller, and the exemption is claimed rather than assumed.
Sponsoring a 401(k) Instead
The alternative to facilitating the state program is sponsoring your own plan, and the case for it is capability rather than compliance. A 401(k) allows far higher deferrals than an IRA, permits an employer match, and behaves like a benefit rather than a payroll instruction.
The cost objection is weaker than it was. Under the federal startup credits, an eligible small employer can claim a percentage of qualified startup costs up to the greater of $500 or a formula amount capped at $5,000 per year for three years. A separate credit of up to $500 a year for three years applies for adding automatic enrollment (Internal Revenue Service).
The same IRS guidance describes an employer contribution credit for employers with up to 100 employees, worth up to $1,000 per participant in each of the first two plan years and phasing down over the three years after that.
Eligibility rules also decide the cost, and the long-term part-time rules mean part-time employees can become eligible sooner than owners expect.
Which Route Fits Your Business
Choose the state program if your goal is to satisfy the mandate at zero employer cost. Choose your own plan if your goal is a retirement benefit that does work for you in recruiting, retention and your own tax position.
| Factor | MyCTSavings | Your own 401(k) |
|---|---|---|
| Employer cost | None, and employer contributions are prohibited | Plan fees, administration, plus any match you choose |
| Employer contribution possible | No | Yes, including a safe harbor design |
| Contribution ceiling for savers | The IRA limit, which is materially lower | The much higher 401(k) deferral limit |
| Who is the plan sponsor | The state, not you | You |
| Fiduciary and investment selection | Handled by the state and its advisers | Yours, usually shared with a provider |
| Annual filings | None for the employer | A Form 5500 series return every year |
| Recruiting value | Low, employees see a deduction | High, employees see money you added |
| Setup effort | Registration and roster upload | Plan document, provider selection, ongoing administration |
The two are not permanently exclusive. A Connecticut employer can facilitate the state program for a year or two, then establish a plan once headcount and cash flow support it, and certify the exemption at that point.
Treating the state program as a floor rather than a destination is a reasonable position, and it fits the wider way most small business benefits programs get built.
Where Connecticut Employers Get This Wrong
Five mistakes are worth ruling out before a notice arrives. Assuming the exemption applies itself is the first. Sponsoring a 401(k) removes the duty to enroll employees, but the state has no way of knowing that until you certify, so an exempt employer that stays silent walks into the same notice sequence as one that ignored the mandate outright.
Reading the coverage test against today's roster is second. The test looks at October first of the preceding calendar year, which means a business that has since shrunk can still be covered and a business that has since grown may not be yet.
Treating remittance as a monthly chore is third. The statute wants withheld contributions transmitted on the earliest date possible and no later than ten business days after withholding, and holding an employee's money longer than that is a separate failure from failing to enroll.
Letting the roster go stale is fourth. Terminated employees who stay marked active generate submission errors and confusion, and the fix is upstream in offboarding rather than in the portal.
And answering investment questions is last. The moment you tell somebody the program is a good deal or a bad one, you have stepped into a role the statute deliberately kept away from you.
If you do one thing after reading this, run the October first coverage test with the record above and file the answer where the next person can find it. Everything else on this list follows from knowing whether you are covered.
Frequently Asked Questions
Who has to register for MyCTSavings?
Private sector employers that employed five or more individuals in Connecticut on October first of the preceding calendar year, and paid at least five of them taxable wages of five thousand dollars or more during that year, are the ones the program reaches. Conn. Gen. Stat. 31-416 sets that test. Government employers at the federal, state and municipal levels sit outside it, and so does any employer that did not exist for the whole of both the current and the previous calendar year. A covered employer that already sponsors a qualifying retirement plan does not enroll employees, yet it still has to certify that exemption instead of ignoring the notice. Since the count is a one-day snapshot rather than a rolling average, coverage can change from one year to the next, so rerun the test each autumn rather than answering once and filing the result away.
Does the employer have to contribute anything?
No. Conn. Gen. Stat. 31-422 goes further than leaving contributions optional: it bars an employer from putting any money into the program at all. That is the structural difference between the state auto-IRA and a workplace retirement plan. All the employer does is withhold from the employee’s own pay and send it on, so there is no match, no nonelective contribution, no vesting schedule and no employer money at risk. Fees come out of saver accounts, not out of the business. The same bar explains why the employer does not sponsor the plan, pick the investments or take on the fiduciary duties of a workplace plan. If you want employer money in the arrangement, the state program is the wrong vehicle and your own plan is the answer.
What is the MyCTSavings registration deadline?
The staged launch deadlines are behind us, and the program now follows an annual cycle. A newly covered employer hears from the state and is expected to either register or file its exemption certification by August 31 of that year. Coverage is measured on the October first headcount of the preceding calendar year, so a business can cross the line unnoticed and see its first notice the next summer. Read that notice as a clock that has started, not as marketing mail, since the enforcement sequence begins from it. An employer with a qualifying plan follows the same timetable: it certifies the exemption through the program with the access code in the notice, and a covered employer that never replies looks no different from one that chose to ignore the mandate.
What are the penalties for not complying?
Public Act 25-30, effective July 1, 2025, swapped the earlier civil action route for civil penalties that the Comptroller assesses directly. First comes a run of at least two notices of noncompliance, then a final notice. For every year it stays noncompliant ninety calendar days or longer past the final notice, an employer can be assessed up to five hundred dollars, up to one thousand dollars once it reaches the twenty-five employee threshold, and up to one thousand five hundred dollars at one hundred. The penalty comes back each year the problem continues, so ignoring it only compounds the cost. The sequence can start from either of two failures: not enrolling covered employees, or not transmitting contributions already withheld from their pay.
How much is deducted from an employee paycheck?
The standard election for savers enrolled since July 2025 is 5 percent of compensation, an increase from the 3 percent default the program launched with. Per the program description, a saver who changes nothing sees the rate climb by 1 percentage point every January until it hits 10 percent, unless that saver opts out of the increase. Employees may choose any rate, zero included, and electing zero is exactly how an opt-out works under Conn. Gen. Stat. 31-422. The employer applies whatever rate the program reports and never adjusts it independently. Because doing nothing means riding the escalation upward, the design matches what federal automatic enrollment rules were built to produce. Anyone who wants a different number changes it directly with the program.
Is a 401(k) better than the state program?
It depends on whether you want a retirement plan or want to satisfy a mandate. MyCTSavings costs the employer nothing and carries no fiduciary role, but it also gives you no employer contribution to point at when recruiting, and contribution limits for an IRA are far below those of a 401(k). A 401(k) costs real money and real administration, and it lets owners and senior staff defer far more, supports a match, and reads as a genuine benefit. The federal startup credits shrink the cost gap for small employers: a share of qualified startup costs is credited for three years, and adding automatic enrollment earns an additional credit. The practical question is what you want the money to do: satisfy a statute, or buy something candidates can compare against another offer.
Can we switch from MyCTSavings to our own 401(k) later?
Yes. Establishing a qualifying plan exempts you from enrolling employees in the state program, so the usual path is to set up the 401(k) and then certify the exemption through MyCTSavings, rather than just stopping submissions. Existing saver accounts are individual Roth IRAs owned by the employees, so they stay in place whatever you decide. Sequence matters more than the decision itself: certify the exemption first, then stop remitting, and keep the confirmation. If submissions stop before the certification, the state sees an unexplained gap in remittances that looks just like a failure to transmit, and that is what turns a compliant employer into one receiving notices. Allow enough lead time that the plan is truly established before the certification goes in.
Do part-time employees count?
Part-time status is not the test. Under Conn. Gen. Stat. 31-416, a covered employee is anyone employed by a qualified employer for at least one hundred twenty days who is nineteen or older and performs services within the state. Because hours never enter the definition, a part-timer with long service is generally covered, while a brand new full-time hire is not covered yet. From July 1, 2026 the definition also takes in personal care attendants, who need only thirty days of service rather than one hundred twenty. The employer-side test works differently again: it counts everyone employed in the state on October first regardless of hours, then asks how many of them were paid five thousand dollars or more in taxable wages.
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