Delaware’s State-Mandated Retirement Program – EARNS

Delaware’s state-mandated retirement program is an auto-IRA program signed into law on August 18, 2022. Expected to launch in 2025, employers with five or more employees that were in business at least 6 months in the previous calendar year must enroll unless they have an employer-sponsored retirement plan in place. The initial deadline for employer participation will be phased according to the size of the employer. The chart below illustrates a brief summary of the program.

Feature State IRA Plan Employer Sponsored 401k
Plan Type Payroll Deduction Roth IRA Pre-tax, Roth AND Employer Contributions
Contribution Limits Limited to $7,000 (2024) $23,000 (plus more if over age 50)
Compliance Unknown at this time Compliant with state program
Eligibility Unknown at this time Employer controls eligibility requirements
Plan Costs Unknown at this time Dependent on type of plan design chosen.
Tax Deductible NO Employer contributions are tax deductible
Tax Credit Available NO Plan costs qualify for available tax credits
Default Contribution 3% of annual pay unless employee opts out or elects lower amount Employee choice
Auto Escalation Feature Yes, increases annually 1 to 2% every year, until a 15% contribution rate is achieved. NO
Minimum Employees to Participate 5   Any Number
Investments Unknown at this time More than 25 funds in a variety of Morningstar categories


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