Maine has rolled out a state-sponsored Roth auto-IRA plan, MERIT, for companies that have been active for at least two years, have more than five employees, and do not offer an employer-sponsored retirement savings plan to their employees. Employers with 5 or more employees needed to register by June 30, 2024. 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 | Possible penalty for non-compliance may be $20 per employee per year | Compliant with state program |
| Eligibility | 18 years of age with taxable wages in Maine | Employer controls eligibility requirements |
| Plan Costs | An administrative fee of approximately 0.32% is deducted from employee’s account | 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 | 5% of pay with auto escalation unless opt into a different amount | Employee choice |
| Auto Escalation Feature | YES. Increases by 1% annually up to an 8% cap, with the ability to opt out at any time | NO |
| Minimum Employees to Participate | 5+ | Any Number |
| Investments | Capital Preservation, Target Date Funds, Bond Index, and International Equity Option | More than 25 funds in a variety of Morningstar categories |
