Maine Retirement Investment Trust (MERIT)

Maine is rolling 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 15 or more employees need to register by April 30, 2024. Employers with 5 – 14 employees need 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 Possible penalty for non-compliance may be $20 per employee per year Employer controls eligibility requirements
Plan Costs Small administrative fee 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 Target Date Funds More than 25 funds in a variety of Morningstar categories
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