New Penalties For Employers That Fail To Comply with Retirement Program Obligations

With the legislative session in the rear view mirror, it’s time to analyze some of the bills that may have been overlooked. One of them had significant changes to the state’s Retirement Security Program.

Public Act No. 25-30, which was signed into law on June 9, 2025, brings important updates that will affect how employers handle employee retirement benefits. Given that these changes were effective July 1, 2025, here’s what employers need to know.

Under the prior version of the law, employers were required to enroll their eligible employees in the state’s retirement savings program.

The revised law now establishes a clear enforcement process to the MyCTSavings.com program with graduated penalties.

The Process:

1. First violation: Comptroller sends notice of noncompliance
2. Second violation: Another notice
3. Third violation: Final notice

The Penalties (for each year employers remain non-compliant for 90+ days):

• Small employers (5-24 employees): Up to $500
• Medium employers (25-99 employees): Up to $1,000
• Large employers (100+ employees): Up to $1,500

The program also now accommodates the federal Saver’s Match contribution, which provides additional retirement savings incentives for lower-income workers. The state Comptroller will ensure participant accounts can receive these federal contributions.

Despite the change in penalties, there are several key aspects remain the same:

• Employer size threshold: Still applies to employers with 5+ employees who paid at least $5,000 in wages to 5+ workers
• Employee eligibility: Still requires 120 days of employment and age 19+ (except for personal care attendants)
• Default contribution rate: Still 3% of wages if employee doesn’t make an election
• No employer contribution required: Employers are still not required to contribute to employee accounts
• Fee collection: Employers are still not responsible for collecting program fees from participant

Immediate Steps for Employers:

1. Review your current enrollment processes to ensure compliance with the new auto-enrollment provisions
2. Update your HR procedures to reflect the state Comptroller’s administrative role
3. Prepare for the new penalty structure by ensuring compliance tracking

While these changes add some complexity, they’re designed to strengthen Connecticut’s retirement security program and provide better outcomes for employees. The key is staying compliant with enrollment requirements and contribution transmissions

The new penalty structure makes compliance more important than ever.