State plans
Some states now require, or are considering requiring, employers to join a state-controlled retirement program if they don’t offer their workers a retirement plan. But a state-sponsored plan is just one of many options.
State-by-state status is compiled from Georgetown University’s Center for Retirement Initiatives and from state websites as of June 23, 2023. For more details about each state’s plan and its current legislative status, go to cri.georgetown.edu/states. New York City’s retirement program is expected to become part of the state program. Seattle’s retirement program is pending state action. Some enacted state programs have not yet taken effect.
Alternative solutions
While a state-run program can help more people save for retirement, there are several low-cost alternatives.
Read more about state-sponsored plans and alternative solutions
Capital Group’s retirement plan solutions are scaled to fit a range of clients.
A state-run program can satisfy the requirement to offer a plan, but other plan types could enable participants to save more.
AUTO-IRA
ELIGIBILITY
Varies by state
EMPLOYER CONTRIBUTIONS
Not permitted
MAXIMUM CONTRIBUTIONS
$6,500
($7,500 if 50+)3
SEP IRA
ELIGIBILITY
Any business
EMPLOYER CONTRIBUTIONS
Discretionary1
MAXIMUM CONTRIBUTIONS
25% of compensation1
or $66,000
SIMPLE IRA
ELIGIBILITY
≤100 employees
EMPLOYER CONTRIBUTIONS
Mandatory2
MAXIMUM CONTRIBUTIONS
$31,000
($38,000 if 50+)4
401 (k)
ELIGIBILITY
Any business
EMPLOYER CONTRIBUTIONS
Discretionary
MAXIMUM CONTRIBUTIONS
$66,000
($73,500 if 50+)
1Employer SEP IRA contributions must be the same percentage for every employee, calculated on up to $330,000 in compensation.
2Employers must make either a dollar-for-dollar match of up to 3% (may be reduced to a minimum of 1% for two of every five calendar years) or a non-elective contribution of 2%
(based on up to $330,000 in compensation).
3Income restrictions apply.
4Maximum based on employer matching contributions of 3%, for participants earning at least $516,667 annually ($633,333 when the maximum catch-up amount is included).
AUTO-IRA
SEP IRA
SIMPLE IRA
401(k)
Eligibility
Varies by state
Any business
100 or fewer employees
Any business
Employer contributions
Not permitted
Discretionary1
Mandatory2
Discretionary
Maximum contributions
$6,500
25% of compensation1
$31,000
$66,000
($7,500 if 50+)3
or $66,000
($38,000 if 50+)4
($73,500 if 50+)
1 Employer SEP IRA contributions must be the same percentage for every employee, calculated on up to $330,000 in compensation.
2 Employers must make either a dollar-for-dollar match of up to 3% (may be reduced to a minimum of 1% for two of every five calendar years) or a non-elective contribution of 2%
(based on up to $330,000 in compensation).
3 Income restrictions apply.
4 Maximum based on employer matching contributions of 3%, for participants earning at least $516,667 annually ($633,333 when the maximum catch-up amount is included).
Our products
Capital Group, rated the best overall recordkeeper by advisors*, offers solutions with best-in-class service and support† that can be tailored to fit the needs of any client.
SEP IRA
For sole proprietorships and businesses with few employees.
SIMPLE IRA
Affordable, easy solution for businesses with 100 or fewer employees.
SIMPLE IRA Plus
401(k)-style features at a SIMPLE IRA price, exclusive to Capital Group.
RecordkeeperDirect
A low-cost 401(k) solution designed for startups and smaller plans.
PlanPremier
A full-featured 401(k) solution designed for larger plans.
Resources
Use the following resources to learn more as you and your clients weigh retirement plan options.
Are tax credits available?
Expanded tax credits, recently enacted by Congress, could significantly defray the cost of starting a plan.
How are participants supported?
Financial professional support and engaging tools, like our ICanRetire® site, can help participants stay on track.
How are the plan investments managed?
Quality plan menus can make a difference in participant outcomes. Explore what sets Capital Group’s investments apart.
Retirement saving gets another boost with SECURE 2.0 Act
The current state of state-sponsored retirement plans
2023 Retirement Plan Trends: Big changes coming
Trust in a proven leader
Our target date series has “Thrilling” underlying strategies.‡
Our funds were honored with 27 Refinitiv Lipper Funds Awards.§
American Funds was the DC plan provider selected most often as a “company I trust” and “easy for advisors to do business with.”†
Ready to get started?
We’re here to help.
Give our team of dedicated retirement plan specialists a call today.
800-421-9900
* Source: 2022 Financial Advisor IQ Service Awards. Methodology: Votes of 742 advisors were collected through an online poll conducted April to June, 2022. American Funds was awarded the Gold Medal for Best Overall Recordkeeper, large managers.
† Escalent, Cogent Syndicated, Retirement Plan Advisor TrendsTM, September 2022. Methodology: 538 respondents participated in a web survey conducted August 19-30, 2022. The respondents consisted of financial advisors managing defined contribution (DC) plans. For “Ownership” of Core Brand Attributes, among 385 “established” DC advisors (with at least $10 million in DC plan assets under management), American Funds was selected most often in response to the question, “Which — if any — of these DC plan providers are described by this statement … ‘Best-in-class plan advisor service and support’ (Tier 1) and ‘Best-in-class plan sponsor service and support’ and ‘Best-in-class participant service and support’ (Tier 2)?”. American Funds was also selected most often for “Easy for advisors to do business with” (Core Brand Attributes — Tier 1) and “Is a company I trust” (Tier 2). Capital Group has provided input on some questions to be included in Cogent surveys over time.
‡ Source: Morningstar, “The Thrilling 31,” by Russel Kinnel, October 2022. Morningstar’s screening took into consideration expense ratios, manager ownership, returns over manager’s tenure, and Morningstar Risk, Analyst and Parent ratings. The universe was limited to share classes accessible to individual investors with a minimum investment no greater than $50,000, and did not include funds of funds. Class A shares were evaluated for American Funds. American Funds Target Date Retirement Series® invests in Class R-6 shares of the underlying American Funds. Not all seven American Funds strategies are in each target date fund. Underlying funds may change over time.
§ Source: Refinitiv Lipper Fund Awards. © 2023 Refinitiv. All rights reserved. The 2023 Refinitiv Lipper Fund Awards were awarded on March 23, 2023, and were based on Class R-6 and F-3 shares for the three-, five- or 10-year periods ended November 2022. The Refinitiv Lipper Fund Awards are based on the Lipper Leader for Consistent Return rating, which is a risk-adjusted performance measure calculated over 36, 60 and 120 months. The fund with the highest Lipper Leader for Consistent Return (Effective Return) value in each eligible classification wins the Refinitiv Lipper Fund Award. For more information, visit lipperfundawards.com. Although Refinitiv Lipper makes reasonable efforts to ensure the accuracy and reliability of the data contained herein, the accuracy is not guaranteed by Refinitiv Lipper.