Delaware's EARNS Retirement Program

At a Glance

• Delaware recently enacted Expanding Access for Retirement and Necessary Savings (EARNS), a state-sponsored employee retirement savings program, effective July 1, 2024.
• Employers with five or more employees who don’t offer a qualified retirement plan must register with EARNS by October 15, 2024.
• The program is completely employee-funded (i.e., it doesn’t require employer contributions).
• Employers who fail to comply with the program may be subject to a penalty of $250 per eligible employee up to a maximum of $5,000 annually.

Summary

Delaware enacted a state-sponsored retirement savings program for employees within the state called Expanding Access for Retirement and Necessary Savings (EARNS). The program takes effect July 1, 2024, and is completely employee-funded (i.e., it doesn’t require employer contributions).

Employers who have been in business for at least six months, have five or more employees (full or part-time), and don’t currently provide a qualified retirement plan must register for the program or certify they’re exempt. Employers who fail to enroll in the program by October 15, 2024, will be subject to a penalty of $250 per eligible employee up to a maximum of $5,000 annually.

After registering, employers must withhold the default rate (5%) of an employee’s gross pay to contribute to that employee’s Roth Individual Retirement Account (IRA).

The program’s default contribution rate is expected to increase by 1% each year. Employees may change their contribution rate or opt out of the program at any given time without consequence. For the 2024 tax year, employees under the age of 50 can contribute up to $7,000 annually to their retirement account, while employees aged 50 or older can contribute $8,000 annually.

Employers must notify their employees that the EARNS program will charge employees the following fees for participating in the retirement plan:

• An annual asset-based fee of 0.32% (i.e., $0.32 for every $100 in the account)
• A quarterly account fee of $5.50 (i.e., $22.00 annually)
• A quarterly state fee of $1.00 (i.e., $4.00 annually) 

What’s Next?

The EARNS program will notify employers when their enrollment period opens for registration. Employers will need their federal employer identification number (EIN) and EARNS access code from that notification to complete their registration.

Note, employers don’t get additional notifications from EARNS as the due date approaches. To avoid penalties, an employer must contact EARNS to register before the October 15, 2024, deadline.

Next Steps

Visit the Delaware EARNS site for more information about employer registration, and if you have questions about the EARNS program, please email clientservices@EARNSDelaware.com.

Thank you for choosing Paylocity as your Payroll Tax and HCM partner. This information is provided as a courtesy, may change and is not intended as legal or tax guidance. Employers with questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney or Advisor. questions or concerns outside the scope of a Payroll Service Provider are encouraged to seek the advice of a qualified CPA, Tax Attorney, or Advisor.