Maryland has officially opened its state-sponsored retirement program, providing individuals and small business owners with a new way to save for emergencies and retirement.

MarylandSaves, announced last year, is a state-sponsored program designed to make it easy for businesses to offer their employees a voluntary, automatic, low-cost and portable retirement and emergency savings plan.

The state says there are nearly a million employees working full-time without access to a retirement or emergency savings option. Under Maryland law, established businesses that use an automatic payroll system are required either to offer a retirement plan or to sign their employees up for the MarylandSaves program.

Businesses that enroll before December 1 will not have to pay the State of Maryland’s $300 annual report-filing fee for 2023, according to a press release from MarylandSaves. Employers will have no payment obligations, have no federal reporting requirements and will pay nothing to MarylandSaves for the service.

The program takes responsibility for most of the administrative duties. The press release notes that employers need to register their business, upload payroll and employee information into the system, and then keep staff lists up to date and submit their employees’ savings contributions.

The program is being administered by a team of providers including Vestwell and BNY Mellon, with investment options managed by BlackRock, Lincoln Financial Group, State Street Global Advisors and T. Rowe Price, the state announced.

MarylandSaves will offer workers in the state the opportunity to start a personal WorkLife Savings Account, or a Roth IRA funded automatically from payroll deductions, the release states. The accounts are under each individual saver’s control, with multiple investment options to choose from. Savers can decide at any time to change their savings rate, change their investment options or opt out entirely. They can also withdraw their money or take their account with them when they change jobs.

If a saver decides not to opt out, 5% of their paycheck will be automatically saved, the release states. The first $1,000 will be contributed to an emergency savings fund, and contributions beyond that will be invested in a target-date fund based on the age of the saver.

MarylandSaves is developing the ability in the future to enable participants to automatically convert their WorkLife Savings Accounts to a monthly paycheck when they are ready to retire, in an amount estimated but not guaranteed to last a saver’s lifetime, the release states.

The program is developing a feature to offer savers the option to withdraw money from their MarylandSaves account as they near retirement age to help them postpone filing for Social Security benefits; if a person defers and doesn’t file for Social Security at age 62, it increases their payment by approximately 8% each year until age 70. Using their WorkLife Savings Accounts to create a “Social Security bridge” could mean getting more Social Security payments when they do file, the release says.

The “Social Security bridge” and “managed payout” options are not expected to be available for several years, and the program will notify employers and participants if those options are adjusted.