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The list of states that have launched retirement programs for private-sector workers continues to grow, with Minnesota and Hawaii becoming the 17th and 18th states to provide a way for workers without access to a 401(k) or other workplace plan to save for retirement through their job. Minnesota’s program opened Jan. 1 and will begin enrolling workers Jan. 19, and Hawaii plans to launch its version later this year. In general, these state-run options require all but the smallest employers to either offer their own retirement plan or facilitate worker enrollment in their state’s option.
Although there are some minor differences among these programs, most involve employees being automatically enrolled in Roth individual retirement accounts through a payroll deduction — starting around 3% or 5% — unless they opt out. There is generally no cost to employers, and these so-called auto-IRAs are managed by an investment company.
Addressing the Retirement Savings Gap
An estimated 53.7 million full-time and part-time workers between the ages of 18 and 65 lack access to any employer-based retirement plan, according to 2025 research from the Economic Innovation Group, a bipartisan public policy group. The state-run retirement programs help fill that gap. Collectively, workers have saved $2.75 billion through state-run retirement programs as of the end of 2025, according to data from the Center for Retirement Initiatives at Georgetown University. The bulk of that, around $2.69 billion, is in auto-IRAs.
“We’re seeing those programs move the needle to cover workers … and it’s also moving employers to adopt plans of their own,” said Angela Antonelli, executive director for the center.
State Programs and Federal Options
The rise of state-run auto-IRA programs comes amid an ongoing push to give people a way to save for retirement through a work-based option. Workers are about 15 times more likely to save if they can do so through their employer, according to AARP research. Automatic enrollment also boosts participation. In 2024, 61% of 401(k) plans included auto-enrollment, up from 54% in 2020 and 27% in 2010, according to Vanguard’s How America Saves 2025 report.
Moreover, plans with auto-enrollment had a 94% participation rate, compared with 64% for those without that feature, according to the report. Last year, a provision from retirement legislation known as Secure 2.0 took effect that requires 401(k) plans to auto-enroll workers, although it excludes some employers — i.e., very small businesses — as well as plans that were in existence prior to the legislation’s passage in December 2022.
Federal policymakers and legislators continue proposing ways to improve the U.S. retirement system. For example, a bill in Congress called the Automatic IRA Act generally aims to do what the state-run programs do: require most employers to either automatically enroll their workers in a retirement account, whether an IRA or through a 401(k) plan or similar option.
State Programs and Small Businesses
While most private-sector workers — 72%, according to the Bureau of Labor Statistics — have access to a retirement plan at work, that figure drops among employees at smaller businesses. The BLS data is based on a survey of 126.9 million workers. Fifty-nine percent of workers at employers with under 100 employees are offered a retirement plan, compared with 90% of workers at employers with 500 or more employees, according to the BLS.
The state-mandated programs at least partly help address that disparity. The existence of the programs also appears to boost the number of employers that choose to offer their own retirement plan instead of enrolling their workers in the state program, according to a December study from the Center for Retirement Research at Boston College.
Understanding Roth IRAs and Auto-IRAs
For workers who may end up enrolling in a state-run auto-IRA program, it’s worth knowing that contributions to Roth accounts are not tax-deductible as they are with traditional 401(k) plans. Traditional IRAs, whose contributions may be tax-deductible, might be available as an alternative option, depending on the specifics of the state’s program.
However, Roth IRAs — unlike, in general, 401(k) plans — also come with no penalty if you withdraw your contributions before age 59½. This means that if you take back any contributions to a Roth before retirement, there is generally no penalty because you already paid taxes on that money. For earnings, however, there could be a tax and/or penalty.
Learn more about state auto-IRA retirement programs Here
Smart Tip for Readers
If you’re eligible for a state-run auto-IRA program, take the time to review the details and consider contributing to it, as it can be a valuable way to start building your retirement savings. Be sure to also explore other retirement savings options available to you, such as traditional IRAs or employer-matched 401(k) plans, to determine the best fit for your financial situation.
