Saving for the Future

BY COLLEEN DAVIS AND FAYETTA BLAKE

For many small businesses, it can be difficult to offer the same employee benefits and perks that larger companies offer. This is especially true when it comes to workplace retirement plans. Most large employers can attract talent by offering 401(k) plans. However, small business owners often find it too burdensome and expensive. As a result, thousands of Delaware businesses lack a retirement plan.

Enter Delaware EARNS.

Last year, HB 205 authorized Delaware to develop and launch a state-run workplace retirement plan. It’s a plan that will be specially designed for small businesses that aren’t able to offer their own retirement plan. The plan, named Delaware EARNS, is modeled after programs that already successfully operate in several other states—like OregonSaves & Illinois Secure Choice.

With Delaware EARNS, Delaware’s Office of the State Treasurer will handle the hard work—designing, managing, and operating. The employer simply needs to enroll employees and make payroll deductions. The goal is to make the process as easy as possible so that employers can help their employees securely save and invest for retirement.

Here’s how it works. When an employee is hired, they’ll receive a notice about Delaware EARNS. If they don’t want to participate, they can opt-out; otherwise, they will be auto-enrolled into Delaware EARNS. Once enrolled, a Roth IRA will be opened for them, and the employer will deduct a default percentage of their salary and remit it to the Treasurer’s Office. The money will be deposited into the IRA and put into a default investment, but the participant is free to select their own preferred contribution rate and investments instead.

While the program requires some involvement from the employer, it will not present a huge burden, even for the smallest of businesses. Surveys from other states show that employers generally have positive experiences with these programs and do not consider them to be costly or cumbersome.

Also, rest assured that the Office of the State Treasurer has the necessary experience and expertise to manage this plan. The Office’s team already manages the 457(b) & 403(b) retirement plans for state employees, as well as Delaware’s 529 education savings plan. As the Delaware EARNS program is designed, implemented, and administered, the Office is prepared to take the same thoughtful and responsible management approach they’ve always used to help Delawareans save and invest money.

Keep in mind, however, that Delaware EARNS is not a substitute for offering a 401(k). A 401(k) plan provides employees with important features that Delaware EARNS does not have—for example, a 401(k) has higher contribution limits and permits employer match contributions. However, for employers who are not equipped to offer a 401(k), Delaware EARNS is the next best thing.

Delaware EARNS launches in 2025. Until then, the State Treasurer’s office will be designing the program and setting it up.

EARNS is meant to be easy and convenient for business owners, and you can help by providing your input. Contact EARNS@delaware.gov with comments or questions or visit de.gov/ earns to learn more.

Together, thousands more Delawareans will be supported by getting access to retirement plans, saving for the future, and enjoying a more secure retirement.

Colleen Davis is Delaware’s State Treasurer and Fayetta Blake is chair of the Delaware EARNS Program Board in addition to serving as CEO and founder of Pathways to Success.