Starting in 2026, companies in Minnesota with 5 or more employees MUST offer a qualified retirement plan. If they don’t offer their own plan, they must join the Minnesota Secure Choice Retirement Program. This state-sponsored program enables employers to offer a retirement savings option with minimal administrative effort and no cost to the employer. Employees must be allowed the opportunity to change their contribution amount or opt out of contributing altogether. Employees will be 100% vested with their contributions.
This program is a state-run retirement savings plan that requires companies to work with the Board of Investments to ensure all appropriate steps are taken to establish an effective plan.
For coverage purposes, employers that maintain a tax-qualified retirement plan of any kind (e.g., a 401(k) plan, a 403(b) plan, a traditional defined benefit or cash balance pension plan, an eligible Code Section 457 plan, a simplified employee pension plan, a SIMPLE plan or an automatic-enrollment payroll-deduction IRA) or that contribute to a Taft-Hartley multiemployer plan are excluded from participation in the Secure Choice program.
Employers will be required to deduct contributions from their employees’ paychecks and remit those to the Program. Employers will be responsible for any cost associated with deducting the contributions and remitting them to the Service Provider. The Service Provider will offer several ways to interface with their current payroll software and payroll firms. There will be no cost to the employer. Employers contributions are not permitted; the only contributions to the Program will be wages withheld from employees’ pay checks.
Implementation Timeline
The program is expected to launch between January 1, 2026, and March 30, 2026, and will be rolled out in phases based on employer size. The Program will help employers get started.
Tax Credits Offered for Starting a New Qualified Retirement Plan
- Administrative Tax Credit
- 100% of costs up to $5,000 per year for 3 years
- Employer Contribution Tax Credit
- Up to $1,000/employee making less than $100,000 for 5 years (with restrictions)
- Auto-Enrollment Tax Credits
- $500 per year for 3 years ($1,500 total tax credit)
Comparison Chart
| State | Simple IRA | 401(k) | |
| Plan Type | Roth IRA (default) & IRA | Simple IRA – Roth allowed | 401(k) – Roth allowed |
| Employee Contribution Limit | $7,000 | $16,500 | $23,500 |
| Catch-up Contribution age 50+ | $1,000 | $3,500 | $7,500 |
| Catch-up Contribution age 60-63 | $1,000 | $5,250 | $11,250 |
| Employer Contributions | None | Mandatory: Either 2% non-elective contribution or 3% matching contribution | Depends on Plan design |
| Payroll Integration | Limited | Yes | Yes |
| Investment Options | Chosen by the State | Chosen by Financial Advisor/Employer | Chosen by Financial Advisor/Employer |
| Tax Benefits to Employee | Pre- & Post-tax (default) | Employee: Pre- & Post-tax Employer: Tax deductible |
Pre- & Post-tax |
| Administration | Unknown* | Minimal | Annual compliance testing & Form 5500 |
| Tax Credits | None | Yes | Yes |
*Please note this information is not comprehensive. We are still waiting on guidance from MN with additional details and more information.
- Limits are for 2025 and can be subject to change annually.
We recommend reviewing your current retirement benefit offerings and payroll capabilities. Staying proactive will help your organization remain compliant and provide employees with a valuable opportunity to save for their future.
Considerations?
- Most state-mandated plans require W-2 employees to be enrolled within 30-60 days of hire, creating an administrative burden.
- Do employees already have a personal IRA? Employees are responsible for tracking their own IRA contribution limits, which can be challenging if they are automatically enrolled in a state IRA while also maintaining a personal IRA. Since employers cannot monitor contributions made to different IRAs, employees may accidentally exceed the annual contribution limits.
MN Secure Choice Retirement Program Website
Questions? Call us at (888) 388-1040 to learn more and hear about other options available. Whether you have 5 or 500 employees, exploring retirement account options is a critical tool for planning and growth. Reach out to our expert, Jen Burnett, to hear how retirement account options can be tailored to fit your needs.
Our firm provides the information on this page for general guidance only, and does not constitute the provision of legal advice, tax advice, accounting services, investment advice, or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional tax, accounting, legal, or other competent advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation.
