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Delaware EARNS Act Sets Retirement Plan Mandate in Motion

August 25, 2022


  • The Delaware EARNS act will be implemented on January 1st, 2025.
  • Employers with five or more employees will be required to enroll in Delaware EARNS or a qualifying alternative.
  • The program will be an payroll deduction Auto-IRA.


Delaware passed House Bill 205 in May and was signed into law by the governor, John Carney, on August 18th, 2022. The bill establishes the cleverly titled EARNS act (Expanding Access for Retirement and Necessary Savings), which is a mandatory retirement plan program for employers with five or more employees who do not offer a retirement plan.

Delaware EARNS aims to support small business owners and their employees with a state-funded retirement savings alternative. According to the Delaware government website, this program will assist the 147,000 Delaware residents who lack access adequate retirement savings options.

What Type of Plan Is Delaware EARNS?

Like other state-administered plans, the program with be an auto-enroll Roth IRA that draws from automatic payroll contributions.

This means those who are enrolled will have a portion of their paychecks placed directly into their IRA before they receive their paychecks. The plan is monitored by an investment company and is of no cost to the employer.

The Delaware EARNS program will automatically enroll employees when their employer signs up for the program. Employees can opt out at any time. 

When Can a Business Enroll?

 The Earns Act is set to be implemented by January 1st, 2025. This may be subject to change.

Who Is Eligible?

Employers must

  • Be in business for at least six months
  • Have five or more employees

Employees must

  • Be 18 years or older
  • Be employed and receive wages from their employer
  • Not receive benefits from another retirement plan
  • Not be covered by the federal Railway Labor Act.

These criteria do not apply to individuals already employed by a state or federal government agency.

How Much Can Employees Contribute?

Employees who do not opt out of the retirement plan will be enrolled at a default contribution rate. The default contribution rate will be between three and six percent as determined by the Board that runs the program. Employees can choose to invest more, but must not run past the year’s IRS contribution limits.

Who is Required to Enroll?

Delaware EARNS will be required for employers who have five or more employees. Because this plan has been signed into law so recently, there are no plans for earlier implementation for companies with larger pools of employees.

Are There Other Retirement Plan Options?

Fortunately, employers in Delaware are not forced to enroll in the state-run program if they enroll in a qualifying retirement plan. Qualifying plans include:

  • 401(a)
  • 401(k)
  • 403(b)
  • 408(k)
  • 408(p)

Each plan type has its own benefits and drawbacks. If you are unsure which plan is right for you, we will help you find the right match for your needs.

Note: qualified plans in Delaware do not include Taft-Hartley Plans

If you are not satisfied with the offerings of the Delaware EARNS program or are looking to help your employees save now, get in contact and we will help you create a plan around your business.

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