Vestwell is set to administer the nation’s first multi-state retirement program, using Colorado’s existing auto-IRA functionality as the framework for Maine.
Vestwell has been in charge of recordkeeping responsibilities for auto-IRA programs in states including Oregon and Connecticut in the past several years. In this situation, the Maine Retirement Investment Trust opted to partner with Vestwell’s Colorado SecureSavings.
A pilot for the Maine program will launch in late 2023, aiming to eventually offer about 40% of private-sector state employees the chance to access workplace retirement accounts through an auto-IRA option. Vestwell will administer the program with BNY Mellon by running recordkeeping, custodial and administrative duties for companies (and employees) in both states. Maine will have segregated assets and its own customized platform.
Doug Magnolia, the president of Vestwell State Savings, told WealthManagement.com that collaborations like this could help states with smaller populations that find it difficult to procure the time and funding to quickly ramp up such programs.
“It does get them to market faster and reduces their implementation expense,” Magnolia said. “Someone else has paved the road, and they can drive down it.”
Maine’s legislature established MERIT in 2021 to boost retirement savings for private-sector employees (as well as lower the cost for taxpayers). All businesses with five or more employees must include the program or a similarly-qualified retirement plan option for its workers.
The Colorado SecureSavings program wrapped up its initial rollout in June after being launched early this year. Colorado businesses with five or more workers that launched more than two years ago must offer SecureSavings or another workplace retirement program, akin to Maine’s structure. Colorado State Treasurer Dave Young said he was proud of Colorado’s involvement with Maine’s retirement offerings.
“Partnerships increase the number of Americans saving for retirement, while decreasing fees for Coloradan and American savers alike, helping states with smaller populations offer a cost-friendly, state-run retirement program option for workers who don’t have access to one at work.” he said.
According to Magnolia, the Colorado program was designed with the expectation it would partner with other states as it’s now done with Maine. While this was the first partnership of its kind, Magnolia believed other states like Oregon, Connecticut and Maryland may consider forging their own partnerships with other states.
He also expected the Maine/Colorado deal to help speed up the timeline for states considering such deals to move from passing legislation to going to market.
“Someone had to go first, and Maine is the first,” he said. “Hopefully, we’ll see more choosing that path.”
As it stands now, Vestwell is the only company that launched any state auto-IRA program since 2021, and administers more than 30 programs across numerous states, including auto-IRAs and 529 College Savings plans. It was originally founded in 2016 and is led by CEO Aaron Schumm (one of WealthManagement.com’s “10 To Watch” in 2017).