Tom Werner | Stone | Getty Images
The list of states that have launched retirement programs for private-sector workers continues to grow.
This year, Minnesota and Hawaii will become 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.
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.
States plow ahead even as federal options explored
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.
A separate measure, the Retirement Savings for Americans Act, would create portable retirement accounts for workers without a workplace plan. “There’s no one solution in the marketplace that has everybody covered,” said John Lettieri, co-founder, president and CEO of the Economic Innovation Group, which supports the proposed legislation.
The state plans “can coexist” if a federal law were enacted to cover all workers, Lettieri said, “but in a way that ensures the target group of left-behind workers have a wider array of options and stronger access as they choose how to plan for retirement.”
It’s uncertain whether lawmakers would act on either of these proposals any time soon. In the meantime, states are continuing to plow ahead with tweaking their programs and, in the case of states without an option, exploring the possibility of an auto-IRA program. A measure in the Florida state legislature, for instance, would create a task force to determine how best to expand retirement savings options to private-sector employees without a workplace plan.
“I think there’s a general sense that right now, with the combination of states and private-sector providers, that [this] private and public sector collaboration focused on closing the access gap is promising and moving in the right direction,” Georgetown University’s Antonelli said.
If the federal government does end up adopting some sort of mandate, “the state programs will continue to play a role,” Antonelli said.
State programs boost savings at 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.
At the same time, up to a third of workers opt out of the auto-IRAs, Antonelli said. OregonSaves, which was the first to launch in 2017, has an opt-out rate of about 27%, according to recent data from the program. The average savings rate among those who participate is 6.8% of their pay, and the average monthly contribution is $176. The average balance is $2,991.
“The best-use case for these auto IRAs is just getting non-savers started,” said certified financial planner Douglas Boneparth, president and founder of Bone Fide Wealth in New York and a member of the CNBC Financial Advisor Council. “The long-term impact depends [partly] on if they stay enrolled and increase their contribution rate over time.”
Roth IRAs differ from 401(k)s in several ways
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.
Additionally, these Roth accounts generally won’t have an employer match on work contributions, as 401(k) plans often do.
Contribution limits to IRAs, both Roth and traditional, are also lower than those for 401(k)s. In 2026, you can contribute up to $7,500 in an IRA, although higher earners are limited in what they can contribute, if at all. Also, anyone age 50 or older is allowed an additional $1,100 so-called catch-up contribution.
For 401(k)s, the 2026 contribution limit is $24,500, and the catch-up limit is $8,000, although workers ages 60 to 63 can instead save an extra $11,250, based on changes enacted via Secure 2.0.
