Employers fall into three groups relating to the Program:
- If the company has five or more Delaware W-2 employees (including the owner, even if the owner does not receive a W-2) and it does not offer any type of retirement plan, then the employer must register at www.earnsdelaware.com and participate in the program before October 15, 2024.
- If the company has one or more Delaware W-2 employees and offers a retirement plan, then the employer must go to www.earnsdelaware.com and certify that it offers an acceptable plan before October 15, 2024. (The employer does not have to provide details of the retirement plan they offer.)
- If the company has less than five employees and doesn’t offer a retirement plan, employees can still participate in the Program. The employer should provide employees with a link to www.earnsdelaware.com and direct them to the employee section.
Retirement plans that qualify for exemption include:
- 401(k), 403(b), 403(a), and 408(k) SEP plans,
- SIMPLE IRA plans,
- Traditional pension plans, or
- Government deferred compensation plans.
Note: Simply giving employees money to put into an IRA does not qualify as a retirement plan.
In order to register or certify, employers will need the Access Code that was mailed to them from the Program in the past couple of weeks. An EARNS representative informed us that 90% of companies were sent their Access Code via the U.S. Postal Service. Approximately 10% received emails to whatever address the Delaware Department of Labor has on file. Employers will also need their federal Employer Identification Number (EIN) when registering or certifying.
If the employer did not receive an Access Code, they can go to the website, input their federal EIN, and select “Look Up Access Code.” It may be necessary to call the number listed. The EARNS representative informed us that they automatically certified a number of employers whom they know offer retirement plans. The representative recommended employers contact them to be sure they are certified.
Under the Program, employers will NOT:
- Incur any account fees,
- Have plan-sponsor liability, or
- Be allowed to make an employer contribution (match).
The Program is administered and sponsored by the Delaware State Treasurer and administered by Vestwell. Vestwell is a private company who is a leader in this type of state IRA program. Ten other states have this, and Vestwell handles eight of those states.
Vestwell will create employee Roth IRA plans for employees. Vestwell will notify employees to let them know they have a 30-day window to do an initial opt out of the program if they want.
Under the Program, eligible employees:
- Can save up to $7,000 in 2024, plus an additional $1,000 if over the age of 50.
- Will automatically have 5% withheld from their pay for EARNS contributions (after-tax). The percentage withheld automatically increases each year by 1% until it caps at 10% withheld.
- Can opt out or re-enroll in the Program at any time.
- Can customize their deduction options:
- Choose a traditional IRA.
- Choose a different contribution rate – minimum is 1% of their gross salary.
- Choose their investments – target date funds, money market funds, bond funds, and/or international funds.
FAQs from a recent Delaware EARNS Program Webinar:
Who counts towards the five employees?
- Any employee who will receive a W-2 for Delaware state income tax purposes, with the exception of seasonal workers.
- For additional information, the Delaware EARNS statute details what constitutes an employer and an employee.
Does the employer have to count seasonal workers?
- The employer has up to 120 calendar days to enroll an employee in the Program. Seasonal workers who work less than 120 calendar days do not have to be counted towards the five employees.
How will the Program reach out to eligible employees once their employer has uploaded them to Vestwell?
- When uploading, employers will provide an email address for each employee and a personal residence address. An email or letter will go out to each employee from Vestwell.
- On the Program’s website under the employer section, there are PDFs an employer can give to employees once they’ve completed the enrollment. There are also easy Fact Sheets on the website that an employer can print and hand out. We strongly recommend employers provide these handouts to their employees before they receive notice from Vestwell.
For employers required to participate in the Program: When submitting the initial employee upload, can the employer save employees the time of having to opt out by submitting their information with an opted-out status?
- The employer cannot make elections on behalf of the employee. All employees must be uploaded to the Program. The employer should give employees the website or phone number to call to opt out.
When does the employer submit employees’ gross payroll to the Program?
- Each pay period, the employer will need to upload gross payroll and the amounts withheld for EARNS from each employee.
- Employers will need to set up a new payroll deduction code with their payroll provider.
- Employers required to participate in the Program should check with their payroll providers for what else is needed.
When does the employer notify the Program of a new employee?
- They can enroll them on their date of hire or once they have been employed for 120 calendar days.
How will an employer know if an employee has opted out?
- There will be notifications every payroll cycle to the employer to let them know if any employees have made changes, including opting out or changes to percentages withheld.
Does the employer have to update the system when an employee is terminated?
- There just won’t be a contribution for that ex-employee.
Is the Program available to 1099 workers?
- Employers should encourage 1099 workers to go online and open their own account.
What happens to an employee’s funds if they opt in, contribute, and then opt out?
- The money decision is completely up to the individual who owns the IRA.
- The account does not belong to the employer or to the state.
- Employers do not have to keep track of employees if they terminate. The Program will keep track of them.
Additional Information:
Click on www.earnsdelaware.com/employers/program-details – this link provides easy-to-understand, detailed instructions. The EARNS Call Center is also available and ready to take calls.
Website: www.earnsdelaware.com
Service Issues Email: clientservices@earnsdelaware.com
Treasurer’s Office Email: earns@delaware.gov
Phone # for Employers: 855-934-3701
Phone # for Employees/Savers: 844-609-1784
You can also reach out to Linda Pappajohn, our HR Director, if you have any questions (Lpappajohn@santoracpagroup.com).
