One-quarter of working adults have no retirement savings,[1] and nearly two-thirds of 40-year-olds have retirement savings of less than $100,000.[2]

Worries about retirement are a major source of financial stress. This stress spills over into the workplace, with employees spending work time on personal financial matters, resulting in reduced productivity.[3]

Employees are far more likely to save for retirement when their employers offer a retirement savings vehicle.[4] As a result, an increasing number of states have passed legislation establishing a retirement savings program.

Currently, there are 13 states and two cities that have enacted new state-facilitated programs. Five of these state programs are active, with an additional four (Connecticut, Maryland, Vermont and Colorado) expected to launch in 2021.

Many of these programs include a mandate to employers to provide retirement plan benefits to their employees, or to enroll them in the state-run option. These states include Colorado, Connecticut, Illinois, Maryland, New Jersey, New Mexico, New York, Oregon and Virginia. If you’re in one of the listed states that have passed legislation establishing a state-mandated plan, or if you operate in one of the other states currently considering such legislation, [5] it’s time to start weighing your options.

Many state-offered plans operate like a Roth IRA, which means employees contribute after-tax dollars that grow and are withdrawn tax-free. And while many employees at small businesses are happy to have access to a retirement plan for the first time, the question remains whether a state-sponsored vehicle is the best option for a small business — or whether a 401(k) retirement plan is a better choice.

Advantages and disadvantages of a Roth IRA

The Roth IRA has various pros and cons, including:

  • Convenient and cost-effective to administer
  • Lower annual limits on contribution than other types of plans
  • Limited investment options
  • Income restrictions limit participation

Advantages and disadvantages of a 401(k)

State-sponsored retirement plans are not always ideal for small businesses. In many cases, a small business 401(k) is an effective way to meet workers’ and employers’ needs.

For a 401(k), consider these factors:

  • Inclusive participation options (with some restrictions)
  • Multiple plan design options
  • Tax credits for start-ups
  • Cost-efficient plans
  • Higher contribution option
  • Matching contributions
  • Compliance with state mandates

Enrolling in a state-sponsored plan isn’t always the answer — review the options with your HUB specialist and select an appropriate strategy for your business. If your employees are already enrolled in the state-sponsored plan, it’s easy to make the switch to a 401(k).

HUB International’s team of retirement specialists has extensive experience with all types of retirement planning, including selecting the employer-sponsored plan for your business.

Our small business retirement plan offering, HUB Retirement Select, is specifically designed for small to mid-sized organizations who want an easy to administer 401(k) plan that addresses fiduciary risk and helps employees save for retirement. Contact HUB to speak to a retirement specialist and learn more about HUB Retirement Services.


Advisory services for HUB Retirement Select offered through Global Retirement Partners, a SEC registered investment adviser and wholly owned entity of HUB International.

HUB Retirement and Private Wealth employees are Registered Representatives of and offer Securities and Advisory services through various Broker Dealers and Registered Investment Advisers, which may or may not be affiliated with HUB International. Insurance services are offered through HUB International, an affiliate. Consult your financial professional for additional information about the provision of specific securities, investment advisory and insurance services by each brokerdealer and investment adviser.

[1]U.S. Federal Reserve Board, Report on the Economic Well-Being of U.S. Households in 2019, May 2020.

[2]TD Ameritrade, Road to Retirement Survey: Evolving timelines, expectations and investments, January 2020.

[3]Human Resource Executive, “Employees are stressed about finances. How employers can help,” August 2, 2019.

[4]AARP Public Policy Institute, Access to Workplace Retirement Plans by Race and Ethnicity, February 2017.