Editor’s Note: The below article by Cheryl U. Brown, Attorney, Davis, Agnor, Rapaport and Skalny is provided as a courtesy to Maryland churches.
Your church may have received a letter from MarylandSaves concerning retirement saving plans that are required to be offered to employees in Maryland. Churches are not exempt from this requirement.
MarylandSaves is a state-sponsored program designed to make it as easy as possible for businesses to offer their employees a voluntary, automatic, low-cost, portable retirement and emergency savings plan. This law actually was passed in 2016 but the state program became available September 15, 2022. Under Maryland law, established businesses, including churches, that use an automated payroll system are required to either offer a retirement plan or sign their Maryland employees up for the MarylandSaves program. Businesses, including churches, that do so will receive $300 per year via a waiver of the Maryland business annual filing fee that would be charged when the annual report is filed.
There are no employer payment contributions or MarylandSaves fees to employers. All administrative fees are paid from employee accounts.
Employee participation is completely voluntary. Employees are automatically enrolled in MarylandSaves, but they can withdraw funds, choose investment options, change their savings amount, or opt out entirely at any time. Account fees will be lower than commercial alternatives and savers keep their accounts when they change jobs.
Any private-sector, for-profit, or nonprofit business (this includes churches) operating in the state of Maryland that meets all four of the following criteria must participate in the MarylandSaves plan or offer a private retirement savings plan:
- Churches that pay employees through a payroll system or service.
- Churches in operation at least two years
- Churches that do not currently offer an employer-sponsored retirement plan arrangement to employees
- Churches that have not provided a retirement savings plan in the last two years
A portion of the churches affiliated with the Baptist Convention of Maryland/Delaware may not be required to sign up for MarylandSaves primarily due to the fact that:
- They do not utilize an outside payroll service to pay their employees — OR
- They already provide the opportunity for all employees to make retirement contributions from their wages to a qualified retirement plan through Guidestone.
Note that payroll deduction for individual retirement accounts (IRAs) don’t qualify.
The church has to certify on the MarylandSaves website that it maintains a qualified retirement plan for its employees to obtain the $300 per year waiver of the filing fee due in April.
An employer, including churches, has to sign up for MarylandSaves or certify that it maintains a retirement plan by December 31 to obtain the filing fee waiver for the annual report due in April of the following year. Please see the MarylandSaves website to register: https://www.marylandsaves.org/
Have a Merry Christmas!
Cheryl U. Brown | Attorney
Feature photo: FREEPICK