A provision buried in Massachusetts's economic development bill will require many construction and trades businesses to automatically enroll employees in a state retirement program—or pay penalties.
Most construction and trades owners in Massachusetts have never heard of the Secure Choice program. That's about to change. Buried deep in H5576—a bill focused on economic development—is a requirement that will affect any qualifying business with 25 or more employees and no existing retirement plan.
Under Sections 64F and 64I of H5576 (inserted by Section 40 1/2, pages 64–73), Massachusetts is creating a state-run individual retirement account program. Here's the core obligation: if your business has 25 or more employees and does not already sponsor a retirement plan, you must automatically enroll all employees in the Secure Choice IRA program via payroll deduction.
This is not optional. Employers who fail to comply face financial penalties: $250 per employee per year initially, rising to $500 per employee per year in subsequent years.
Businesses with fewer than 25 employees are exempt from this requirement.
The program launches once the state board confirms implementation is ready. Penalties do not begin immediately—they start one year after the Department of Revenue issues guidance on the program. This gives employers a window to understand the rules and prepare, but that window is finite.
For a construction company with 50 employees, failure to comply could cost $12,500 in the first year of penalties alone, and $25,000 annually thereafter.
The threshold is straightforward: 25 or more employees. In construction and trades, this includes mid-sized general contractors, large plumbing and HVAC firms, electrical contractors with multiple crews, and roofing companies operating across multiple job sites. If you're currently offering a 401(k), SIMPLE IRA, SEP-IRA, or other qualified retirement plan, you're exempt.
If you have 24 employees or fewer, this requirement does not apply to you.
Once the program is live, affected employers will need to:
• Identify which employees are eligible
• Set up automatic payroll deductions
• Provide required disclosures to employees
• Report enrollment and compliance to the state
The state runs the program, not your business—you're the enrollment and payroll administrator. Employees can opt out, and contributions go into individual IRAs they own.
If your business has 25 or more employees and no retirement plan in place, audit your current situation. Confirm your headcount and whether you sponsor any qualified plan. Watch for Department of Revenue guidance, which will include the specific enrollment timeline and compliance procedures. Some employers may find that offering a plan makes more business sense than paying penalties; others may decide the Secure Choice program fits their needs.
The law is real, the threshold is clear, and the penalties are material. This is not a distant future problem for mid-sized trades businesses—it's a compliance issue to address now.
Source: H5576, Sections 64F and 64I (Section 40 1/2, pages 64–73); Massachusetts Department of Revenue guidance pending.