A new state law requires most property management firms to automatically enroll employees in a retirement savings program—or pay escalating penalties.
Most property management and real estate business owners in Massachusetts have no idea that a provision buried deep in H5576—a bill ostensibly about economic development—will soon require them to establish retirement savings for their employees or face annual penalties starting at $250 per worker.
Section 64F, inserted by Section 40 1/2 on pages 64-65 of H5576, creates the Massachusetts Secure Choice program. Here's the plain-English version: if your property management or real estate firm has 25 or more employees and does not already offer a retirement plan, you must automatically enroll all eligible employees in a state-run Individual Retirement Account (IRA) with payroll deductions.
You don't have to create the plan yourself. The state administers it. But enrollment is mandatory—you cannot opt out unless you offer employees a qualifying employer-sponsored retirement plan instead, such as a 401(k) or SIMPLE IRA.
The requirement applies to "qualifying employers"—defined as businesses with 25 or more employees that do not sponsor an existing retirement plan. For many property management companies, especially mid-sized firms managing multiple properties across Massachusetts, this will apply.
If you already sponsor a 401(k), pension, or other qualifying plan, you are exempt. If you have fewer than 25 employees, the requirement does not apply to you.
Noncompliance carries financial consequences. Employers who fail to enroll employees face penalties of $250 per employee per year. If noncompliance continues, that penalty rises to $500 per employee per year.
However, there is a grace period: no penalties are assessed until one year after the Department of Revenue (DOR) issues confirmation that the program is operational and ready for implementation. This means you will have advance notice before penalties begin.
The program takes effect upon implementation confirmed by the Board to the DOR. The exact effective date has not yet been announced, as the program is still in the implementation phase. Property managers should monitor announcements from the Massachusetts DOR and the Secure Choice Board for the official launch date.
Once the program is live, qualifying employers will have one year before penalties apply. This window gives businesses time to either enroll employees in the state IRA program or establish their own retirement plan.
You have two paths forward: (1) automatically enroll employees in Massachusetts Secure Choice when the program launches, or (2) establish a qualifying employer-sponsored retirement plan before enrollment becomes mandatory. Many employers consult with HR advisors or benefits consultants to evaluate which option makes sense for their business and budget.
The provision is designed to expand retirement savings access for workers in small and mid-sized businesses. For property management firms, it represents a new compliance requirement that should be on your radar now, even though the program is not yet live.
Source: H5576, Section 64F (inserted by Section 40 1/2, pages 64-65); Massachusetts Department of Revenue.