State-run retirement programs have accumulated over $400 million from private company workers.

• Since 2017, nearly 430,000 accounts have been funded through state-run programs in California, Illinois, and Oregon.
• Similar initiatives are under way in other states.
• A total of 46 states have either enacted or considered legislation to establish retirement savings programs for employees who do not have a plan through their employers.

The state-run retirement programs for private-sector employees appear to be functioning effectively.

Individuals without access to a 401(k) plan or similar workplace option have saved more than $400 million in individual retirement accounts through such programs. Currently, three states have implemented these programs, with others set to follow.

Ensuring that these are accessible to more private-sector employees for retirement savings is of utmost importance, according to Angela Antonelli, executive director of Georgetown University's Center for Retirement Initiatives.

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An estimated 57 million workers lack job-based retirement plans, according to Antonelli. This is part of a broader effort to boost the number of retirement savers through state-run programs.

Individuals nearing retirement require all the help they can get, as their median account balance is only $84,714, according to Vanguard's latest report. Fidelity Investments recommends having 10 times your annual salary saved if you want to retire at age 67.

Since 2017, nearly 430,000 accounts have been funded through state-run programs in California, Illinois, and Oregon.

This year, Maryland and Colorado are set to introduce their own versions, while Connecticut will transition from its pilot phase to a full launch. Additionally, a few other states, such as Massachusetts, Vermont, and Washington, have programs that operate differently, with participation being voluntary.

The Supreme Court is considering a lawsuit challenging the legality of the California program.

Since 2012, 46 states have either implemented or considered legislation to create retirement savings initiatives for workers without a plan at work, including states such as Maine, New Mexico, and Virginia, which are in the early planning stages.

AARP reports that individuals are 15 times more likely to save for retirement if they can do so through a workplace plan, rather than setting up an account independently.

Vanguard research shows that 401(k) plans with auto enrollment have a 56% higher total average savings rate, including employer contributions.

State-run programs can increase access to a workplace plan for small business owners who may not be able to offer a retirement option due to cost and administrative burdens.

State-run programs generally automatically enroll employees in a Roth IRA through payroll deduction, starting at around 3% or 5%, unless they choose to opt out. Employers do not incur any costs, and the accounts are managed by an investment company.

The opt-out rate for OregonSaves, launched in 2017, is approximately 32%, while the average account balance is $1,331, according to the program's most recent data.

Contributions to Roth accounts are not tax-deductible, unlike 401(k) plans. However, traditional IRAs, which may offer tax-deductible contributions, could be an alternative option depending on the specifics of the state's program.

Unlike 401(k) plans, Roth IRAs do not impose a penalty for withdrawing contributions before age 59½.

If you withdraw money from a Roth account before retirement, you won't be penalized because you've already paid taxes on it. But for earnings, there could be a tax and/or penalty.

Typically, Roth accounts do not receive employer matches on contributions made through work, unlike 401(k) plans.

The yearly Roth IRA contribution limit in 2022 is $6,000, with higher earners having limitations on their contributions. Additionally, individuals aged 50 or older are eligible for an extra $1,000 "catch-up" contribution.

In 2022, the contribution limit for 401(k) plans is $20,500, with an additional $6,500 allowed for those aged 50 and above.