Effective July 1, 2027 · Information current as of July 2026
What every Washington employer needs to know, and the one choice you have to make.
Washington Saves is a new state retirement savings program, created to help the roughly 1.2 million Washington workers, about 43 percent of the private-sector workforce, who have no retirement plan through their job.
The idea is simple.
If a business does not offer a retirement plan, its workers are automatically enrolled in a state-run IRA funded by payroll deductions. Employees can opt out. Investments are managed by private-sector firms selected and overseen by the state, and the employer just forwards the deductions.
The program starts July 1, 2027. If you run a Washington business and do not offer a retirement plan, it affects you. Here is what it is, who it covers, and the choice you face.
Prefer the shorter version?
Employer Comparison Guide
Washington Saves or a 401(k): A Side-by-Side Comparison
Comparing the state auto-IRA and an employer sponsored plan, point by point.
A set percentage of each paycheck goes into an IRA the employee owns. The default rate is set by the state board, starting between 3 and 7 percent, and it can step up 1 percent a year to a 10 percent cap.
Contributions can be pre-tax (traditional IRA) or after-tax (Roth IRA), depending on the options the board approves.
Employees can opt out anytime, and opt back in later.
The account moves with the worker from job to job.
Investments are professionally managed by private-sector firms, with state oversight.
Your role as the employer is small. You forward payroll deductions and distribute disclosures. You are not a fiduciary, and you do not pick or manage the investments.
Which Washington employers are required to participate?
You must participate if you do not already offer a qualified plan and you meet all three of these:
You have operated in Washington, with a physical presence, for at least two years.
Your employees worked a combined 10,400 hours or more last calendar year. That is roughly five full-time workers.
You do not offer a qualified plan to employees with one year or more of continuous service.
Already sponsor a qualifying plan? Then you are exempt. That is the fork in the road.
Washington Saves deadlines and penalties for employers
The program starts July 1, 2027. It may phase in by employer size.
Enforcement is graduated. It does not hit all at once.
Before January 1, 2030: an employer found in violation gets technical assistance from L&I, not a fine.
After January 1, 2030: willful violations can carry civil penalties.
A willful violation is one an employer commits knowingly or on purpose. The penalty scale for willful violations after January 1, 2030 is:
$100 for a first violation.
$250 for a second violation.
$500 for each violation after that.
This leaves a window between the 2027 launch and the 2030 start of penalties for employers to review their options.
Washington Saves vs. a 401(k) plan
If you have no qualified plan, you pick one of two paths. Register for Washington Saves. Or sponsor your own employer-sponsored qualified retirement plan, like a 401(k), which also satisfies the mandate.
They work differently. Here is how they compare on the points that matter most.
Contribution limits. The auto-IRA uses IRA limits: $7,500 a year, or $8,600 at age 50 and up. A 401(k) uses higher limits: $24,500, or $32,500 with the age-50 catch-up. (2026 IRS limits shown; these are adjusted periodically for inflation.)
Employer contributions and tax credits. The auto-IRA does not allow employer contributions or offer employer tax credits. A 401(k) allows employer matching and profit sharing and may qualify the business for tax credits.
Flexibility and simplicity. The auto-IRA is standardized and simple to facilitate. A 401(k) can be tailored to the business, which adds both flexibility and administrative work.
What makes Washington Saves appealing
For some employers, the auto-IRA is the better fit. Its advantages are real and worth weighing on their own terms.
No program fees. The state charges the employer no program fees and no setup fees, though facilitating the program still takes some payroll administration time.
No fiduciary duty. The employer is not a plan fiduciary and has no liability for investment results.
Minimal administration. No plan document, Form 5500, nondiscrimination testing, or fidelity bond. The employer registers, forwards deductions, and distributes disclosures.
Simple and portable. Investments are managed by private-sector firms overseen by the state, and the account follows the employee from job to job.
For a very small or thin-margin business, or one with no plans to contribute, these can be the deciding factors.
What a sponsored plan can add
For other employers, a sponsored plan such as a 401(k) fits better.
It carries added cost and a fiduciary role, and in exchange it offers higher limits, employer contributions, and access to tax credits.
Eligible employers that start a new plan may qualify for several federal tax credits under SECURE 2.0, which apply to a qualified plan and not to the auto-IRA:
Startup cost credit. Up to $5,000 a year for three years. For employers with 50 or fewer staff, it covers 100 percent of eligible startup costs, calculated at $250 per non-highly-compensated employee.
Auto-enrollment credit. A flat $500 a year for three years for adding automatic enrollment.
Employer contribution credit. Up to $1,000 per employee for the money you put in, phasing down over five years.
For employers that qualify for the maximum credits, the startup and automatic enrollment credits can total as much as $16,500 over three years, offsetting some or all of the early plan cost.
Eligibility and amounts depend on your specific circumstances, so confirm the numbers with a tax advisor. These credits are one factor among several, alongside the ongoing cost and administration a sponsored plan requires.
Employer Comparison Guide
Washington Saves or a 401(k): A Side-by-Side Comparison
Comparing the state auto-IRA and an employer sponsored plan, point by point.
Check whether your business meets the coverage criteria.
Confirm whether you already sponsor a qualifying plan.
If a sponsored plan is your path, pick the plan type that fits. A 401(k) is the common choice, but a safe harbor 401(k), SIMPLE IRA, SEP IRA, or profit sharing plan may suit your business better.
Give yourself time to set one up. Setting up a plan takes lead time, while the auto-IRA is register-and-go.
The 2027 deadline gives you time to work through these steps. Reviewing your options sooner leaves more room to act.
The bottom line: how to decide before 2027
The two paths serve different priorities. Washington Saves offers the simplest path, with no cost and no fiduciary duty, but lower contribution limits, no employer contributions, and no tax credits. A sponsored plan offers higher limits, the ability to contribute, and access to tax credits, in exchange for added cost and a fiduciary role.
The right choice depends on your budget, your goals for the plan, and your workforce. The 2027 deadline applies either way, so compare both before you decide.
Want help thinking it through?
First Hill Trust Company works with Washington employers weighing this decision. We can walk you through both paths so you can choose what fits your business. The side-by-side comparison above is a good place to start
No. If you already sponsor a qualified retirement plan for your eligible employees, such as a 401(k), 403(b), SIMPLE IRA, or SEP IRA, you are exempt from Washington Saves and do not need to register. The mandate is aimed only at employers who offer no plan at all. That said, it is worth confirming your current plan actually qualifies and covers the right employees, since the exemption applies to a plan offered to workers with one year or more of continuous service.
Enforcement is graduated rather than immediate. Before January 1, 2030, an employer found in violation receives technical assistance from the Washington Department of Labor and Industries rather than a fine, giving you a chance to come into compliance. After that date, only willful violations, meaning ones an employer commits knowingly or intentionally, can carry civil penalties: $100 for a first violation, $250 for a second, and $500 for each one after that. L&I investigates based on employee complaints.
Yes. You can adopt a qualified plan at any time, and once you do, it satisfies the mandate in place of the state program. Many employers start by facilitating Washington Saves and then move to a sponsored plan as the business grows or as they decide they want to contribute. Keep in mind that standing up a 401(k) takes lead time for plan documents and setup, so build in a few months if that is the direction you choose.
No. Under federal law, employers cannot contribute to a worker's IRA through the program, so there is no match or employer money involved. Your role is limited to facilitating payroll deductions and passing them along. If contributing to your employees' retirement is something you want to do, that is only possible through a sponsored plan such as a 401(k), where matching and profit sharing are allowed.
The threshold is based on the total hours all your employees worked in Washington during the prior calendar year, which comes out to roughly five full-time equivalents. It is a cumulative-hours test rather than a simple headcount, so a business with many part-time or seasonal workers can meet it even without five full-time staff. If your combined hours were at or above 10,400 and you meet the other criteria, you are a covered employer.
Important Disclosure
Educational purpose only. Provided by First Hill Trust Company for general informational and educational purposes only. It is not legal, tax, accounting, investment, or fiduciary advice, does not constitute a recommendation regarding any plan, investment, strategy, or course of action, and does not consider any recipient’s specific circumstances. Consult your own qualified advisors before acting.
No offer, agreement, or commitment. Nothing in this material constitutes an offer, solicitation, agreement, or commitment to provide any particular service or to assume any particular responsibility. Descriptions of what a trustee, administrator, adviser, committee, employer, or other party “may” or “can” do are illustrative of how such arrangements commonly work and do not describe the terms of any specific engagement. The actual services provided, the allocation of responsibilities, the scope of any delegation, and the duties of any party are governed solely by the applicable plan documents, trust agreement, advisory agreement, and written service agreements. In the event of any inconsistency, those documents control.
Services and regulatory status. First Hill Trust Company and its affiliates offer retirement plan services, recordkeeping and administrative services, trust and fiduciary services, investment advisory services, and group benefits services, in each case subject to applicable regulatory requirements and the terms of the relevant agreements. Not all services are offered to all clients, in all states, or in all circumstances. Investment advisory services are offered through an affiliated investment adviser; a copy of its Form ADV Part 2A is available upon request. Insurance and group benefits products are offered through appropriately licensed entities. The availability and scope of any service depend on eligibility and the applicable agreements.
Fiduciary status under ERISA. Fiduciary status under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), is determined based on the functions performed and the authority exercised, not on titles or labels. Whether any particular party is acting as a fiduciary, and the scope of any related duties or potential liability, depends on the facts and circumstances specific to the plan and the relationship. Engaging a trustee, adviser, or other service provider does not eliminate a plan sponsor’s or committee’s own fiduciary responsibilities, including the duties to prudently select and monitor any party to whom responsibilities are delegated.
Affiliated entities and conflicts of interest. First Hill Trust Company is affiliated with other entities, including an affiliated investment adviser and entities providing administrative, trust, or other services. These relationships may create conflicts of interest, including where an affiliate is engaged or compensated in connection with a plan. Such conflicts and compensation are described in the applicable service agreements and the affiliated adviser’s Form ADV Part 2A; fiduciaries should consider them when evaluating any engagement.
References to ERISA, the Internal Revenue Code, SECURE 2.0, Washington Saves, or other federal or state laws, regulations, or government programs are general summaries only and should not be interpreted as legal guidance or a complete statement of the law. Laws, regulations, agency guidance, and program requirements are subject to change and interpretation. Examples and illustrations are simplified for explanatory purposes and may not reflect every circumstance or apply to every employer or retirement plan
Unless otherwise noted, figures, contribution limits, tax credits, and other numerical examples are current as of 2026 and are subject to change. IRS contribution limits and catch-up amounts are adjusted periodically for inflation. Eligibility for SECURE 2.0 tax credits depends on individual facts and circumstances. Certain Washington Saves program provisions, including default contribution rates, investment options, and implementation details, remain subject to final program rules and may change before implementation.
Statutory and regulatory references. References to ERISA, the Internal Revenue Code, and related statutory or regulatory provisions are general summaries only. They are not a substitute for review of the actual statutory text, regulations, or guidance from the Department of Labor, Internal Revenue Service, or other relevant authorities, and they do not address how those provisions may apply to any particular plan, sponsor, fiduciary, or individual. Laws, regulations, and guidance are subject to change and to interpretation by the relevant agencies and courts. Examples, categories, and situations described are simplified for illustration and may not reflect the requirements or circumstances of any particular plan or person.
No guarantee of results; investment risk. References to governance, fiduciary practices, risk reduction, or outcomes describe common industry approaches and potential benefits, not promises or guarantees of any result, of compliance, or of protection from liability, loss, or claims. All investing involves risk, including possible loss of principal; diversification does not ensure a profit or protect against loss. Past performance does not guarantee future results. For more information, contact First Hill Trust Company at (206) 625-1800 or visit firsthilltrust.com.
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