Washington Saves Is Coming in 2027: What Washington Employers Should Know

Beginning in 2027, many Washington employers that do not offer employees a retirement plan will become subject to the new Washington Saves program. The program is designed to expand access to retirement savings by allowing employees to contribute to an IRA through automatic payroll deductions.

Washington Saves is required to launch by July 1, 2027, although the state may phase in employer requirements after that date based on employer size or other factors.

For employers without a retirement plan, 2026 is a good time to determine whether participating in Washington Saves or establishing an employer-sponsored retirement plan makes more sense.

Which Employers Will Be Required to Participate?

Under RCW 19.05, an employer generally becomes a covered employer if it:

• Has been in business in Washington for at least two years as of the immediately preceding calendar year;
• Maintains a physical presence in Washington;
• Had employees who, combined, worked at least 10,400 hours during the immediately preceding calendar year; and
• Does not offer a qualifying retirement plan to covered employees who have completed at least one year of continuous employment.

Although 10,400 hours is approximately the annual hours of five full-time employees, the statute uses total employee hours rather than employee headcount. This distinction may be particularly important for employers with part-time or seasonal employees.

How Will Washington Saves Work?

Covered employees are individuals age 18 or older who work for a covered employer. Employees who do not opt out will be automatically enrolled. The default contribution rate will be established by the governing board and must initially be between 3% and 7% of wages. The program may also provide automatic annual increases of up to 1%, subject to a maximum default contribution rate of 10%. Employees can change their contribution rate or opt out, subject to program procedures.

Employers will primarily perform an administrative role. Covered employers must register, provide relevant employee information, facilitate employees’ participation or opt-out election, timely remit payroll deductions, and distribute required program materials. Employers cannot make matching or other employer contributions to employees’ Washington Saves IRAs.

Should Your Business Establish Its Own Retirement Plan?

Participating in Washington Saves may be attractive for employers seeking a relatively straightforward way to comply without making employer contributions. However, businesses should compare it with establishing their own retirement plan.

Under current law, qualifying plans include:

• 401(k) plans, including plans that provide employer matching or profit-sharing contributions;
• 401(a) qualified plans, including profit-sharing and defined benefit plans;
• 403(a) and 403(b) plans for eligible organizations;
• SEP IRAs under IRC Section 408(k); and
• SIMPLE IRAs under IRC Section 408(p).

A qualifying plan may generally require up to one year of continuous employment before an employee becomes eligible without causing the employer to become subject to Washington Saves.

For many closely held businesses, a 401(k), SIMPLE IRA, SEP IRA, profit-sharing plan, or defined benefit plan may provide advantages beyond exemption from Washington Saves. Depending on the plan selected, employers may be able to make contributions for employees, provide larger retirement savings opportunities for owners and employees, and use the retirement program as an employee recruitment and retention benefit.

What Should Employers Do Now?

Employers without a retirement plan should use 2026 and early 2027 to evaluate their options rather than simply waiting for the mandate to take effect.

For some businesses, Washington Saves may provide a simple solution with minimal employer financial commitment. For others, the new requirements may create a good opportunity to establish a 401(k), SIMPLE IRA or another qualifying retirement plan that better supports the retirement objectives of both owners and employees.

If your business does not currently offer a retirement plan, contact our office to discuss the available options and determine which approach best fits your business before the Washington Saves requirements take effect.