Retirement Regulatory Update: What Maine Employers Need to Know in 2025
Nate Moody, CPFA – RETIREMENT ADVISOR, PARTNER
May 2025
Congress passed the SECURE 2.0 Act with one goal in mind: to help more Americans build adequate retirement savings. Most provisions took effect gradually, but 2025 is the year several headline changes hit new and existing 401(k) plans. Maine employers must also juggle compliance with the state‑run Maine Retirement Investment Trust, known as MERIT. This article unpacks the overlapping rules so you understand what may impact your 401(k)/403(b) Plan and/or can decide whether the state program or a tailored 401(k) is the better fit for your workforce.
SECURE Act 2.0
First, consider the federal landscape. Beginning January 1, 2025, any 401(k) or 403(b) plan established any time after December 29th, 2022, must enroll eligible employees automatically. The default contribution must be at least 3% and must increase at least 1% per year until it lands somewhere between 10 and 15%. Employers retain flexibility in choosing the automatic rate, but participants always have the right to opt out or change their deferral.
Starting in 2025, catch‑up contributions change as well. Participants aged 60 to 63 (as of the end of the calendar year) enjoy higher catch‑up limits, giving late‑career savers a final push toward adequate balances. The increased ‘super’ catch-up is the greater of $10,000 or 150% of the normal catch-up limit for the year. For 2025, the normal catch-up limit is $7,500, so the increased catch-up will be $11,250.
However, starting in 2026, workers who earn more than $145,000 must make catch‑up contributions on a Roth basis. Compensation will be based on prior year compensation earned through your organization specifically. This will be a large takeaway for older and higher-income participants. One potential solution is to explore a Supplemental Executive Retirement Plan (SERP) and/or a Non-Qualified Deferred Compensation Plan. In addition, HR and Finance teams need to have a process in place for tracking this new compensation threshold and tracking catch-up sources.
Lastly, Long‑Term Part‑Time (LTPT) employees receive new protection. Any worker who logs at least 500 hours per year for two consecutive years becomes eligible to contribute (unless otherwise excludable), a threshold that drops from the three‑year rule that applied through 2024. Employers can still restrict employer contributions to those who work 1,000 hours or more.
Maine Retirement Plan Mandate
Now turn to Augusta rather than Washington. Maine’s MERIT program requires employers with five or more employees and no retirement plan to enroll staff in a state‑facilitated Roth IRA. Deadlines arrived in spring 2024 for larger businesses and summer 2024 for those with as few as five employees. Non‑compliant firms face fines of up to one hundred dollars per employee. The Maine Retirement Savings Board oversees MERIT. As a reminder, L&H Retirement Advisor, Nate Moody, was appointed by Governor Mills to this Board in 2023. He is always available for questions on the program.
As a reminder, employers cannot add matching contributions to MERIT, and employees face the 2025 IRA contribution limit of seven thousand dollars—less than one‑third the ceiling available in a 401(k).
Employers evaluating their options should weigh the following questions:
- How important is an employer match as a recruitment and retention tool?
- Do your employees value the higher annual limit a 401(k) or 403(b) offers?
- Will the plan’s administrative cost be offset by the federal tax credit that reimburses small businesses for up to one hundred percent of start‑up expenses?
Many Maine companies choose to bypass MERIT in favor of a 401(k) precisely because it allows them to match contributions, offers both pre‑tax and Roth savings, and provides access to lower‑cost institutional investments. With SECURE 2.0’s richer tax credits, the net cost of launching a 401(k) is often lower than expected.
Conclusion
A well‑structured 401(k) gives employees more room to save and offers employers a competitive advantage in today’s tight labor market. SECURE 2.0 and MERIT do not need to be regulatory headaches. With thoughtful plan design and local guidance, you can turn them into strategic opportunities.
The bottom line is simple: retirement benefits work best when they align with both your business goals and your employees’ real‑world needs. SECURE 2.0 and MERIT each create new rules, but they also open new doors for smart plan design, richer tax credits, and stronger employee engagement. If you are wondering whether to stick with MERIT, start a new 401(k), or fine‑tune the plan you already have, let’s explore the numbers together.
Securities Disclosure: Securities offered through Valmark Securities, Inc. Member FINRA, SIPC. Investment Advisory Services offered through Valmark Advisers, Inc. a SEC Registered Investment Advisor. | 130 Springside Drive, Suite 300, Akron, OH 44333-2431 | Telephone: (800) 765-5201 | Lebel & Harriman, LLP and Lebel & Harriman Retirement Advisors are separate entities from Valmark Securities, Inc. and Valmark Advisers, Inc.
The information provided has been derived from sources believed to be reliable but is not guaranteed as to accuracy and does not purport to be complete analysis of the material discussed.
Source: Congressional Research Service, “Defined Contribution Plan Provisions of SECURE 2.0,” 2024.
Source: Maine Department of the Treasury, “MERIT Employer Guide,” April 2025.
