Two state-run retirement programs reach enforcement milestones within two weeks of each other. Vermont’s maximum penalty for employers that fail to comply with Vermont Saves rises to $75 per covered employee on Oct. 1, and Rhode Island’s RISavers program hits its first compliance deadline, Oct. 15, for employers with more than 100 employees. Both programs route workers whose employers offer no retirement plan into Roth IRAs, which turns two employer deadlines into a question about who will have savings in later life.
Vermont’s penalty ceiling moves from $20 to $75 on Oct. 1
The penalty is written into state law as a stepped schedule. Under 3 V.S.A. § 535, the maximum penalty per covered employee was $10.00 before Oct. 1, 2025, $20.00 from that date through Sept. 30, 2026, and $75.00 on or after Oct. 1, 2026. The penalty applies when a covered employer is out of compliance “without reasonable cause.” The State Treasurer may waive it if the employer did not know of the failure and used reasonable diligence, and no penalty applies if the employer comes into compliance within 90 days of first knowing about the failure.
Fisher Phillips attorneys David R. Dorey, Lauren Laing, Braden Lawes and Sarah Wieselthier listed the change in a Sept. 18 employer cheat sheet of October workplace laws, describing its scope as employers with two or more W-2 employees that lack a qualified workplace retirement plan. Simple arithmetic on the statute’s figures shows how fast the ceiling scales: an employer with 40 covered employees faces a maximum of $3,000 at the new figure, against $800 at the old one.
Who counts as a covered employer and employee under the Vermont statute
The Vermont Saves chapter defines a covered employer as a business in Vermont that does not offer a specified tax-favored retirement plan, and it excludes government employers and businesses in operation for less than one calendar year. A covered employee is an individual 18 or older employed by such a business with wages allocable to Vermont. The chapter sets no upper age limit, so workers in their 60s and 70s at a small firm without a plan fall inside the definition as readily as new graduates. Employer contributions are neither required nor permitted, and a covered employer is not treated as a fiduciary of the program.
What Vermont Saves does with a worker’s paycheck
The Vermont Office of the State Treasurer says employers with two or more W-2 employees must register unless they already offer a qualified plan such as a 401(k), 403(b), SEP IRA or SIMPLE IRA, in which case they must certify the exemption. Employee accounts default to a Roth IRA, with a Traditional IRA as an option. Eligible employees are automatically enrolled but may opt out at any time, and they may increase, decrease, pause or stop contributions. The Treasurer states that the Roth IRA belongs to the employee and remains with the employee after a job change, that employers are not charged to facilitate the program, and that the penalty is $75 per covered employee, per calendar year, from Oct. 1, 2026.
Under the statute, automatic enrollment starts at five percent of wages, with annual increases of not less than one percent and not more than eight percent. For a late-career worker, that default matters as much as the penalty does: a paycheck deduction begins unless the worker acts to stop it, and the balance travels with the worker rather than staying behind with an employer.
Rhode Island phases in enforcement by payroll size
Rhode Island staggers its deadlines. In a Dec. 2, 2025 notice from the Office of the General Treasurer, the state listed compliance dates of Oct. 15, 2026 for employers with more than 100 employees, Oct. 15, 2027 for those with 50 to 99, and Oct. 15, 2028 for those with five to 49. The notice said an earlier registration window was meant “to facilitate Program administration, not Program enforcement,” and that a business would receive a noncompliance notice before any further action. The Fisher Phillips summary lists Oct. 15 as the first compliance date, covering eligible employers with more than 100 eligible employees.
Coverage in Rhode Island reaches further down than enforcement does
The Treasurer’s employer FAQ says any private-sector employer with five or more employees in Rhode Island must facilitate RISavers unless it already offers a defined benefit plan or a 401(k), 403(b), 457(b), SEP or SIMPLE plan. Employees are automatically enrolled unless they affirmatively opt out, and seasonal employees are eligible if they work at least 120 days. The RISavers site describes a Roth IRA for Rhode Island workers whose employers do not offer a workplace plan, at no cost to employers, with accounts that are portable across employers.
The gap between the five-employee coverage rule and the phased enforcement dates means a Rhode Island worker at a small firm may be covered on paper years before that employer faces a deadline. Both Treasurer’s offices publish help lines: Vermont lists 1-844-599-4911 for employers and 1-833-575-0672 for savers, and Rhode Island’s Treasury lists (401) 222-4776, with Vestwell at (833) 868-4732 for employers and (833) 669-4336 for savers.
Sequencing withdrawals across Roth, traditional and taxable accounts
Older savers who hold a mix of traditional IRAs, Roth IRAs and taxable accounts face a sequencing decision in retirement. Which account a withdrawal comes from first decides how much of a retirement income is taxed, and no agency notice works that order out.
The Retirement Tax & Withdrawal Planner covers the account withdrawal order alongside four calculators for provisional income, IRMAA tier, the RMD schedule and Roth bracket fill.
Work out the order to draw down Roth, traditional and taxable accounts →
This article was produced with AI assistance and checked against the primary sources linked above.
David M. Keller is a finance writer based in Columbus, Ohio, covering personal finance and consumer-focused economic topics. He earned his degree in journalism from Ohio University and began his career reporting on local business and economic trends for a regional media outlet. Since then, he has contributed to a variety of online publications, focusing on clear, practical coverage of topics such as cost of living, debt, and everyday financial decision-making.
