Hawaii Retirement Savings Program: A Guide for Employers
If you're running a business in Hawaii, you already know the drill. You navigate costs that are among the highest in the country, you have to constantly keep up with new and changing regulations, and you have to work extra hard to hold onto good people who could earn more somewhere else. Now the state is taking action on something Hawaii employers have felt for years: too many workers are reaching retirement age without enough savings to stop working. The Hawaii Retirement Savings Program, or HRSP, is Hawaii's answer to that.
We've gotten into the overview of the Hawaii Retirement Savings Program and what it means for Hawaii employers. Here, we're going a step further: breaking down how to compare your options, how federal tax credits can offset the cost of going beyond the minimum, and how to turn this requirement into a benefit your team will actually value.
At ProService, we've been helping local businesses navigate challenges like this for over 30 years. Here is everything you need to know to stay compliant and protect your business.
Eligibility: Who Is Affected?
The mandate covers a wide range of businesses. If you have one or more employees and do not currently offer a qualified retirement plan, you will be required to either participate in the state-run HRSP or offer your own qualified retirement plan.
This applies to businesses of all sizes. If you're in a growth phase, it's worth getting your plan in place sooner rather than later. You may already be managing multi-state hiring or ACA requirements, and building a retirement benefit into that foundation now makes the process smoother down the road.
You’re exempt from the HRSP mandate if: You already offer a qualified retirement plan, such as a 401(k), SEP IRA, or SIMPLE IRA, to your employees.
If you don't fall into that exemption, you have two paths forward: facilitate the state's program or launch your own retirement plan. The good news is that either way, there's a clear road ahead.
Deadlines and Penalties
The Hawaii Retirement Savings Board is targeting a launch for mid-to-late 2026. While the board is still finalizing implementation details, employers who act early have the most flexibility to evaluate options, design a plan that fits their team, and communicate changes clearly to employees. Getting your systems ready takes longer than most people expect, and the earlier you start the smoother the process.
Employer Duties Under the HRSP
If you choose the state-run HRSP, there are some operational responsibilities to plan for. The HRSP is a Roth IRA program where employees contribute post-tax dollars through payroll deductions.
Your responsibilities will include:
- Payroll Integration: Configure payroll to deduct employees' contribution rates and remit them to their individual Roth IRA accounts.
- Notice Distribution: Provide written notices regarding employee rights and the opt-out process.
- Enrollment Maintenance: Manage ongoing enrollment updates as needed.
- Note: Employers are not required to make matching or other contributions under the HRSP.
Why Retirement Benefits Have Become a Hawaii Hiring Essential
Why is the state doing this? For workers in Hawaii, the numbers paint a difficult picture.
According to AARP, 179,000 Hawaii private-sector workers, roughly 42% of the workforce, have no access to a retirement savings plan through their employer. The urgency behind HRSP is also demographic. According to Pew, the ratio of older households to working-age households in Hawaii is projected to increase by 43% between 2021 and 2040. As more residents reach retirement age without adequate savings, the burden on the state grows alongside it. HRSP is the state's way of getting ahead of that.
Social Security benefits average just over $24,000 annually. For most Hawaii residents, that baseline simply doesn't stretch far enough to cover the cost of living here. Workers who can't afford to retire stay in the workforce longer, and that affects everyone.
Your employees know this. Over 3 in 5 Hawaii employers are concerned about their employees having enough money to cover health care and living expenses during retirement. When your team is worried about their financial future, it shows up at work. And in a place where good people have options, financial security is part of what makes staying worth it.
Offering a strong retirement plan goes beyond meeting a requirement. It helps keep your people rooted here. It signals to your workforce that they can build a life in Hawaii with you, and that you're invested in that future alongside them.
HRSP vs. 401(k): Which Is Right for Your Business?
The HRSP covers the basics and gives employees a meaningful way to start saving. But for businesses competing for talent in a tight labor market, it may not go far enough.
A private 401(k) gives you more control over plan design, higher contribution limits, and the ability to add an employer match, turning a requirement into a genuine retention tool.
Compare the two options:
Making the Most of SECURE Act 2.0
The federal government is currently subsidizing the cost of launching a new 401(k) through SECURE Act 2.0 tax credits, and that's worth paying attention to regardless of where the state lands on enforcement timelines.
Under SECURE Act 2.0, businesses with 1 to 50 employees may qualify for a 100% tax credit on startup costs, up to $5,000 annually for the first three years. Businesses with 51 to 100 employees qualify for a 50% credit.
There are additional credits available too. You may be eligible for the Employer Contribution Credit, worth up to $1,000 per employee per year for employees earning $100,000 or less, declining over five years. And if you add automatic enrollment, you may qualify for an additional $500 annual credit for up to three years.
To qualify for these tax credits, your business must have 100 or fewer employees, at least one non-highly compensated employee, and must not have sponsored a retirement plan in the last three years.
Next Steps: Why Local Expertise Matters
Whether you're weighing the state program or considering a private 401(k), the decision is worth getting right. The good news is you don't have to figure it out alone.
At ProService, we take a different approach:
- We assume the liability: When you join our multiple employer 401(k) plan, we take on the fiduciary responsibility, including Form 5500 filings and audits.
- We are local: You get direct access to HR and retirement experts who know Hawaii. You talk to a human who understands your business and your community.
- We handle the legwork: From plan design to employee education, we execute the strategy so you can focus on running your business.
Hawaii is investing in its workers. The businesses that move with that will be better positioned to recruit, retain, and lead. We're here to help you get there. Let's talk.
Disclaimer: This document is provided for general informational purposes only and is not intended to be a comprehensive reference or to provide legal or tax advice. Retirement plans are complex, and applicable federal and state laws and regulations vary by plan type and are subject to change. This guide does not create an attorney-client relationship, and the information contained herein should not be relied upon as legal or tax advice. You should consult a qualified tax or legal advisor regarding your specific situation or any particular issue or problem.
