Section 1 — What Is Delaware EARNS?
Delaware EARNS (Employee Retirement Navigating Savings) is a state-mandated retirement savings program requiring private-sector employers with 5 or more employees to enroll workers in a state-run IRA — or offer a qualifying private plan as an alternative.
The program is administered by the Delaware Office of the State Treasurer and was designed to close the retirement savings gap for the 200,000+ Delaware workers who currently lack access to workplace retirement benefits.
Under Delaware EARNS, employees are automatically enrolled in a payroll-deduction Roth IRA at the default contribution rate of 3% of gross wages. Employees can opt out or adjust their contribution rate. Employers have no obligation to contribute — but they must facilitate the program unless they already offer a qualifying alternative plan.
Key Facts About Delaware EARNS
- Applies to private-sector employers with 5+ W-2 employees
- Administered by the Delaware Office of the State Treasurer
- Default contribution: 3% Roth IRA via payroll deduction
- Employers can exempt themselves by offering a qualifying plan (401k, SIMPLE IRA, etc.)
- Designed to serve 200,000+ Delaware workers without retirement access
- Registration via delawareearns.com
Section 2 — Who Is Covered by Delaware EARNS?
Delaware EARNS applies to private-sector employers in Delaware that meet all of the following criteria:
- Located in or doing business in Delaware
- 5 or more W-2 employees
- In business for 2+ years
- Do NOT currently offer a qualifying retirement plan
The following coverage table shows which employer types are affected:
| Employer Type | Covered by Delaware EARNS? | Notes |
|---|---|---|
| Private business, 5+ W-2 employees, no plan | ✅ YES | Must register or offer qualifying plan |
| Private business with existing 401(k) or SIMPLE IRA | ❌ NO | File exemption certificate via portal |
| Private business with <5 W-2 employees | ❌ NO | Below threshold — no obligation |
| Sole proprietors / self-employed (no W-2 staff) | ❌ NO | No W-2 employees = not covered |
| Government / public-sector employers | ❌ NO | Delaware EARNS is private-sector only |
| Nonprofits with no qualifying plan | ✅ YES | Check for 403(b) or other exemption |
| Businesses in operation <2 years | ❌ NO | Newly formed businesses have a grace period |
| Multi-state employers with DE employees | ✅ YES | Delaware employees subject to DE rules regardless of HQ state |
Section 3 — Penalties for Non-Compliance
Delaware EARNS penalties are currently pending final determination as the program moves from implementation to full enforcement. However, based on comparable state mandates, employers should plan accordingly.
⚠️ Expected Penalty Structure
Current penalty status: TBD (enforcement pending)
Similar state programs levy the following penalties:
- New Jersey: $500 per employee per year
- California: $250/employee (yr 1), $500/employee (yr 2+)
- Connecticut: $250–$500 per employee per year
- Illinois: $250/employee (yr 1), $500/employee (yr 2+)
Delaware is expected to follow a similar enforcement model once fully active.
The key takeaway: get compliant now before penalties are set — early movers avoid all risk. Employers who proactively register with Delaware EARNS or file for exemption will not face retroactive penalties when enforcement begins.
For a business with 10 employees, non-compliance under a $500/employee model would cost $5,000 per year. A business with 25 employees faces up to $12,500 annually. The cost of a compliant private plan is almost always lower.
Get Your Free Delaware Compliance Check
Our team reviews your Delaware business, confirms your obligations under Delaware EARNS, and recommends the most cost-effective path to compliance — often free after SECURE 2.0 credits.
Schedule Free Compliance Check →Section 4 — Exemptions & Qualifying Plans
If your business already sponsors a qualifying retirement plan, you are exempt from Delaware EARNS enrollment. However, you must file a Certificate of Exemption through the Delaware EARNS portal at delawareearns.com to formally document your exempt status.
The following plan types qualify for the Delaware EARNS exemption:
401(k) Plan
403(b) Plan
SIMPLE IRA
SEP IRA
Defined Benefit Pension
457(b) Plan
Important: Simply having one of these plans is not enough — you must proactively file for the exemption through the official Delaware EARNS portal. Failure to do so may result in compliance notices even if you already have a qualifying plan in place.
Not sure which plan is right for your business? A SIMPLE IRA is typically the most affordable entry point for small employers. A 401(k) offers higher contribution limits and greater flexibility as your business grows. Our team can help you evaluate the best option.
Section 5 — Delaware EARNS Enrollment Steps
Follow these 6 steps to get fully compliant with Delaware EARNS:
Verify Your Employee Count
Confirm you have 5 or more W-2 employees. Count all employees on payroll during the year — part-time workers may count depending on your payroll structure. If you're under 5, no action is required.
Check if You're Already Exempt
Review your current benefits. If you sponsor a 401(k), SIMPLE IRA, SEP IRA, 403(b), pension, or 457(b), you likely qualify for exemption. File your Certificate of Exemption at delawareearns.com.
Register at the Delaware EARNS Portal
If you're not exempt, register your business at delawareearns.com. You'll need your EIN, payroll information, and employee roster. Registration is free and required for all covered employers.
Set Up Payroll Contribution
Configure your payroll system to deduct the default 3% Roth IRA contribution per employee. Most payroll platforms (ADP, Gusto, Paychex, QuickBooks) support automatic deductions. The state portal will provide integration instructions.
Notify Employees (30-Day Window)
Send required employee notices explaining Delaware EARNS, the default contribution rate, and how to opt out. Employees have a 30-day window to opt out or adjust their contribution rate. Keep records of all notices sent.
Begin Deductions and Maintain Records
Begin payroll deductions for enrolled employees. Maintain records of enrollments, opt-outs, and contribution changes. New hires must be enrolled within 30 days of their start date. Review compliance status annually.
Section 6 — Delaware EARNS vs Private 401(k) Plan
Wondering whether to enroll in Delaware EARNS or set up a private retirement plan? Here's how the two options compare:
| Factor | Delaware EARNS (State IRA) | Private 401(k) Plan |
|---|---|---|
| Employer Cost | $0 mandatory employer contribution | Setup $500–$2,000; admin $1,000–$3,000/yr (offset by SECURE 2.0 credits) |
| Employer Tax Deduction | No employer contribution = no deduction | Contributions + admin fees are fully tax-deductible |
| Employee Contribution Limit | $7,000/year (IRA limit, 2026) | $23,500/year (401k limit, 2026) + catch-up |
| Employer Branding | State-branded IRA; not your plan | Your company's plan — a recruiting advantage |
| Investment Options | Limited state-selected funds | Full range — stocks, bonds, ETFs, mutual funds |
| Setup Complexity | Simple portal registration | Moderate; handled by plan administrator |
| SECURE 2.0 Tax Credits | Not eligible | Up to $5,000/yr × 3 years + $1,000/employee |
| Best For | Employers who want minimal involvement | Employers who want to attract talent, maximize tax benefits, and build long-term culture |
Bottom line: For many small employers, setting up a SIMPLE IRA or 401(k) costs less than the expected Delaware EARNS penalties — and comes with significant federal tax credit offsets under SECURE 2.0. Contact us for a free cost comparison specific to your business.
Section 7 — Frequently Asked Questions
1. What is Delaware EARNS?
Delaware EARNS (Employee Retirement Navigating Savings) is a state-mandated retirement savings program requiring private-sector employers with 5 or more employees to either enroll workers in a state-run Roth IRA or offer a qualifying private retirement plan. It is administered by the Delaware Office of the State Treasurer.
2. When does Delaware EARNS enforcement begin?
Delaware EARNS is currently in implementation phase. Enforcement timelines are being finalized. Employers should register early to avoid any penalties once enforcement activates. Check delawareearns.com for the latest deadlines and registration windows.
3. Do I need to file an exemption if I already have a 401(k)?
Yes. Even if you already offer a qualifying plan such as a 401(k), 403(b), SIMPLE IRA, SEP IRA, pension, or 457(b), you must file a Certificate of Exemption through the Delaware EARNS portal at delawareearns.com to formally document your exempt status. Without this filing, you may receive compliance notices.
4. What is the default contribution rate for Delaware EARNS?
The default employee contribution rate for Delaware EARNS is 3% of gross wages, deducted automatically via payroll and deposited into a Roth IRA. Employees can adjust this rate or opt out entirely within the 30-day opt-out window. Employers are not required to contribute.
5. Can employees opt out of Delaware EARNS?
Yes. Employees have a 30-day window to opt out of Delaware EARNS contributions after being enrolled. Employees who opt out are periodically re-enrolled and must opt out again if they still do not wish to participate. Employers must provide proper notice and maintain records of opt-out elections.
6. How does Delaware EARNS compare to other state mandates?
Delaware EARNS is similar to programs in New Jersey (NJ-SECURE Choice), California (CalSavers), Illinois (Illinois Secure Choice), Oregon (OregonSaves), and Connecticut (MyCTSavings). Key differences: Delaware's threshold is 5+ employees (vs NJ's 25+), the Delaware penalty structure is pending (NJ confirmed $500/employee/year), and Delaware uses a state-administered Roth IRA as the default vehicle. Employers with employees in both Delaware and New Jersey must comply with both programs separately unless they offer a qualifying private plan that covers both states.
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Not sure if your Delaware business is compliant with Delaware EARNS? Our team provides a free compliance review, confirms your obligations, and recommends the fastest and most cost-effective path to full compliance.
Book Your Free Compliance Check →Disclaimer: This page provides general educational information about the Delaware EARNS state retirement mandate. It does not constitute legal, tax, or financial advice. Compliance requirements vary by employer size, industry, and jurisdiction. Consult a qualified financial advisor or attorney for advice specific to your situation. Kandelaki Solutions provides retirement plan compliance consulting, employer education, and employee benefits advisory services. Retirement plan establishment and administration is performed by independent licensed third-party administrators. SECURE 2.0 tax credit estimates are based on current IRS guidance and may vary. © 2026 RetirementMandate.com