Maryland has one of the most aggressive state retirement mandates in the country. MarylandSaves applies to every Maryland employer with at least one W-2 employee — and the penalty is $250 per eligible employee per year. That’s higher than most other states.
Who Must Comply with MarylandSaves?
Any Maryland employer with:
- 1 or more W-2 employees (lowest threshold in the US alongside California and Oregon)
- Registered in Maryland for at least 2 years
- No existing qualifying retirement plan
This catches a huge number of small businesses — solo employers with one admin, small retail shops, home service companies, small medical practices.
The $250/Employee Penalty Is Real
For a Baltimore-area business with 15 employees: $3,750/year in penalties if non-compliant. Three years of non-compliance: $11,250. That’s real money — and Maryland is actively enforcing it.
MarylandSaves vs. Private Plan
MarylandSaves route: Free, easy setup, no employer contributions. Stops the penalty clock. But leaves significant tax savings on the table.
Private plan route: SECURE 2.0 credits cover costs. Tax deductions available. Better employee benefit. For a 15-person Baltimore business, up to $20,000+ in total credits over 3 years.
Special Consideration: Maryland’s High State Tax Rates
Maryland has some of the highest state income tax rates in the US (up to 5.75% state + local). Every dollar sheltered in a 401(k) saves you not just federal taxes but Maryland state taxes. This makes the private 401(k) route even more financially powerful for Maryland business owners than in lower-tax states.
Serving Baltimore, Columbia, Silver Spring, Rockville, and All of Maryland
We specialize in helping Maryland small business owners navigate MarylandSaves and find the most tax-efficient compliance path. Get your free Maryland compliance audit →
