Maine employers: Explore a SIMPLE IRA as an alternative to MERIT
Maine employers with five or more employees and two years in business must either register for MERIT or offer a qualified retirement plan. If you want employer contributions and a choice of investment portfolios, a WealthRabbit SIMPLE IRA may be worth a look. Employers who offer a qualified plan certify their exemption with the state.
What is MERIT?
The Maine Retirement Investment Trust (MERIT) is Maine’s state-run retirement program for employers that don’t offer a qualified plan. It applies to employers with five or more Maine employees and at least two years in business. Employers with a qualified plan still register to certify their exemption.
Employees 18 or older with 120 days of wages are enrolled in a Roth IRA through payroll deductions, starting at 5% of pay and rising 1% each January to 10%, unless they opt out. Employers pay no fees and can’t contribute. Employees pay the program’s fees.
Registration deadlines (all original deadlines have passed)
- 15 or more employees: April 30, 2024
- 5 to 14 employees: June 30, 2024
- Employers that became eligible in 2025: June 30, 2025
- Employers that become eligible later: December 31 of the year after meeting the criteria
Penalties for not complying
Employers that do not comply may face penalties of up to:
- $20 per covered employee, July 1, 2025 to June 30, 2026
- $50 per covered employee, July 1, 2026 to June 30, 2027 (current)
- $100 per covered employee, on or after July 1, 2027
Penalties are assessed per covered employee for each calendar year of noncompliance.
Where MERIT may not be the right fit
MERIT is built to be simple, and for many small businesses that is exactly what they need. Here is what to weigh.
What MERIT does well: no employer fees, no required employer contribution, and no fiduciary responsibility for you.
- No employer contributionsYou can’t add a match or profit share, so the plan can’t help you recruit or keep people.
- Roth IRA onlyEmployees can save up to $7,500 in 2026 ($8,600 if age 50 or older), the standard IRA limit.
- A curated fund menuEmployees choose from state-selected funds, including capital preservation, target-date, bond, international equity and U.S. equity options.
- No plan to claim credits onBecause you aren’t sponsoring a plan, there are no startup costs to offset and no employer contributions to deduct.
A SIMPLE IRA: an alternative to consider
A SIMPLE IRA is an employer-sponsored plan for businesses with 100 or fewer employees. You get to decide how your team’s retirement benefit works, and your employees get to save more each year than they could in a MERIT Roth IRA.
- Possible tax creditsEligible employers may claim a federal credit for plan startup costs for up to three years, plus a credit of up to $1,000 per employee for employer contributions in a plan’s early years. The amount depends on your size and your actual eligible costs.1
- Employer contributions that may be deductibleContributions you make are generally deductible as a business expense.
- Higher contribution limitsIn 2026, employees can defer up to $17,000 into a SIMPLE IRA, plus $4,000 more if 50 or older ($5,250 if 60 to 63).2
- A choice of investment portfoliosEmployees pick from WealthRabbit’s investment portfolios instead of a single state-selected menu.
- A benefit people noticeAn employer contribution can help you recruit and keep good people.
Know before you choose:
A SIMPLE IRA is available to employers with 100 or fewer employees who earned $5,000 or more in the prior year. It must be the only retirement plan you offer that year. Employer contributions are required every year. A new SIMPLE IRA generally must start between January 1 and October 1; plans set up after October 1 generally begin the following January 1 (new businesses excepted). Withdrawals before age 59½ may be subject to a 10% additional tax, or 25% within the first two years of participation. Employers remain responsible for timely deposits and required notices.
See How Much You Can Save with a SIMPLE IRA
Small businesses can take advantage of tax credits to help cover setup and administrative costs. By launching a new plan with auto-enrollment, you could qualify for up to $5,500 in tax credits!
How tax credits work
Tax credits are designed to offset the cost of setting up and administering, as well as contributing to the employees retirement savings.
Employers can claim up to $5,000 per year for three years to offset plan setup and administrative costs. They may qualify for additional tax credits.
- Auto-enrollment bonusIf you make the plan automatic (employees are enrolled unless they opt out), you get an extra $500 credit for 3 years.
- Employer contributionsYou may also get credits for money you put into employees' accounts (up to $1,000 per employee in the early years).
Together, these credits can add up to thousands in savings for your business. Curious how much you could claim?
Try our calculator and see exactly how much you could save.
Estimate your tax credit
Disclosure*
The SIMPLE IRA tax credit calculator is intended to estimate the average tax credit for your business. Please note, it does not constitute tax or legal advice.
Set up a retirement plan your team will use
Illustrative example only. Not an actual account.
Instead of enrolling in MERIT, Maine employers can offer a qualified plan such as a WealthRabbit SIMPLE IRA. Employers that offer a qualified plan are exempt from MERIT’s enrollment requirement but must still register with the program and certify their exemption through the MERIT portal.
- Self-onboardingYou and your employees sign up online, and plan documents are e-signed in the app. Set up takes a few steps.
- Payroll integrationWealthRabbit connects with supported payroll systems to help you send contributions accurately and on time. You remain responsible for remitting contributions by the required deadlines.
- Plan rolloversMove funds from an existing retirement plan into WealthRabbit. Timing depends on your current provider.
- Automated contributionsSet up automatic deposits so contributions go out on schedule. You can review and change them at any time.
- Employer and employee portalsManage contributions and investments from your computer or phone, and see contributions, performance and account activity in one place.
MERIT vs. WealthRabbit SIMPLE IRA
A quick look at how the two options compare.
| Feature | MERIT | WealthRabbit SIMPLE IRA |
|---|---|---|
| Employer setup | Register (or certify an exemption), maintain your employee roster, and send payroll contributions to the state program | Set up online with payroll sync. You manage contributions, notices and annual plan decisions |
| Retirement options | Roth IRA only. Default 5% contribution, rising 1% each January to 10%. Employees can change their rate. No employer match | SIMPLE IRA, with a Roth SIMPLE option if the employer allows it. Employees choose from investment portfolios |
| Who can use it | Employers with 5 or more employees, in business 2+ years, without a qualified plan. Employees 18+ with 120+ days of service | Employers with 100 or fewer employees earning $5,000+. Must be your only plan |
| Employer contributions | Not allowed | Required: match up to 3% of pay, or 2% of pay for every eligible employee |
| 2026 employee limit | $7,500 ($8,600 if 50 or older) | $17,000, plus $4,000 if 50 or older ($5,250 if 60 to 63) |
| Employer cost | $0. Employees pay approximately 0.32% of assets plus $22 a year | $29 per month plus $4 per employee per month, paid by the employer |
| Employee experience | State-run account with online tools and a retirement calculator | WealthRabbit portals and mobile app, with financial literacy resources and rollover support |
3 MERIT charges employers no fees. Participating employees pay the program’s fees, approximately 0.32% of assets plus $22 per year. WealthRabbit SIMPLE IRA fees are paid by the employer: $29.00 per month plus $4.00 per employee per month. Additional fees and investment-related costs may apply. See our Fees and Services Disclosure and Form ADV Part 2A.
4 Information about MERIT is based on public information from the Maine Retirement Investment Trust and Maine statute as of October 21, 2026, and may change. WealthRabbit is not affiliated with, sponsored by, or endorsed by MERIT or the State of Maine.
Frequently asked questions
Private-sector employers in Maine must register for the Maine Retirement Investment Trust (MERIT) or certify an exemption if they meet all of the following criteria:
- Have five or more employees in Maine
- Have been in business for at least 2 years
- Do not offer a qualified retirement plan (such as a SIMPLE IRA)
Eligible employees must be at least 18 years old and have been employed for at least 120 days. Employers who already offer a qualified plan must still certify their exemption through the MERIT portal.
Registration opened in January 2024 and was phased in by employer size. The original deadlines (April 30, 2024 for 15 or more employees and June 30, 2024 for 5 to 14 employees) have passed. Employers that become eligible later must register or certify an exemption by December 31 of the year after they meet the criteria.
Employers register (or certify an exemption), keep their employee roster current, and send payroll contributions to the program. Employers pay no program fees, cannot contribute, and do not choose employees’ investments. Check the MERIT portal for current remittance timing.
Employers that do not comply may face penalties of up to $50 per covered employee per calendar year through June 30, 2027, rising to up to $100 per covered employee on or after July 1, 2027.
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