Hawaii's New Retirement Mandate: What Hawaii Employers Need to Know About HRSP
Hawaii's new retirement mandate is scheduled to launch in 2026. Already have a 401(k) with SI Group? You're covered. Here's what every employer should know.
Hawaii is scheduled to roll out a new retirement savings mandate in 2026, and every Hawaii employer will need to make a decision about how to comply. If you already have a 401(k) plan with SI Group, here's the short version: you're already in compliance. Nothing's required on your part. For employers without a qualified retirement plan, the situation is different. The Hawaii Retirement Savings Program, or HRSP, is a state-administered Roth IRA that requires participation, ongoing administration, and financial penalties for noncompliance.
This guide explains what HRSP is, who's affected, and the two paths Hawaii employers can choose.
What is the Hawaii Retirement Savings Program?
The Hawaii Retirement Savings Program, commonly referred to as HRSP, is a state-mandated retirement savings program that requires Hawaii employers to either offer a qualified retirement plan or enroll their employees in HRSP, a state-administered Roth IRA.
HRSP launches in 2026 and is designed to address the savings gap for Hawaii workers who don't currently have access to a retirement plan through their employer. The program is administered by the State of Hawaii Department of Labor and Industrial Relations and operates through automatic payroll deductions.
Who is affected by HRSP?
HRSP applies to Hawaii employers that do not currently participate in a “qualified retirement plan”. A “qualified retirement plan” includes a 401(k), 403(b), profit-sharing plan, money purchase pension plan, ESOP, defined benefit plan, cash balance plan, SIMPLE, and SEP.
Two paths for Hawaii employers:
Every Hawaii employer without a current retirement plan will need to choose between two paths.
Path 1: Enroll employees in the state-administered HRSP program. This is the default path for employers who do not offer a qualified plan. Under this path, employers will be required to:
Automatically enroll employees in HRSP
Process and timely transmit a 5% payroll-deducted contribution for each enrolled employee (unless the employee opts out or makes a different contribution election)
Manage ongoing administrative responsibilities, including employee notices, payroll deductions, and opt-out requests
Maintain compliance with state requirements throughout the year
Employers who fail to comply face financial penalties of up to $5,000 per year.
While the HRSP satisfies the state mandate, it comes with administrative burden, lower contribution limits for employees, and limited flexibility for the employer. As a Roth IRA, HRSP is also subject to federal IRA contribution limits and income restrictions, which are meaningfully lower than the limits available through a 401(k) plan.
Path 2: Set up a qualified retirement plan, such as a 401(k). A 401(k) plan (or any other qualified retirement plan) also satisfies the mandate and is exempt from HRSP requirements. It allows for higher contribution limits, optional employer contributions, and the ability to design the plan around the business. New plans may also qualify for federal tax credits under SECURE 2.0, which can offset much of the startup and administration cost in the first three years.
The right fit depends on the business. For many Hawaii employers, a 401(k) (or other qualified retirement plan) is worth a serious look before defaulting to the state program.
What this means for SI Group clients:
SI Group has been helping Hawaii businesses build retirement plans for almost 40 years. If you are already an SI Group client with a 401(k) or other qualified plan, you are exempt from HRSP. There is nothing for you to do.
If you know a Hawaii business owner navigating this — a peer, a vendor, a client — we'd be happy to talk with them. We work with businesses of every size to set up qualified plans that satisfy the state mandate, provide stronger savings outcomes for employees, and unlock available federal tax credits.
Frequently asked questions about HRSP:
Is HRSP mandatory for all Hawaii employers?
HRSP applies to Hawaii employers that do not currently participate in a qualified retirement plan. Employers with a 401(k), 403(b), or other qualified plan are exempt from the program.
When does HRSP launch?
The Hawaii Retirement Savings Program is scheduled to launch in 2026.
What are the penalties for noncompliance?
Employers who do not have a qualified retirement plan and fail to comply with HRSP requirements face financial penalties of up to $5,000 per year.
Does a 401(k) plan satisfy the HRSP mandate?
Yes. Any qualified retirement plan, including a 401(k), satisfies the HRSP mandate and exempts the employer from state program requirements. Other types of qualifed retirement plans include a 403(b) plan, profit sharing plan, defined benefit plan, cash balance plan, SIMPLE, and SEP.
Are there tax benefits to setting up a 401(k) instead of using HRSP?
Yes. New 401(k) plans may qualify for federal tax credits under SECURE 2.0, which can offset a significant portion of plan startup and administration costs in the first three years.
What happens if I don't take any action?
Hawaii employers without a qualified retirement plan will be required to enroll their employees in HRSP once the program launches. Employers who fail to comply with HRSP requirements face penalties of up to $5,000 per year.
Get Started
HRSP launches in 2026, and setting up a qualified plan takes time. The businesses that act early have the most flexibility on plan design and tax credits. If you'd like to talk through what a 401(k) could look like for your business, our team is here to help.