What Is the Keystone Saves Program and What Does It Mean for Your Business?
PA House Bill 1263 could mandate retirement plans for businesses with 5+ employees. Learn how to stay exempt and claim up to $17,000 in tax credits with PAC Financial in Harrisburg if this moves to law.
Keystone Saves is a proposed state-facilitated retirement savings program for Pennsylvania workers whose employers do not offer a plan. As of April 2026, House Bill 1263 has passed the PA House and is currently under consideration by the Senate Finance Committee. If signed into law in its current stage, businesses with five or more employees will be required to either enroll workers in this state program or start a private plan. PAC Financial is a family-owned financial advisory firm in Harrisburg, Pennsylvania. We help Central PA business owners understand these rules and how to get ahead of them.
Here is the bottom line: if you already have a retirement plan for your business, you would be EXEMPT from Keystone Saves entirely. That is the winning play for most owners.
Schedule a Free Keystone Saves Compliance Review
Has Keystone Saves Become Law Yet?
Not yet, but it is moving to the State Senate. The bill passed the Pennsylvania House with a 102-101 vote and is now in the Senate Finance Committee. While it is not yet a final mandate, the momentum is undeniable. Eighteen other states have already launched similar "Auto-IRA" programs. Pennsylvania is following that path. Smart owners in Harrisburg and Mechanicsburg are not waiting for the final vote. They are setting up their own plans now while federal tax credits cover the cost.
Which Businesses Would Be Affected?
Under the current proposed bill, Keystone Saves applies to employers who meet three specific conditions. First, you must have five or more employees in Pennsylvania. Second, you must have been in business for at least two years. Third, you must NOT already offer a qualified retirement plan like a 401(k) or SIMPLE IRA.
The rollout would happen in phases. Larger businesses (100+) would have 24 months to register. Small shops with 5 to 9 employees would have 48 months. If you already have a plan, you are exempt. FULL STOP.
What Would Employers Have to Do?
If you do not have a plan, you will have to enroll your employees automatically. Workers would start by putting 4% of their wages into a Roth IRA managed by the PA Treasury. This amount would increase by 1% each year until it hits 10%.
The fee cap for the state program is 0.60% annually. While that is reasonable, many private SIMPLE IRAs actually cost less today. Your only job is managing the payroll deductions. You are not a fiduciary for the state plan, but you also have zero control over the investments.
How Is This Different from a SIMPLE IRA or 401(k)?
The state program is a bare-bones Roth IRA. A private plan gives you more firepower. For 2026, a SIMPLE IRA allows employees to save up to $17,000. A 401(k) allows for a massive $24,500 contribution. The state Roth IRA is limited to just $7,500 for 2026.
You can let the state call your plays, or you can RUN YOUR OWN OFFENSE by choosing a plan that fits your specific tax goals. A private plan lets you pick the provider and the funds that fit your team.
The SECURE 2.0 Tax Credits: Making "Private" Nearly Free
The federal government wants you to choose a private plan over a state one. That is why the SECURE 2.0 Act offers massive credits. You can get a startup credit of up to $5,000 per year for three years. For businesses with 50 or fewer employees, this often covers 100% of your costs.
There is also a credit for employer contributions. You could get up to $1,000 per employee back in tax credits. A 12-person business could see $17,000 in credits in the first year alone. This makes a private plan cheaper than the "free" state program.
Talk to PAC Financial
Do not wait for the mandate. The tax credits are available TODAY. PAC Financial helps business owners in Harrisburg, Camp Hill, Carlisle, and Hershey build plans that protect their team and their bottom line. Call (717) 564-6400. Let's build your game plan before the state builds one for you.
Compliance Notice
This information is for educational purposes only. It is not financial, legal, or tax advice. House Bill 1263 is pending legislation and subject to change. PAC Financial is a financial advisory firm serving Central Pennsylvania. Securities and advisory services offered through Osaic Wealth, Inc. Member FINRA/SIPC.
Photo Attribution: By Kumar Appaiah - CC BY-SA 2.0