What Is The Nevada Employee Savings Trust?

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Quick Answer

The Nevada Employee Savings Trust, known as NEST, is a state-facilitated retirement savings program created by Senate Bill 305 of the 2023 legislative session and codified at NRS Chapter 353D. Covered employees are automatically enrolled in an individual retirement account funded by payroll deduction, with a 30-day window to opt out.

The Nevada Employee Savings Trust is the state's answer to the number of private sector workers with no retirement account at all. Rather than requiring employers to sponsor a plan, Nevada built one and requires covered employers to connect their payroll to it. The account belongs to the employee, is a Roth individual retirement account by default, and follows the worker from job to job because it was never tied to the employer in the first place. Employees are enrolled automatically at five percent of compensation with a thirty day window to opt out, and the rate rises by one percentage point each January until it reaches ten percent.

Nevada decided the problem was not that workers refuse to save. It was that most small employers were never going to build a retirement plan, so there was nothing to save into.

The Nevada Employee Savings Trust is the state’s response. Rather than requiring employers to sponsor plans, Nevada built one and required covered employers to plug their payroll into it.

What is NEST and where did it come from?

The Nevada Employee Savings Trust is a state-facilitated payroll deduction retirement savings program. It was created by Senate Bill 305 of the 2023 legislative session[1] and codified at NRS Chapter 353D[2].

The program runs under a Board of Trustees with oversight from the Nevada State Treasurer and is operated day to day by a third-party administrator. Nevada is not unusual in this. A number of states have built comparable programs, which is why so much of the online commentary about penalties and deadlines is about somebody else’s state rather than this one.

The design choice underneath it is the important part. NEST is not an employer plan with state involvement. It is a set of individual retirement accounts owned by the workers, with the employer acting only as the conduit that moves money from payroll into them.

What does the account actually look like?

A Roth individual retirement account, by default, in the employee’s own name. A traditional IRA is available if the employee elects it.

Because the account belongs to the employee rather than to the employer, it moves with the worker. Someone who leaves a Summerlin restaurant for a Henderson contractor keeps the same account, which is a meaningful design feature in a labor market with the turnover Las Vegas has.

Enrollment is automatic. Covered employees are enrolled at a default contribution rate of 5 percent of compensation, which increases automatically by 1 percentage point each January until it reaches a maximum of 10 percent. An employee has 30 days from the enrollment notice to opt out, can opt out at any point afterward without penalty, and can change the contribution rate at will. The program details page[3] carries the current mechanics.

Why the default rate matters more than it looks

Defaults decide outcomes, and Nevada’s own data shows it. Program administrators have reported an observed average contribution rate sitting at approximately the 5 percent default, which is to say the overwhelming majority of enrolled savers never touch the dial in either direction.

That is worth knowing in both directions. It means automatic enrollment genuinely produces savings that would not otherwise exist. It also means an employee who needs to be saving more than 5 percent almost certainly is not, and nobody in the process is responsible for telling them.

What does it cost?

Nothing to the employer, and a modest amount to the saver. There is no employer fee attached to the program, which is one of its genuine advantages over sponsoring a plan.

Savers carry the costs. The current structure is a $26 annual account fee, charged quarterly, plus asset-based fees running between 0.223 percent and 0.31 percent a year depending on which investment option the saver holds. The NEST FAQ sheet[4] published by the Nevada State Treasurer covers the program basics.

On a small balance a flat annual account fee is proportionally heavy, which is simply the arithmetic of any small account rather than a criticism of this program specifically. It is one more reason the comparison against an employer-sponsored plan is worth running once rather than assumed.

What is the employer’s role, and what is it not?

The employer is a conduit and nothing more, which is deliberate and legally significant. Under NRS 353D.320 the employer is explicitly not a fiduciary of the program.

The obligations are to register or certify exemption, maintain the roster as staff join and leave, run the deductions, and remit contributions not later than 10 business days after the date the amounts otherwise would have been paid to the employee, per NRS 353D.310.

Three things an employer may not do. It may not make matching or any employer contributions. It may not advise employees on IRA eligibility or investment selection. And it may not determine whether a given employee is eligible to contribute to an IRA at all, which matters because Roth IRAs carry income limits and a high earner auto-enrolled in a Roth account may be ineligible. The program places that responsibility on the participant, not the employer.

That last point is a genuine trap in a market with commission-heavy income. A top producer whose income swings above the Roth phase-out is auto-enrolled the same as everyone else.

How does NEST compare with sponsoring a plan?

The ceiling is the difference, and it is large. NEST is an individual retirement account, so employee contributions are capped at the IRA limit rather than the much higher 401(k) elective deferral limit, and no employer money can go in at all.

For a business that was never going to sponsor anything, NEST is a real improvement over an employee having no account whatsoever, at zero cost and zero fiduciary exposure. For a business with retention problems, owners who want to shelter income, or a payroll large enough that the federal startup credits would cover most of the setup, it is the wrong tool chosen by inaction. The contribution limits are compared in how much can employees save in Nevada NEST, and the credits that change the math are in the retirement plan tax credits guide.

The full picture of who is covered and what the obligation involves is in Nevada’s retirement plan mandate, and the benefits that sit alongside retirement are in the small business benefits playbook.

We are insurance nerds, not tax professionals. Which retirement structure fits a specific business, and how any of it lands on a specific return, belongs with a licensed tax professional and a qualified retirement plan advisor.

As an official Paychex partner, ProtectHealth can map the state program, payroll, HR and benefits in one conversation. Owners who want that for their own business can book a conversation.

Sources

  1. Nevada Legislature — Senate Bill 305 of the 2023 legislative session
  2. Nevada Legislature — NRS Chapter 353D
  3. nest.nv.gov — program details page
  4. nevadatreasurer.gov — NEST FAQ sheet

Frequently Asked Questions

Who runs the Nevada Employee Savings Trust?

The program operates under the NEST Board of Trustees with oversight from the Nevada State Treasurer, and is administered by a third-party program administrator. The enabling statute is NRS Chapter 353D, created by Senate Bill 305 of the 2023 legislative session.

What kind of account do employees get?

A Roth individual retirement account by default, with a traditional IRA available by employee election. The account belongs to the employee rather than the employer, so it travels with the worker when they change jobs.

What is the default contribution rate?

Employees are automatically enrolled at 5 percent of compensation. The rate increases automatically by 1 percentage point each January until it reaches a maximum of 10 percent, and an employee may change the rate or opt out at any time.

Does the employer pay anything?

No. There is no employer fee for the program, and employers are not permitted to make matching or any other contributions. Savers pay the program costs through a $26 annual account fee plus asset-based fees running between 0.223 and 0.31 percent depending on the investment option.

Can an employee opt out?

Yes. An employee has 30 days from the enrollment notice to opt out, and may opt out at any time afterward without penalty. An employee who opts out can also rejoin later.

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ProtectHealth brokers are insurance professionals, not tax professionals. Eligibility for any coverage or tax-advantaged structure depends on business structure, income, and household situation.