At first glance, state-run pension programs for private sector employees generally work as intended.

Those without access to a 401(k) plan or similar work option have collectively saved more than $400 million in individual retirement accounts through these programs. To date, three states have them in place and are functioning, although more are on the way.

“Making them available to more private sector workers is absolutely critical so they can save for retirement,” said Angela Antonelli, executive director of the Center for Retirement Initiatives at Georgetown University.

Learn more about personal finance:
3 good reasons to keep your will or estate plan up to date
Tax season is underway. How to get a faster refund
Here’s a financial roadmap for the rest of the year

The rise of these state-run programs is part of a broader effort to increase the number of retirement savers. An estimated 57 million workers don’t have access to a plan at their job, Antonelli said.

The workers seem to need all the help they can get. For example, the median account balance of people nearing retirement — those between the ages of 55 and 64 — is $84,714, according to Vanguard’s latest report. How America Saves Report. Generally, it is recommended to have 10 times your annual salary saved if you want to retire at 67, according to Fidelity Investments.

Through state-run programs in California, Illinois, and Oregon, nearly 430,000 accounts have been funded since the first one (OregonSaves) launched in 2017.

This year, Maryland and Colorado are expected to roll out their own versions, while Connecticut will move to a full launch from its pilot phase. A handful of other states — including Massachusetts, Vermont and Washington — have programs that operate differently, with voluntary participation.

(The California program remains embroiled in a lawsuit challenging its legality. More recently, the plaintiff asked the Supreme Court to review the case. It’s unclear whether the High Court will accept or deny it.)

Other states, including Maine, New Mexico and Virginia, are in the early planning stages of starting their programs. A total of 46 states have implemented or considered legislation since 2012 to create retirement savings initiatives to reach workers without a plan at work.

While it’s possible to set up a retirement account outside of work, individuals are 15 times more likely to save if they can do so through a work plan, according to advocacy group AARP older Americans.

Add auto-enrollment and the result is better: The average total savings rate is 56% higher (including employer contributions) among 401(k) plans with auto-enrollment, according to Vanguard research.

While larger employers are more likely to offer a retirement option, costs and administrative burdens can hamper small business owners’ willingness to create one. Thus, these state-run programs can increase access to a work plan for these workers.

Although there are some minor differences between state-run programs, the general idea is that employees are automatically enrolled in a Roth IRA through a payroll deduction (starting at around 3% or 5%), unless they withdraw. There are no fees for employers and the accounts are managed by an investment company.

OregonSaves, which launched in 2017, has an unsubscribe rate of around 32%, according to the latest available program data. The average account balance is $1,331.

For workers who may find themselves enrolled in these programs, it’s worth knowing that contributions to Roth accounts are not tax-deductible as they are with 401(k) plans. (Traditional IRAs, whose contributions may be tax-deductible, may be available as an alternative option, depending on the specifics of the state program).

However, Roth IRAs — unlike, in general, 401(k) plans — carry no penalty if you withdraw your contributions before age 59½.

This means that if you resume contributions to a Roth before retirement, there is no penalty because you have already paid taxes on them. (For income, however, there could be a tax and/or penalty.)

Additionally, these Roth accounts will generally not have an employer match on contributions at work, as 401(k) plans often do.

Annual Roth IRA contribution limits are also lower. You can contribute $6,000 in 2022, although high earners are limited in what they can contribute, if at all. In addition, anyone aged 50 or over is entitled to an additional “catch-up” contribution of $1,000.

For 401(k) plans, the contribution limit is $20,500 in 2022, with those 50 and older eligible for an additional $6,500.