According to the Colorado Department of Treasury, nearly “94,000 workers have no employer-sponsored retirement savings plan.” To rectify this, the Colorado SecureSavings Program was approved by the Colorado Legislature in 2020. While a pilot program begins this month (October 2022), employers will be required to take part beginning in 2023.
The program allows employees, who are not offered employer-sponsored plans, to contribute to a state-run retirement account. “The paycheck deductions will start at 5 percent, and that money will go to a worker’s Secure Savings account. These accounts will likely be Roth IRAs, but the state also may decide later to include traditional IRAs,” according to the article, “Colorado is launching a retirement program for all employees. Here’s what that means,” on the CPR News website.
While the new program will not require employers to provide their own plans, they may need to enroll their workers in the state government’s new program if they:
- Have five or more employees. Employees must have worked for the company for at least 180 days.
- Have been in business for two or more years.
- Do not currently offer a retirement savings program to any employees.
According to the Colorado SecureSavings Program website, this initiative offers several benefits to employers, including:
- Free facilitation.
- Easy setup, with no complex administration and with minimal ongoing responsibilities.
- Easy integration with existing payroll processes.
- A valuable benefit to attract and retain employees.
- No fiduciary responsibility by the employer. Employers are not responsible for the investment decisions or outcomes of any employee who participates in the program.
- No matching contributions by the employer.
Employers are required to register their business, upload payroll and employee information to the system, submit their employees’ savings contribution levels and keep employee records up to date.
There will be penalties for an employer’s noncompliance. “For noncompliance, fines will be $100 per employee per year and can ratchet up to $5,000 annually. The compliance period is one year after implementation,” according to the Bonfire Financial website.
For more information about this program and how to register your business and implement the other steps, click here.