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Three Things to Know about the Colorado Secure Savings Program

Over nine hundred thousand working Coloradans currently do not have access to a retirement savings account or program at work, according to a recent study included in Colorado Senate Bill 20-200, with young, minority, and lower-wage workers more likely to lack access.

According to the Senate Bill*:

  • Young and minority workers: Nearly 50% of workers between the ages of twenty-five and twenty-nine; 46% of African-American workers and 59% of Latinx workers do not have access to a workplace retirement program.
  • Lower-wage workers: Additionally, nearly 70% of Colorado’s workers in the lowest income bracket have no access to a retirement program at work.
  • Small businesses: Many employers want to offer a workplace retirement program but lack the necessary resources.

In July of 2020, Colorado moved to improve retirement outcomes by passing the Colorado Secure Savings Program. The law mandates that businesses must implement the program for their employees if they have; five or more employees at any time in the calendar year, have been in business at least two years and have not offered a qualified retirement plan in the preceding two years. Employers meeting these parameters must offer access to an individual retirement account (IRA) funded by automatic payroll deductions or enroll eligible workers in a state-sponsored Roth IRA plan.

Three things you need to know:

  1. Employees will be automatically enrolled in the new program.

    If your business does not provide a retirement program, eligible employees will be automatically enrolled into the state-sponsored Roth IRA plan. A percentage of employee pay will automatically be deposited into an IRA that is portable from job to job. Employees may opt-out of the program or decrease the percentage of pay withheld.

  2. Employer match and contributions are not required.

    Unlike in a 401(k) plan, employers are not fiduciaries in the Colorado Secure Savings Program. This means there will likely be minimal administration burdens and costs to employers.

  3. Employers can face penalties for not complying with the program.

    Employers can face a penalty for non-compliance, such as failure to enroll eligible employees, of $100 per eligible employee per year, up to a max of $5,000 annually. Enforcement of this rule will begin one year after the due date (TBD) set for employer enrollments based on the number of employees in the business’s workforce. Enforcement is slated to begin at the later of (1) at least one year after establishment of the program or (2) one year after an employer is scheduled to enter that program.

In preparation for the program rollout, we encourage you to consider whether implementing a unique retirement plan makes sense for your business. Colorado businesses do not need to wait for the program to launch and can open a retirement plan at any time to satisfy the mandate.

Learn more about how businesses are adapting to changing financial pressures and check out the recent blog post: The Convergence of Health and Wealth: Holistic Support for Your Workforce.

Investment Advice offered through OneDigital Investment Advisors, an SEC-registered investment adviser and a wholly owned subsidiary of OneDigital.