In July of 2020, the Colorado Secure Savings Program was signed, mandating businesses with at least five employees must offer access to individual retirement accounts. This ruling isn’t a requirement for employers just yet. But as we’re a year from the date it was signed it’s worth a reminder of what this program entails as you prepare your business for it.
What Is the Colorado Secure Savings Program?
The Colorado Secure Savings Act is state-mandated legislation. The purpose of the act is to increase access to retirement savings for workers in Colorado. Some workers, as it stands, don’t have the ease of saving for retirement through their job. This program would mandate that qualifying employers provide an employer-sponsored retirement plan funded through automatic payroll deductions to solve that need.
What You Should Know
The deadline for compliance for the Colorado Secure Savings Program is still to be determined. Employers aren’t currently responsible or being held accountable for anything just yet. Employer registration for this act will likely be at the end of this year or early 2022.
As an employer, you will be required to implement this program if:
- You have five or more employees
- Have been in business for two or more years
- Don’t have an existing qualifying retirement plan
Employees can voluntarily participate in the retirement plan if they are 18 years of age or older, employed by a Colorado employer for at least 180 days, and earn taxable wages.
Employers do NOT have to provide contributions to the retirement accounts — that is a voluntary option. Employers also don’t have to be the fiduciaries of the program.
Larger businesses will likely have to meet earlier deadlines while smaller businesses will be given more time. Regardless, the program is eventually going to happen and Colorado employers should prepare to be compliant or face up to a $5,000 fine. Enforcement won’t begin until at least one year after the program is established — or one year after an employer is scheduled to enter the program based on the number of employees or years in business.
What You Can Do to Prepare for the Colorado Secure Savings Program
Having a retirement plan option and even financial education tools is a great benefit to attract and retain employees. Take the following steps to get the most out of complying with this program:
- Evaluate what retirement plan is best for your employees. Not all retirement plans are the same. Consider what your employees will value most. And note, if you already have a retirement plan option such as a 401(k) or other qualified plans you’re already in compliance.
- Prepare your payroll — automatic deductions for employees are part of the program. Review your current right payroll processing to make sure this runs smoothly.
- Compile information to share with your existing employees and new hires on the program. Employees will look to you to gather the facts so they can make the best decision for themselves and their families. And though this program is an additional responsibility for employers, it can be advertised to prospective employees.
We’ll keep you updated as registration deadlines for this program get finalized. But if you need support curating retirement plans, the administration of this program, and getting compliant, reach out to us: obsidianhr.com/contact/
You can also read our guide on other Colorado Laws & Regulations for more information on your risk and compliance issues.