The Colorado Secure Savings Program is a state-mandated program that aims to give citizens access to a retirement savings plan. Colorado is one of several states in the US that requires private businesses to offer a retirement savings plan to their workers.
Colorado Secure Savings allows employees to save up for retirement even if their employer does not currently sponsor its own 401(k), individual retirement arrangement (IRA), or other pension plans.
All private employers with at least 5 workers that have been in business for at least two years in the State of Colorado must offer a retirement savings plan to their workers.
Companies with 50 or more employees must start their own retirement savings plan or enroll under Colorado Secure Savings by March 15, 2023; those with 15 to 49 workers by May 15, 2023, and those with 5 to 14 employees by June 30, 2023.
Private businesses that already offer a retirement savings plan in the past two years are exempt from the state mandate. The Secure Savings Program is managed by the Colorado Secure Savings Board (in the Office of the State Treasurer) and administered by Vestwell.
The Colorado Secure Savings Program is set up like a Roth IRA, meaning that all contributions are made with after-tax dollars where the funds grow tax-free, and withdrawals during retirement are also tax-free.
The program involves a default savings rate of 5% of annual salary. For 2023, eligible employees can contribute up to $6,500 yearly in salary deferrals, with an additional $1,000 in catch-up contributions for employees 50 years or older.
The program entails numerous benefits for businesses and employees alike. Certain penalties will also be incurred for noncompliance.
Employers can elect to enroll under Colorado Secure Savings at no cost. They will be able to offer a retirement savings plan to their workers with minimal administration and a simple setup process.
Other related benefits include a tax credit to cover the costs of setting up their own retirement savings plan beyond Colorado Secure Savings. Eligible employers can get up to $5,000 in annual tax credits for the first three years of their plan, for a total of $15,000.
In the same time frame, businesses can also avail of an additional $500 in annual tax credits for automatic employee enrollment, adding up to $1,500 in the first three years of the plan’s implementation.
There are also credits available for plans offering employer contributions. Companies with 50 or fewer employees may receive a percentage-based tax credit of up to $1,000 per employee that earns less than $100,000. Those with 51 to 100 employees may qualify for a phase-in credit.
By offering a retirement savings plan, businesses can attract and retain top talent and take advantage of increased employee morale and productivity associated with competitive benefits packages.
With the state mandate, employees are assured of a retirement savings option. They can gain access to the Roth IRA of Colorado Secure Savings.
They can also get access to another retirement plan if their employer elects to offer a different one, including a 401(k) plan, 403(b) tax-sheltered annuity, Simplified Employee Pension (SEP) plan, or a SIMPLE (Savings Incentive Match Plan for Employees) IRA.
If the employer enrolls under Colorado Secure Savings Roth IRA, workers are assured of portability, meaning they can take their account even if they change companies.
Employees can also customize their contributions after the initial default contribution of 5% of their annual salary. Colorado Secure Savings also comes with an opt-out provision, meaning employees can get out of the plan and reenroll whenever they want.
State legislation requires eligible employers to either offer Colorado Secure Savings or their own retirement savings plan. Noncompliance will mean penalties of $100 per employee per year, with a maximum of $5,000 in aggregate penalties annually.
Fines will be imposed one year after a business is scheduled to enter the program.
Below is a table summarizing the key details of this state-mandated retirement program:
The Colorado Secure Savings Program mandates all private businesses with at least five employees and operating in the last two years in the State of Colorado to offer a retirement savings plan by June 30, 2023.
Eligible businesses can choose to offer their own retirement savings plan or enroll under the Colorado Secure Savings Program. This mandate ensures that employees in Colorado have access to a nest egg for their retirement years.
Benefits for employers include tax credits, easy administration, and quick setup. Employers that do not comply with the mandate will face penalties of $100 per employee per year, with a maximum of $5,000 in aggregate fines annually.
It is a state-mandated retirement savings plan operated by the State of Colorado. It requires eligible private businesses to offer their own retirement savings plan or enroll under the Secure Savings Program.
All private companies with at least five employees, in business in Colorado for at least two years, and do not offer their own retirement savings plan are required to participate in the Colorado Secure Savings Program.
Employees are assured of a retirement savings plan. Employers benefit from potential tax credits, easy enrollment, and attracting top talent.
The default contribution is set at 5% of an employee's annual salary. For 2023, employees can choose to modify contributions up to $6,500 annually, with an additional catch-up contribution of $1,000 for employees 50 or older.
Yes. Employers may elect to offer their own retirement savings plan, including 401(k)s, SIMPLE IRAs, tax-sheltered annuities, and SEP plans.