05 Jan 2023 How to Prepare for the Colorado Secure Savings Program
In July 2020, the Colorado Secure Savings Program was signed, mandating businesses with at least five employees must offer access to individual retirement accounts. Since this ruling was signed in 2020, many employers may forget the requirements. Now that the program will be upheld and implemented in 2022, here is a reminder of what the program entails and how to 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.
To help workers save for retirement, the Colorado Secure Savings Act mandates that qualifying employers provide an employer-sponsored retirement plan funded through automatic payroll deductions. Though this is an additional burden for employers, there are many benefits to employer-sponsored retirement plans — for the employee and employer.
Colorado Secure Savings Program: What You Should Know
The deadline for compliance with the Colorado Secure Savings Program is 2023, but the pilot program will launch in October 2022. Employers aren’t currently responsible or being held accountable for anything just yet.
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. The pilot program is set to begin in October 2022 with official enrollment starting in 2023.
Steps to Prepare for the Colorado Secure Savings Program
Having a retirement plan option and even financial education tools is a great benefit to attracting and retaining 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 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.
How to Leverage the Colorado Secure Savings Progam
The Colorado Secure Savings Act resulted in a new rule for Colorado employers. But it doesn’t have to be a burden. Employers should treat the program as an opportunity to improve their employees’ financial wellness. After all, offering financial wellness benefits helps attract and retain employees. So be sure to advertise your company offers retirement options.
Start with an employer-sponsored retirement plan, and then consider what other financial benefits you can offer your team. You’d be surprised at how many low-cost options there are that go a long way toward bettering your employees’ financial wellness.
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