Colorado SecureSavings is the name of the state’s mandatory retirement program, and its goal is to assist more workers in saving for retirement. But as an employer, how do you know if your company is required to participate, what the enrollment process is, and what you should do if you already offer a retirement savings plan like a 401(k) for your employees?
In this guide to Colorado SecureSavings, we’ll find out more about when this program got its start, how employers can sign up, and what to do if you’re already offering a plan.
Why are state-mandated retirement plans receiving more attention?
Some data shows that there’s a retirement crunch on the horizon, with millions of Americans financially unprepared for post-work life. And in Colorado, nearly 940,000 workers are without access to workplace retirement savings plan.
Though programs such as Social Security provide some monthly income once a person is at least 62, there’s data that suggests there could be some shortcomings in the near future. By 2035, the SSA predicts that it will only be able to pay 75% of scheduled benefits.
In response, states like Colorado have passed legislation that makes it easier for private workers to get access to a program promoting retirement savings. Colorado joins a growing number of states, such as California, Connecticut, and Massachusetts, that have introduced state-mandated retirement plans.
Let’s find out more specifics about what Colorado’s plan requirements are.
What is Colorado’s state-mandated retirement savings program?
In a nutshell, Colorado SecureSavings is a state-facilitated program that requires all eligible employers to provide their employees with access to a program that helps them start saving money for retirement. Specifically, the type of savings opportunity through the state-sponsored plan is a Roth Individual Retirement Account (also known as an IRA).
The mandate to create a state program was signed into law in July 2020 by Colorado governor Jared Polis. From there, the pilot program began in October 2022 and is currently in a testing phase with a small group of participating employers. The 2023 compliance deadline starts at least one year after the program is officially enacted (this date is still to be determined).
Let’s find out more about the deadlines and what the minimum number of employees are.
What do employers need to know about Colorado SecureSavings?
Currently, Colorado requires all employers in business for two or more years with five or more employees, to offer a qualified retirement plan. This could be a 401(k) from a private provider or they may choose to opt into their state’s sponsored plan. All of the 2023 registration deadlines have passed:
- The deadline for employers with 50 or more employees passed on March 15, 2023
- Employers with 15 to 49 employees were required to register by May 15, 2023
- Employers with 5 to 14 employees were required to register by June 30, 2023
Employers may choose an independent retirement plan administrator or participate in Colorado’s state-run plan, which is Colorado SecureSavings Program. But you need to offer one or the other.
If you already offer employees access to a qualified plan, you may be eligible for an exemption. Let’s learn more about which employers qualify and how they can apply for the exemption.
Who is exempt from the SecureSavings program in Colorado?
If you already provide access to a retirement savings program for your employees, you should be able to certify online that you have a plan in place and share your information with the state, so that employers are not penalized. This means that if your company is already offering one of the following qualified plans (or does not have W-2 employees on the payroll), you may be exempt from Colorado SecureSavings. We compiled the plans that may qualify for an exemption (see below), but you can always access this on the Colorado state site as well:
| Plans that may qualify for an exemption are |
- 401(a) – including 401(k)
|
- 408(k) – Simplified Employee Pension (SEP) plan
|
- 403(a) – qualified annuity plan
|
|
- 403(b) – tax-sheltered annuity plan
|
- 457(b) – governmental deferred compensation plan
|
Do you already offer a qualified plan? Here is more information with instructions, including screenshots on how you can apply for an exemption. Per the state’s help center, to certify your exemption, you’ll want to have the following information available when applying for the exemption:
- Your EIN or employer identification number
- Know which retirement program you offer your employees, because you’ll need to enter this information
- Access code. According to the Colorado SecureSavings website, businesses should receive this by email or by postal mail. That said, if you cannot find your information or need assistance, their team can help in two different ways:
- Contact clientservices@coloradosecuresavings.com
- Call 844-692-1073 for assistance
How do contributions work?
Simply put, qualifying employers participating in Colorado’s SecureSavings Program must offer Individual Retirement Accounts (IRAs) that can be synced up with automatic payroll deductions.
Who is eligible for SecureSavings in Colorado?
The criteria for employees to be eligible for ColoradoSecure Savings are:
- Savers must be at least 18 years of age or older
- Have earned taxable wages from a Colorado employer for at least 180 days
The Colorado SecureSavings program is considered a portable retirement plan. This means that an employee’s contributions will follow them if they end up taking another job with another employer. Furthermore, an employee is automatically covered under any employer that is registered for the program. If they work for someone who isn’t or they are self-employed, they can make contributions directly from their savings account.
Workers should also know that with Colorado SecureSavings, they are automatically enrolled in the program. That said, employees do have the option to opt out if they decide they don’t want to participate. Here is the form an employee uses to opt-out.
The out-of-the-box savings rates that are withheld from each paycheck are 5% per person, with an auto-escalation each year of 1%, with a cap of 8%. That said, participants will be able to change the withheld percentage after they are enrolled in the program.
Because employees participating in the Colorado SecureSavings are contributing to a Roth IRA, the amounts they save need to be within Uncle Sam’s Roth IRA contribution limits.
For 2024, these are:
- IRA contribution limits are $7,000 per year
- $8,000 per year if your employee is 50 years of age or older, if they have earned $6,500 in wages
More information is available from the IRS.
After you learn about Colorado SecureSavings, you might find other information about the state useful. For example, you might want to know how much payroll taxes are in Colorado (this page also includes a free payroll calculator you can use.)
Are there penalties if an employer fails to offer a plan?
There can be stiff penalties for companies that don’t follow the rules and file for exemptions if they qualify for them. Don’t get mad at the messenger, but employers who do not participate in the Colorado SecureSavings Program or offer another work-based retirement savings plan to their employees can face potential fines of up to $100 per eligible employee per year. Per the rules, this should be, at most, an aggregate amount of $5,000 in a calendar year for an employer.
More resources for Colorado employers
Below are some additional resources we compiled for employers about the ColoradoSecure Savings program.
In addition, you can always get in touch with their office by calling: 1-844-692-1073.
Access to retirement savings has benefits for both employers and employees
Whether choosing a state plan, such as Colorado SecureSavings, or picking a private provider, offering your employees access to retirement savings can be a “win-win” for both employers and employees. For workers, they enjoy socking away savings and feeling better about their retirement prospects. On the flip side, employers can use programs to attract top job candidates and keep high-performing employees from looking to see if the grass is greener with another company.
