At Intrinsic Financial Design Group we have been receiving a few questions regarding the newly implemented Colorado Secure Savings Program (CSS) and the requirements surrounding retirement plans.
NOTE: This law will impact any employer that has been in business for at least two years and employs 5 or more people.
What you need to know:
- The law was passed in July 2020, and will become effective this year (2023)
- Employers should be receiving notifications from the state with their deadline to enroll in the program, or opt out by certifying an exemption
- The deadline will be determined based upon the number of employees your business has:
- Businesses with 50 or more employees, the deadline is March 14th
- Businesses with 15-49 employees, the deadline is May 15th
- Businesses with 5-14 employees, the deadline is June 30th
Once enrolled in the Colorado Secure Savings Program, your employees will automatically be enrolled for a 5% contribution into a ROTH IRA. The employer is responsible for keeping the employee roster accurate and adding employees once they have reached 180 days of employment. Continuing through the program, every January it will default to increase the contribution 1% annually, until the contribution reaches 8%.
It is important for employers to understand what options are available when selecting a retirement plan for your employees. The business owners will also be responsible for ensuring that payroll deductions are submitted to the plan. Additional details can be found at the Colorado Secure Savings program’s website at: https://coloradosecuresavings.com/
Is this a good thing?
As with many things in life, there are pros and cons to each option. From our viewpoint, one of the major cons of the Colorado Secure Savings Program is that it does not allow a business owner to make contributions to an employees’ retirement account. With the ever-increasing focus surrounding employee benefits, this may be a deterrent for those looking to hire and retain fantastic employees. Additionally, because the Colorado Secure Savings program is a ROTH IRA- there is a limit to the amount that can be contributed each year, which is often below the limits of other qualified retirement plans.
Some other commonly used retirement plans are 401ks and SIMPLE IRAs. Each of these plans allow for or require that an employer match a participating employees contribution. Additionally, an employee typically has a greater selection of investment options from the CSS target date funds.
Next Steps:
We are here to help. Whether you would like to discuss the impacts of the CSS or finding the right retirement plan for your business, please give us a call or send an email. We’d love to hear from you.