2021 Update: Colorado Secure Savings Program

Colorado Senate Bill 20-200 was passed in July 2020 and the State is looking to enact it in July/August 2021.

Businesses with five W2 employees or more will be mandated to offer a retirement benefit to their employees either through the States program or by a third party 401K/ IRA provider of their choice. 

What is the Colorado Secure Savings Program?

The Colorado Secure Savings Program, expected to be enacted sometime August 2021, mandates that businesses with at least five employees provide their employees access to an Individual Retirement Account funded through automatic payroll deductions. If businesses fail to offer one of their own, they will be required to offer the state mandated program to their employees.

How does the Colorado Secure Savings Program work?

The Colorado Secure Savings Program will give employers a way to set up an Individual Retirement Account (IRA) for each eligible employee.

Based on other state-mandated programs, it is likely that employee deductions will be automatically set to a specific percentage of total pay, employees will be able to adjust their contribution settings, and they can also opt out of the program every two years. Owners will have to make manual contributions from payroll to the IRA. No payroll integration with the states program.

Is the Colorado Secure Savings Program mandatory?

Enrolling in the Colorado Secure Savings Program is not mandatory. Businesses can go with a third party provider. However, it WILL be mandatory for all state employers with five or more employees to offer a qualified retirement plan, or potentially face fines. You do have options, if you don’t want to go with the States Program.

What if an employer doesn’t comply?

Though the details of the final requirements have not yet been released, if Colorado’s plan follows the guidance of other states who have enacted this requirement, employers who don’t offer a plan by the deadline may face financial penalties.

What’s the difference between the state option and having a 401k?

State IRA Program

Cost: Nothing to employer in administration

Payroll Integration: None- won’t integrate with any payroll provider and employees will have to be auto enrolled and employer responsible to manually input Roth IRA contributions for each employee each payroll run. Liability falls on the employer.

Matching: Employer does not match or contribute to employees.

Tax Credits: No tax credits offered for going through the States program.

401k Provider-  Third Party Option 

Cost: Administration costs to get the plan going and running. Low cost

Payroll Integration: Will integrate with payroll so no manual entry into payroll needed. Liability falls on the 401k administrator. 

Matching: Employer does not have to match but can choose to match and contribute to employees for a larger tax deduction to the employer. 

Tax Credits: Up to $5,000 in credits a year for the first 3 years of the plan plus an additional $500 auto enrollment credit for 3 years.