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Employers with 5 or more employees will be automatically registered in 2023
Businesses with five or more employees will be automatically enrolled in Colorado’s Secure Savings Program beginning in 2023. (Durango Herald File)
Beginning in 2023, all Colorado employees of private companies and nonprofits will have access to retirement funds through Colorado’s Secure Savings program.
Employers with five or more employees are automatically enrolled in the program. Employees can opt out of the program if they have an existing retirement plan. Businesses or nonprofits with fewer than five employees are exempt from automatic enrollment, but employees have the option to sign up for the program.
The savings program also includes part-time employees.
Colorado Treasurer Dave Young said: “Thus, in those circumstances, employees who do not have access to the program at work can qualify through the Safe Savings Program.”
If an employee chooses to use this program, a default 5% rate will be deducted from each salary. However, employees can increase or decrease that rate at their discretion. Because retirement funds are funded through the Ross Personal Retirement Account, federal law limits the amount employees can contribute to the account each year.
Federal law limits this contribution to $6,000 annually, or $7,000 if the employee is 50 years of age or older. Since this is a Roth IRA, it is a post-tax program, meaning taxes are already deducted before the funds go into your account.
Employees can manage these funds through the Colorado SecureSavings portal.
Young says the program is a little different than some 401(k) plans. This is because some plans offer matching programs and federal law prevents states from providing matching. He said the Colorado Department of Treasury emphasized the program because it recognized there was a national retirement savings crisis.
Through a survey conducted by the Treasury Department, Young found that about one million people in the state do not have retirement funds through their employers.
The Treasury Department also found that most employees not enrolled in retirement savings funds are in low-income jobs and are confused by financial terms and acronyms.
“They wanted to get started but couldn’t make a decision because the financial services landscape was confusing them,” says Young.
Business Improvement Districts are interested in implementing this program. Executive Director Tim Walsworth says the program will bring significant benefits to some downtown businesses.
“I think a lot of companies would love to do something like this. It helps with employee retention,” says Walsworth.
Walsworth is interested in enrolling in BID because its employees do not have retirement benefits.
Walworth said this is attractive to employers because there is no comparable element to Colorado’s secure savings program.
BID is also interested in pursuing this program because of its Downtown Ambassador Program. The downtown ambassadors are part-time employees, and Walsworth wants to know if they can cover.
He said it’s important for businesses to realize that this is what will happen automatically in 2023.
“If you have any obligations or requirements, you have to tell the business about it,” he said.
The Durango Chamber of Commerce will host a lunch event Wednesday to discuss the details of Colorado’s Secure Savings Plan with local businesses.
tbrown@durangoherald.com
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