Employers with five or more staff members who will automatically enroll in 2023
Beginning in 2023, all Colorado private business and nonprofit employees will have access to a retirement fund through the Colorado SecureSavings Program.
Employers with a workforce of five or more will be automatically enrolled in the program. Employees have the ability to opt out of the program if they have an existing retirement plan. Businesses or nonprofits with fewer than five employees will be exempt from automatic enrollment, but their employees still have the option to enroll in the program.
The savings program will also include part-time employees.
“In some cases, there are companies where certain employees have access to a retirement savings program, but others don’t,” Colorado State Treasurer Dave Young said. “So in those situations, employees who don’t have access to the program at work would be eligible through the safe savings program.”
If employees choose to use the program, a predetermined rate of 5% will be deducted from each paycheck. However, employees may choose to raise or lower that rate at their discretion. Because the retirement fund is held through a Roth individual retirement account, the amount of money an employee can contribute to the account each year is limited by federal law.
Federal law limits this contribution to $6,000 per year and $7,000 if an employee is over the age of 50. Because it’s a Roth IRA, it’s an after-tax program, which means taxes have already been deducted before the funds go into the account.
Employees can manage these funds through the Colorado SecureSavings portal.
Young said the program is slightly different from some 401(k) plans because certain plans offer matching programs and, due to federal law, the state cannot provide a match. He said the Colorado Treasury Department made the program a point of emphasis because it realized there was a national retirement savings crisis.
Through studies conducted by the Treasury Department, Young found that there were about 1 million people in the state without a retirement fund through their employer.
The treasury department also found that most employees who were not enrolled in a retirement savings fund had low-paying jobs and were confused by financial terminology and acronyms.
“They wanted to get started, but they couldn’t make a decision because the whole financial services landscape was confusing to them,” Young said.
The Business Improvement District is interested in continuing the program. CEO Tim Walsworth said the program would greatly benefit some downtown businesses.
“I imagine a lot of companies would love to do something like this. It helps with employee retention,” she said.
Walsworth is interested in enrolling the IDB because the employees do not have a retirement fund.
Because there is no overlap with the Colorado Secure Savings Program, he said this makes it attractive to employers.
The IDB is also interested in continuing the program due to its Center Ambassadors Program. The center’s ambassadors are part-time employees, and Walsworth is interested in finding out if they could be covered.
He said it’s important for companies to know that this is something that will happen automatically in 2023.
“If there is a mandate or requirement, we need to inform our companies about it,” he said.
The Durango Chamber of Commerce will host a luncheon on Wednesday to discuss more details of the Colorado SecureSavings Plan with local businesses.