Golden eggs in nest with a paper reading retirement.

What is the Colorado Secure Savings Plan?

In 2020, Colorado passed a law mandating small business owners to enroll in a state-run retirement savings plan. The pilot program launches in October 2022 and compliance is required in 2023. Is your business ready?

While workers have always had the ability to seek outside retirement savings plans like 401k’s, this mandate places the responsibility on employers to set up and create payroll deductions. For your employees, the program is voluntary but they are responsible for opting out. Otherwise, they will have 5% of their gross pay automatically deducted and placed into their Roth IRA.

How do I know if my business qualifies?

All businesses with employees in Colorado are required to register for the program unless they meet one of the below exceptions:

  • Your business already offers a qualified retirement savings plan like a 401k, Traditional IRA, Roth IRA, SEP IRA, or a Simple IRA /401k
  • You never employ more than 5 employees at any one time, not counting employees under the age of 18 or employed for fewer than 180 days
  • Your business is less than 2 years old

As a small business owner, you can still opt in and offer the program even if you are not mandated to do so.

If you qualify and do not enroll, there are penalties or fines for noncompliance. They will be $100 per employee per year with a cap of $5,000 per year.

How much will the Colorado Secure Savings Plan cost my business?

The Colorado Secure Savings Plan creates no new expenses on your business aside from administrative time. This program is funded through employee payroll deductions and you are not responsible for matching any contributions.

How to prepare for the Colorado Secure Savings Plan

While we wait for the program to be completely rolled out, you should consider the various retirement plan options available. It is a good idea to get ahead, enroll in a separate program now and file for an exemption with the State later.

Once Colorado officially launches the savings program, there will be a rush of businesses signing up all at once; you should begin planning and researching now. Colorado has already made the website available so you can read more about the program.

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