Starting in 2023, Colorado workers whose employers don’t provide a retirement plan may have entry to an optionally available retirement financial savings plan by a state-facilitated retirement financial savings program, the Colorado SecureSavings program.
The regulation requires all Colorado employers who’ve been in enterprise for 2 or extra years, have 5 or extra workers and don’t have already got a retirement financial savings plan in place to facilitate this system by providing their workers the chance to avoid wasting for retirement by wage deductions.
All workers who’re a minimum of 18 years previous and have earned wages in Colorado for a minimum of 180 days are eligible and will likely be routinely enrolled in this system. As soon as enrolled, workers may have 30 days to both choose out or customise their contribution quantities, funding choices and beneficiaries. Workers who don’t choose out inside 30 days of enrollment will routinely have 5% of their after-tax compensation withheld and contributed to a Roth Particular person Retirement Account (Roth IRA) of their identify. Contributions will likely be routinely elevated by 1 % every January to a most of 8 % except in any other case adjusted by the worker.
If an worker doesn’t make a selection about how the Roth IRA will likely be invested, it is going to initially be invested within the Capital Preservation Possibility—a “cash-like fund” invested in cash market securities—after which will likely be transferred to the Goal Retirement Date possibility with a goal date that’s closest to the worker’s anticipated retirement 12 months. Workers could make extra contributions to Roth IRAs by test from a checking account.
Obligations of the employer
In early 2023, all Colorado employers will obtain a discover from the state to register with Colorado SecureSavings. If the employer sponsors a tax-qualified retirement financial savings plan for its workers, comparable to a 401(ok), 403(b), Simplified Worker Pension (SEP), or SIMPLE IRA, the employer could choose out of this system.
If the employer doesn’t sponsor a retirement financial savings plan for its workers, the employer should present the identify of its payroll supplier, payroll schedule, firm banking data, employer contact data, and a listing of workers.
Workers on the record will likely be routinely enrolled in SecureSavings and can then have the choice to choose out or make different decisions. Workers employed after the date of enrollment have to be enrolled within the SecureSavings program inside 180 days of the date of employment.
As soon as workers have made funding choices or opted out, employers might want to replace taking part worker contribution charges of their payroll system to make sure that contributions are correctly withheld and remitted to this system. Contributions to this system should start with payroll instantly after the 30-day opt-out interval has elapsed primarily based on the worker’s contribution election. Employers are required to maintain worker lists and payroll contribution data updated.
Below this system, employers are prohibited from establishing or managing worker accounts, managing funding choices, or answering questions on this system and its funding choices. Moreover, employers aren’t permitted to offer any tax, authorized or different monetary recommendation relating to their workers’ accounts. Moreover, remitted program contributions don’t should be reported on an worker’s W-2 kind. Workers will obtain a Kind 5498 (IRA Contribution Data) straight from this system administrator by Could 31 of every 12 months.
In early 2023, all Colorado employers ought to search notification and knowledge from the state relating to this system. Discover and knowledge could also be despatched by e-mail or US mail. After receiving the discover, employers may have 30 days to both enroll in this system or request an exemption. For employers with 5-14 employees, the deadline to register or apply for an exemption is June 30. For employers with 15-49 employees, the deadline is Could 15. For employers with 50 or extra employees, the deadline is March 15.
Failure to well timed register or apply for an exemption may end up in a high quality of as much as $100 per worker per 12 months, as much as a most of $5,000 per 12 months.
Ruth Anne Collins Michels is an lawyer at Ogletree Deakins in Atlanta. Rebecca M. Lindell is an lawyer at Ogletree Deakins in Denver. © 2022. All rights reserved. Reprinted with permission.