VIRGINIA RETIREMENT PLAN STATE MANDATE: HELP BUSINESS OWNERS BENEFIT
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It’s the law: Virginia businesses with more than 25 employees must offer a retirement saving opportunity. Those who haven’t yet adopted an employer-based plan have two choices:
- Adopt their own retirement plan
- Register for RetirePath Virginia, the state-sponsored retirement savings program
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Contact your Regional Plan Consultant
Non-Compliant Employers Face Stiff Penalties
Similar to some of the currently active state-mandated programs, employer involvement is minimal with RetirePath Virginia, but there are certain requirements necessary to stay compliant. Businesses must:
- Register by the deadline (when provided) or offer a qualified option that satisfies the mandate
- Set up payroll deduction for employees (the percentage of wages allocated per pay period has yet to be determined)
- Hold an annual open enrollment period
- The statute includes a provision to development enforcement mechanisms and penalties for noncompliance with the program. At this time, penalties have not been finalized.
You can help your clients avoid these fines and offer a retirement plan that will:
- Comply with the Virginia mandate
- Reduce taxes
- Control costs
- Attract and retain top talent
- Maximize business value
- Enable them to work with their preferred business partners
RetirePath Virginia OR Customized Plan?
RetirePath Virginia is a basic, one-size-fits-all retirement savings program for businesses that do not wish to sponsor a plan for their own employees. Yet there are many businesses that would be better served with a plan from TRA that’s customized to their needs.
| RetirePath Virginia | Custom 401(k) from TRA | |
|---|---|---|
| Pre- and Post-Tax Deferrals | Roth IRA w/ auto after-tax payroll deduction | Pre-tax or Roth elective deferral contributions |
| Contributions | $6,500 – ($7,500 age 50+) | Lesser of 100% of compensation or $22,500 |
| Catch-Up Contributions | Determined by Roth IRA contribution limits | $7,500 annually for those age 50 and older |
| Employer Match | Employers cannot contribute to the program such as matching funds. | Available |
| Income Limit | Savers not eligible for the default Roth IRA have the option to recharacterize contributions to a traditional IRA | No income limits |
| Investment Choices | Limited selection of low-cost investment options | Can provide a wide variety from top asset managers |
| Automated Payroll Integration | Available | Available |
| Customizable for businesses | Not customizable | Yes – for example, Safe Harbor, SIMPLE, Profit-Sharing & Cash Balance |
| Tax Credit | No, since there are no start-up costs for employers | Yes – 100% of the expenses paid up to the greater of $500 or the lesser of $250 for each non-HCE’s. A maximum tax credit of $5,000 per year would be available for 3 years. |
TRA Plans to Consider
For Virginia businesses who want to sponsor a retirement plan, some plans to consider include:
• 401(k)
• Safe Harbor 401(k)
• Cross Tested Profit-Sharing Allocation
• 401(k) plus Cash Balance Plan
Other alternatives to RetirePath Virginia include SIMPLE 401(k) Plans, Group 401(k) Plans (MEPs, PEPs and Aggregation Programs), and 403(b) Plans (for non-profits).
Working closely with you, TRA will create a customized plan that meets your client’s business. We partner with top recordkeepers and investment managers around the country and deliver exceptional client service. We also offer 3(16) Plan Administration Relief Services (PARS) to relieve business owners of day-to-day plan administration responsibilities and manage their fiduciary risk.
Complete the form below and one of TRA’s Regional Plan Consultants will be in contact with you.
