COLORADO RETIREMENT PLAN MANDATE: HELP BUSINESS OWNERS BENEFIT
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In July of 2020, the Colorado Secure Savings Program was signed, mandating businesses with at least five employees must offer access to individual retirement accounts. Colorado employers that do not offer a qualified retirement plan may be required to register for Colorado Secure Savings or certify an exemption. The program is now active and available to eligible employers throughout the state.
Those who haven’t yet adopted an employer-based plan have two choices:
- Adopt their own retirement plan
- Register for CO Secure Savings Program, the state-sponsored retirement savings program
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Contact a Regional Sales Consultant
What You Should Know
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Deadlines
Eligible employers that do not offer a qualified retirement plan must register with Colorado Secure Savings or certify an exemption if they qualify. Registration is currently open.
Previous Deadlines:
50+ March, 30, 2023
15-49 May 15, 2023
5-14 June 30, 2023 -
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Requirements
As an employer, you will be required to implement this program if:
- You have five or more employees
- Have been in business for two or more years
- Don’t have an existing qualifying retirement plan
Employees can voluntarily participate in the retirement plan if they are 18 years of age or older, employed by a Colorado employer for at least 180 days, and earn taxable wages.
Employers do NOT have to provide contributions to the retirement accounts — that is a voluntary option. Employers also don’t have to be the fiduciaries of the program.
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Penalities
Employers need to ensure they are compliant or will face potentially hefty penalties.
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CO SECURE SAVINGS OR CUSTOMIZED PLAN?
CO Secure Savings 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.
| CO Secure Savings Program | 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 | Capped at $7,500 annually | Lesser of 100% of compensation or $24,500 |
| Catch-Up Contributions | Limited to $1,100 more — up to $8,600 in total — for those age 50 and older | $8,000 annually for those age 50 and older |
| Employer Match | Not available | Available |
| Income Limit | Determined by Roth IRA contribution limits | No income limits |
| Investment Choices |
Limited menu of professionally managed investment options.
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Can provide a wide variety from top asset managers |
| Automated Payroll Integration | Available | Available |
| Customizable for businesses | Not customizable | Yes – Plans are designed to meet the employer’s needs – Traditional 401(k), Safe Harbor, Profit Sharing, Cash Balance |
| Tax Credit | No tax credit for start-up costs | 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 Colorado 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 Colorado Secure Savings Program 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 Sales Consultants will be in contact with you
