May 25, 2023

Summer Business Opportunities: Colorado SecureSavings State Mandate Deadline

June 30th is the deadline; Employers with 5 to 14 employees must enroll eligible employees. They could face penalties if they do not!

All Colorado employers are required by law to: Either enroll their employees in the Colorado SecureSavings program if they do not currently have an employee retirement plan in place, or create a retirement plan of their own!

What is a qualified employer-sponsored retirement plan?

Under the Internal Revenue Code 401(a), qualified plans are retirement plans. A SEP IRA, SIMPLE IRA, 401(k), 403(b) if a non-profit, or 457(b) for governmental plans are examples. Plans like these can satisfy the Colorado state mandate for employer retirement plans.

Important 2023 due date for Colorado SecureSavings

June 30 – Employers with 5 to 14 employees

If employers fail to enroll eligible employees, they could face a $100 penalty per employee per year, up to a maximum of $5,000 annually. An employer SEP or SIMPLE IRA plan that meets state mandate requirements excuses the employer from any potential state-imposed penalties for non-compliance.

How Colorado SecureSavings works: Employees eligible for withholding are automatically enrolled by their employer with an automatic 5% withholding, increasing by 1% annually. If employees do not wish to participate, they can opt-out. Each employee’s payroll-deducted contributions are processed by the employer. Employees participating in Colorado SecureSavings pay a $22 annual account fee. And depending on which investment option is chosen by the employee, an annual asset-based fee ranging from 0.225% to 0.32% is applied to the total value of assets held by the employee in the plan.

Details

Top 4 reasons why employers should consider offering a retirement plan with National Life Group

Attract and retain employees – offering your employees an alternative retirement plan to Colorado SecureSavings gives your employees more flexibility, the support of a dedicated National Life Agent and you the ability to take advantage of tax credits that the SecureSavings plan cannot offer.
$15,000 tax credit – For small businesses with up to 50 employees, SECURE 2.0 Act of 2022 increases the tax credit from 50% to 100% of the retirement plan start-up costs that an employer may incur. The tax credit is capped annually at $5,000 per employer, for each of the first three years that the new retirement plan is offered.
Tax credit for business owners with up to 100 employees a potential tax credit for matching employee contributions. The credit caps at $1,000 per employee and phases out over a five-year period. Employers with 51 to 100 employees may have further reductions to the credit amount.
Starting in 2024 employers will be able to match employee student loan payments with matching payments to a SIMPLE IRA, 401(k) or 403(b), another great tool for employers to attract new employees or retain employees.