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State program provides retirement fund for small-business employees

Employers with five or more staff members to be automatically enrolled in 2023
Businesses with five or more employees will be automatically enrolled in the Colorado SecureSavings Program starting in 2023. (Durango Herald file)

Beginning in 2023, all Colorado employees of private businesses and nonprofits will have access to a retirement fund through the Colorado SecureSavings Program.

Employers with a staff of five or more people will be automatically enrolled in the program. Employees have the ability to option out of the program if they have an existing retirement plan. Businesses or nonprofits with fewer than five employees will be exempt from automatic enrollment but their employees still have the option to sign up for the program.

The savings program will also include part-time employees.

“In some cases, you have businesses where certain employees have access to a retirement savings program but others that don’t,” said Colorado State Treasurer Dave Young. “So, in those situations, the employees that don’t have access to the program at work would then be eligible through the secure savings program.”

If employees choose to use the program, a default 5% rate will be taken out of each paycheck. However, employees can choose to raise or lower that rate at their discretion. Because the retirement fund is done through a Roth Individual Retirement Account, how much money an employee can contribute to the account annually is limited by federal law.

The federal law limits this contribution at $6,000 per year and $7,000 if an employee is over the age of 50. Because it is a Roth IRA, it’s a post tax program, meaning taxes have already been deducted before funds enter the account.

Employees can manage these funds through the Colorado SecureSavings portal.

Young said the program is slightly different from some 401(k) plans because certain plans offer matching programs and because of federal law the state cannot provide matching. He said the Colorado Department of Treasury made the program a point of emphasis because it realized there was a national retirement savings crisis.

Through studies conducted by the department of treasury, Young discovered there were around 1 million people in the state without a retirement fund through their employer.

The department of treasury also found most employees who were not enrolled in a retirement savings fund were those in low income jobs and were confused by financial terminology and acronyms.

“They wanted to get started but they couldn’t make a decision because the whole financial services landscape was confusing to them,” Young said.

The Business Improvement District has interest in pursuing the program. Executive Director Tim Walsworth said the program would greatly benefit some downtown businesses.

“I would imagine that many businesses would love to do something like this. It helps with employee retention,” he said.

Walsworth is interested in enrolling the BID because the employees do not have a retirement fund.

Because there is no matching element to the Colorado Secure Savings Program, he said this makes it attractive to employers.

The BID is also interested in pursuing the program because of its Downtown Ambassador Program. Downtown ambassadors are part-time employees, and Walsworth is interested in figuring out whether they could be covered.

He said it is important for businesses to know this is something that will be happening automatically in 2023.

“If there’s a mandate or requirement, we need to tell our businesses about it,” he said.

The Durango Chamber of Commerce will be hosting a lunch event Wednesday to discuss further details of the Colorado SecureSavings Plan with local businesses.


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