Colorado employers, you’ve likely heard about the retirement mandate by now. Colorado SecureSavings is a state-run retirement program that requires certain businesses that don’t offer a qualifying retirement plan to help employees build their savings through work.
So, it provides more opportunities for employees to build wealth when they otherwise may not have been able to.
The way the program works is simple: Eligible employees are automatically enrolled into their own IRA through payroll deductions. They can opt out or customize their savings, giving them autonomy over their accounts while employers focus on facilitating the program.
For businesses though, the big question is what comes next: Participate in Colorado SecureSavings or consider an alternative that might better fit their company, like a 401(k)? Below, we dive into what Colorado employers need to know about the mandate, their responsibilities, and other plan options that can help them maximize their plan’s success.
Who is Required to Participate in Colorado SecureSavings?
Colorado employers generally must participate in the state-run program if they don’t offer a qualifying retirement plan in their workplace and:
- Have been in business in Colorado for at least two years
- Have at least five employees who have worked for the business for at least 180 days
Employers that already offer a qualifying retirement plan, like a 401(k), may be exempt from participating. New or growing businesses should continuously monitor their eligibility.
What are the Colorado SecureSavings Deadlines?
Colorado SecureSavings deadlines were originally rolled out in phases based on employer size. Those initial deadlines have already passed, but the program’s requirements still apply to eligible employers.
So, if you’re navigating the program today, here are some important requirements to keep in mind:
Colorado SecureSavings Requirements
| Employer requirement |
What to know |
| Register |
Eligible employers must register for Colorado SecureSavings |
| Claim an exemption |
Employers with a qualifying retirement plan can certify their exemption |
| Add new employees |
New eligible employees generally must be added within 180 of being hired |
| Start deductions |
Employees receive a 40-day decision period before payroll contributions begin |
For employers that missed the earlier registration deadlines in 2023 or have recently become subject to the mandate, the next crucial step is seeing where their business stands with the current state requirements, rather than relying on the program’s original rollout dates and information.
How Does Colorado SecureSavings Work?
Employers and employees have different responsibilities with the SecureSavings program. Employers facilitate the program through payroll while employees manage their own savings decisions.
Employers generally stay focused on:
- Registering for Colorado SecureSavings
- Providing required employee and payroll information
- Adding eligible employees to the program
- Processing employee payroll deductions
- Sending employee contributions to the program
- Keeping employee information and contribution rates current
Employees can:
- Participate through automatic enrollment
- Change their contribution rate
- Choose from available investment options
- Keep their account if they change roles
How Much do Employees Contribute to Colorado SecureSavings?
Employers participating in Colorado SecureSavings contribute through automatic payroll deductions and can adjust their savings elections or opt out. Here’s a quick overview.
| Contribution Feature |
Colorado SecureSavings |
| Default contribution |
5% of compensations |
| Automatic escalation |
Increases 1% each January until reaching 8% |
| Employer contribution |
Not permitted |
| Employee flexibility |
Employees can change their contribution rate or opt out |
Because SecureSavings accounts are IRAs, annual IRA contribution limits and other applicable IRA rules still apply. Employees should also consider contributions they’ve made to other IRAs when figuring out how much to contribute per year.
What Happens If an Employer Doesn’t Comply with Colorado SecureSavings?
Colorado employers who are subject to the mandate are responsible for registering for the SecureSavings program or certifying that they qualify for an exemption.
Employers that fail to comply with the requirements can face penalties of up to $100 per eligible employee per year, with a maximum of $5,000 per year.
Even though Colorado SecureSavings was originally introduced through phased deadlines, employers shouldn’t assume that new, flexible make-up deadlines will be coming up or that the requirement no longer applies just because the initial deadlines have passed. If you’re subject to the mandate and haven’t made a move yet, it’s important to start making decisions as soon as you can so you can prevent costly (and preventable!) consequences.
Should Colorado Employers Choose SecureSavings or a 401(k)?
Before jumping into one program or another, it’s important for you to understand what each entail as they both come with different considerations that can impact your business.
Colorado SecureSavings vs. 401(k): Pros and Cons
| Option |
Pros |
Cons |
| Colorado SecureSavings |
- No employer program fees
- No required employer contributions
- Straightforward way to meet the state mandate
|
- Lower IRA contribution limits
- Employers can't contribute
- Fewer plan design and customization options
|
| 401(k) |
- Higher contribution limits
- Employer matching and profit sharing available
- Greater plan design flexibility
- Potential SECURE 2.0 tax credits for eligible businesses
|
- May involve plan administration and employer costs
- Requires employers to establish and maintain a qualified plan
|
Ultimately, there isn’t one “right answer” and your best option comes down to factors like cost, administrative needs, savings goals, and the level of competitive benefit the employer wants to provide.
Can a 401(k) Satisfy the Colorado Retirement Mandate?
The short answer is yes, Colorado employers that offer a qualifying retirement plan like a 401(k) or 403(b) are generally exempt from participating in SecureSavings. In fact, many employers find that they get additional benefits they wouldn’t have with the state-run option from going the private plan route.
For example, if you were to start a 401(k) instead of participating in the state-facilitated IRA, you could expect:
- Higher contribution limits for employees
- More plan design flexibility to better fit your business goals
- Employer contributions through options like profit sharing or matching
- Additional savings opportunities for employees and business owners
Work with Ubiquity to Meet Colorado’s Retirement Requirement
Colorado SecureSavings helps expand access to workplace retirement savings for employees who may not otherwise have a way to build their nest egg through work. For employers subject to the mandate, taking the time to understand the program now and taking the appropriate next steps can keep their business aligned and in compliance with Colorado’s rules.
However, SecureSavings isn’t the only option for employers. They also can consider implementing a qualifying retirement plan, like a 401(k), that can provide additional savings opportunities, more plan flexibility, and higher contributions for employers and employees alike. This is where Ubiquity can help with flexible, flat-fee 401(k) plans designed specifically for small businesses that need a solution that truly meets them and their team where they are.
Ready to learn more about how Ubiquity can help you satisfy Colorado’s retirement mandate? Contact us today!
