What is RetirePath VA?
RetirePath VA is a state-run retirement program, targeting businesses that don’t currently offer a plan. Using primarily Roth IRAs and encouraging engagement through automatic enrollment, the mandate was established with the goal of helping employees save more and meet their retirement goals on time. Regarding the program itself, employers play a role in facilitating it and it’s primarily employee-funded, but is also known to have some drawbacks such as lower contribution limits, limited investment options, and no employer match (which can be a big dealbreaker for employees).
Key Deadlines and Time Frame
Because Virginia is rolling out deadlines for RetirePath VA in phases based on employer size, business owners should start preparing early to avoid compliance headaches. Here are some key dates for you to keep in mind, and remember that they can change as the program continues to evolve.
- Employers with 25+ employees must register or confirm their exemption by February 15, 2025
- Employers with 15-24 employees are expected to follow in early 2026
- Employers with 5-12 employees will join by 2027
Who is Required to Participate in the RetirePath VA Program?
The mandate applies to small business owners in Virginia that meet the following requirements:
- Have 25 or more employees (as of the current phase)
- Have been running their business for at least two years
- Do not currently offer a retirement plan such as a 401(k), SIMPLE IRA, or Roth IRA
Remember: If you meet this criteria, participation is mandatory, but you can become exempt if you implement your own retirement plan.
Attributes and Directives Employers Need to Know
Employer Eligibility & Deadlines
Currently, employers with 25 or more employees are expected to register for the state-run program, or enroll in a privately-run plan. If you have less than 25 employees, be sure to stay up to date with any program changes.
Compliance Options
Besides following the requirements to enroll in RetirePath VA, many employers are also exploring private plans to take advantage of features that the state-run option doesn’t offer. This means they’ll be able to utilize benefits like flexible plan design and broader investment options while still staying compliant with New Jersey requirements.
Employer Obligations
Even with the program’s simplicity, employers still are responsible for submitting payroll and employee data, facilitating automatic enrollment deductions, and keeping their teams current on any changes.
Program Setup
No employer fees or contributions are needed, and the plan is fairly simple to implement, as it’s designed to provide the basics employers need to get set up successfully.
Employee Experience
Employees are automatically enrolled in the state-run plan at a 5% contribution rate. They have 30 days to opt out of the program or change their rate. The accounts are portable, professionally managed, and are subject to IRS contribution limits.
Are there Penalties for Noncompliance?
Yes, if you don’t register or certify your exemption, you may face potential penalties such as fines. While Virginia hasn’t outlined specific rules for penalties yet, it’s expected that they will follow the same model as other programs like CalSavers, imposing $250-$500 per employee for noncompliance. Even if your deadline isn’t here yet or you’ve missed the February 15th one, don’t wait any longer–take care of your requirements as soon as you can because you don’t want your hard-earned money going towards unnecessary fines!
Do I Have Other Retirement Plan Options?
Yes, RetirePath VA isn’t your only choice. In fact, many business owners may find that the state-run option is a great jumping off point, but limits their long-term growth and scalability compared to a private plan. Here’s what you can expect if you decide on an alternative like a 401(k) or SIMPLE IRA:
- More flexibility and control over plan design
- Higher contribution options
- Employer match opportunities
- Tax credits and other deductions (you may qualify for tens of thousands in tax credits)
- Enhanced employee satisfaction and financial well-being (when they’re happy, your business thrives)
- Better investment variety
- More hands-off management and simplified compliance
What Do Employers Need to Do Now to Prepare for and Participate in the RetirePath VA Program?
Staying ahead of RetirePath VA requirements can be simple, as long as you:
Establish a Retirement Strategy
If you haven’t planned out a strategy yet, now’s the time to so you can be sure you meet all the requirements before your deadline.
Confirm Your Employee Count
Because this program heavily depends on your company size, keep track of everyone working at your company–from part-timers to even seasonal employees.
Research Plan Providers
Fortunately, if you don’t want to go with RetirePath VA, there are many other providers to choose from. The right, robust plan will work with your business’ unique needs and ensure your team stays engaged and satisfied.
Keep Your Team in the Know
Whether you choose the state-run plan option or not, your team needs to be informed and educated about your decision. Be sure to keep them updated on any changes, and provide them with resources as needed.
Conclusion
Ultimately, RetirePath VA aims to help employers and employees in Virginia become more strategic with their retirement planning, and deadlines will be coming up sooner than you expect. So, take the time to understand what’s required from you now, how a state-backed plan may impact your business, and your other options so you can be sure to be set up for success.
If you’re an employer looking for a retirement plan option that goes beyond what RetirePath VA offers, Ubiquity can help you. We offer customizable 401(k) solutions with a flat-fee model, ensuring that you have the flexibility and cost efficiency you need to elevate your business and workforce.
