What is Vermont Saves?
Because many businesses are smaller and located in rural areas, Vermont residents may not have access to robust retirement savings. This is why Vermont Saves was created–to provide these residents with the opportunity to build the retirement they want through a state-mandated retirement program. The program targets business owners who are currently not offering retirement benefits, requiring them to either implement the state-run plan, or privately-run plan by a specified deadline so that their employees can start becoming financially secure.
Key Deadlines and Timeframe
Deadlines for Vermont Saves will be rolled out in phases depending on business size starting in mid-2025. Along with the breakdown below, make sure to watch out for official communications from your state and sign up for any updates.
- Large Employers (25 or more employees): Must comply by July 1, 2025.
- Smaller Employers (15 to 24 employees): Registered to sign up by January 1, 2026.
- Very Small Employers (5-14 employees): Must be signed up by July 1, 2026.
Who is Required to Participate in the Vermont Saves Program?
If you’re a Vermont business owner with five or more employees, you’re required to participate in the program if you don’t already offer a qualified plan. If you don’t want to go this route and want other options that go beyond the capabilities of a state-run program, you can implement a privately-run plan instead like a 401(k).
Attributes and Directives Employers Need to Know
Automatic Enrollment
All employees are automatically enrolled into the plan, but also have the option to opt in or out. They can also change their contribution rate at any time.
Employee-Owned Roth IRAs
Roth IRA accounts are held in the employees’ names, with the ability to grow tax-free and with contributions made with after-tax dollars.
No Employer Contributions or Fees
Employers don’t have to worry about contributions or fees but are required to facilitate the program, usually through payroll deductions.
State-Managed Investments
Investment options are pre-selected by the state for the employees to utilize.
Employer Registration & Enrollment
You’ll be notified when it’s time for you to register your business for the Vermont Saves program. The process should be fairly straightforward and quick, and if you want to get ahead of your specific deadline, be sure to read up more about the program ahead of time.
Payroll Deductions & Contributions
Employers are required to set up automatic payroll deductions and ensure timely employee remittances.
Employee Onboarding
Employers will be expected to share state-provided materials with their employees, ensuring they understand the details of the plan and how it impacts them.
Are there Penalties for Noncompliance?
Yes, you may face fines and other penalties if you don’t register or fail to set up the program by the deadline. To ensure you stay in compliance and avoid consequences, it’s important to stay up to date with legislation changes in your state.
What are Other Retirement Plan Options?
Now is the time to review all the ways you can help enhance your business and help your team save for their future. If the Vermont Saves program doesn’t seem like a good fit for your business, here are a few other options you can explore:
Traditional 401(k) Plans
A traditional 401(k) is the most common plan option for employers that also has the most customizable and tax-advantaged features. It’s ideal for businesses that need something that will stay flexible and scale with them, and keep them in control of design.
SIMPLE IRAs
A SIMPLE IRA can be used by both small businesses and self-employed individuals. It’s a lower-cost benefit that is ideal for companies that want a basic-but-effective benefit that will get them and their employees on track.
Safe Harbor 401(k)
This plan is similar to a traditional 401(k), but allows employers to bypass yearly IRS compliance tests as long as they follow specific requirements. It can help simplify your plan management, and ensure compensation and benefits are fair across the board.
What Do Employers Need to Do Now to Prepare for and Participate in the Vermont Saves Program?
In order to stay ahead of the requirements for the Vermont Saves program, you’ll need to:
Review Current Retirement Strategy
Whether you have an established plan or are just getting started, it’s important to still review your retirement plan strategy and options so you can be sure to have everything you need by the deadline.
Understand Deadlines and Registration Details
Because Vermont Saves is rolling out in phases, you might have different deadlines and registration requirements than other businesses. Stay on top of these to avoid penalties.
Confirm Your Headcount
Participation and eligibility is dependent on how many people you have in your company. Remember: Vermont Saves will apply to you if you have a headcount of five employees or more, so keep track of everyone from part-timers to seasonal employees.
Choose Your Plan Provider
If you don’t want to go with the Vermont Saves program, you have alternatives. Other retirement plan providers can provide you with affordable but robust solutions like a 401(k) that work with your team structure and budget.
Educate Your Team
No matter what route you choose, be sure to keep your team informed about their retirement benefits and any upcoming changes. The right plan provider can also help with this if you don’t have all the information or resources necessary.
Conclusion
The Vermont Saves program aims to help employers and their employees plan for retirement more strategically, and deadlines will be coming up quickly. By understanding what the program entails and how a state-backed option might impact your business, you can be sure to set yourself and your workforce up for success.
If you’re looking for another retirement solution other than what the Vermont Saves program offers, Ubiquity can help with customizable, flat-fee 401(k) plans. Our plans are designed to be flexible, simple, and cost-efficient so you can build savings and enhance your business from day one.
