Colorado SecureSavings Program: How It Works and Who Qualifies

The Colorado SecureSavings Program marks a significant shift in how businesses in Colorado are required to approach employee retirement planning.

The program, designed to address the gap in retirement savings for many workers, provides a framework for employees to save for their future while offering a streamlined process for employers.

This is Mosey’s guide to explain the key features of the Colorado SecureSavings Program: how it functions, who needs to comply, the potential penalties for non-compliance, and how to create an effective compliance strategy. We’ll also cover how Mosey can be a solution for state compliance.

What Is the Colorado SecureSavings Program?

The Colorado SecureSavings Program is a state-sponsored initiative aimed at increasing retirement savings among Colorado workers.

The program provides a simple and accessible way for employees to save for retirement, especially targeting those who do not have access to employer-sponsored retirement plans like 401(k)s or IRAs.

The program is designed to help address the retirement savings gap by offering a state-managed retirement savings account that employees can contribute to directly through payroll deductions. It has extensive features designed to support the financial futures of employees who reach retirement eligibility.

Automatic Enrollment

Employees are automatically enrolled in the program unless they choose to opt out. This automatic feature helps increase participation rates and ensures more workers save for retirement.

Payroll Deduction

Contributions to the savings account are made through automatic payroll deductions, simplifying the process for employees and employers. Employees can choose the amount they want to contribute to their SecureSavings account through paycheck contributions.

State-Managed Accounts

The state of Colorado manages retirement savings accounts, reducing the administrative burden on employers and ensuring employees have access to a secure and reliable savings vehicle.

The program is designed to be inclusive and accessible, providing a valuable option for workers who might otherwise not have access to retirement savings plans. It aims to make saving for retirement easier and more convenient by facilitating automatic enrollment and payroll deduction.

How Does the Colorado SecureSavings Program Work?

The Colorado SecureSavings Program operates through a straightforward process made to minimize the administrative burden on employers and maximize employee participation.

Employees Are Enrolled Automatically

Employees who meet the eligibility requirements are automatically enrolled in the program. This helps ensure that workers can save for retirement without having to take additional steps.

Employees can opt out if they do not wish to participate, but default enrollment helps increase overall participation rates. Employees who do nothing (or mindfully choose to remain enrolled) have customization options to review. They’re allowed to make the choices that they feel are best for their futures.

Contribution Rates

Employees can contribute a portion of their paycheck to their retirement savings account through payroll deductions. The program sets contribution rates, which employees can adjust based on their preferences. The flexibility in contribution rates allows employees to save at a level that fits their financial situation.

These flexible rates are designed to keep employees enrolled by preventing situations where they feel priced out by retirement savings. A minimal contribution is still a contribution and will inevitably grow through investment.

Account Management

The state of Colorado manages retirement savings accounts, which means that employees aren’t required to select or manage investment options on their own. They can elect to make their own choices, but they don’t have to learn to make retirement decisions or customize retirement solutions if they don’t desire to do so.

The state oversees the investment of funds in a way that aims to provide steady growth while reducing risk. This management strategy helps simplify the retirement savings process.

Portability of Retirement Accounts

The accounts are portable, meaning employees can take their savings with them if they change jobs. This feature ensures that workers can continue to build their retirement savings even if they move between employers. This portability also doesn’t require any special action on an employer’s part.

Reporting and Compliance

Employers must provide regular reports to the program to confirm employee enrollment and contributions. This reporting helps ensure that the program operates smoothly and that employees’ contributions are correctly deducted and deposited.

Opt-Out Option

Employees who prefer not to participate in the program can opt out. The opt-out process is designed to be straightforward, ensuring employees can easily choose not to participate if they wish.

Still, the goal is to encourage as many workers as possible to participate in the program and increase their retirement savings. Employees are generally dissuaded from opting out.

Who Is Required To Comply With the SecureSavings Program?

The Colorado SecureSavings Program is a general requirement. The program applies to all employers with a physical presence in Colorado, regardless of size. This means that even small businesses and those with limited employees must adhere to the program’s requirements.

The program’s primary focus is on employers who do not already offer a qualified retirement plan, such as a 401(k) or something similar. These employers must enroll their employees in the Colorado SecureSavings Program and facilitate payroll deductions.

Employers offering a qualified retirement plan may not be required to participate in the Colorado SecureSavings Program. However, if they choose not to participate, they must ensure their existing plan meets requirements and provides adequate retirement savings options for their employees.

Employers with remote workers or employees who work outside of Colorado may also need to comply with the program’s requirements if the workers are based in Colorado or if their work is performed primarily within the state.

The program’s requirements apply to employers of all sizes, including small and medium-sized businesses. While smaller businesses may face additional challenges in implementing the program, they must still comply with its provisions.

Are There Penalties for Failing To Comply With the SecureSavings Program?

Failure to comply with the Colorado SecureSavings Program can result in several penalties for employers. HR managers and business owners need to understand these potential consequences to avoid costly fines and legal issues.

Financial Penalties

Employers who do not adhere to the program’s requirements may face financial penalties. These fines can vary based on the nature and extent of the non-compliance. Penalties may be assessed for failure to enroll employees, incorrect reporting, or improper handling of payroll deductions.

Mandatory Remediation

Employers found to be non-compliant may be required to take corrective actions to address the issue(s). This can involve retroactively enrolling employees, adjusting payroll systems, and making necessary adjustments to ensure compliance moving forward.

How To Stay Compliant With the Colorado SecureSavings Program

Creating an effective compliance strategy for the Colorado SecureSavings Program involves several key steps. By following these guidelines, HR professionals and business owners can ensure they meet the program’s requirements and avoid potential penalties.

Review the Requirements

Begin by thoroughly understanding the SecureSavings Program’s requirements. Review the program’s guidelines and regulations to ensure you know all your compliance obligations. That includes enrollment procedures, contribution rates, and reporting requirements.

Employers who already offer retirement savings may need to make special compliance considerations to remain aligned with the SecureSavings Program. Check with local experts to determine how your current retirement program may impact your organization’s participation in the state-sponsored version.

Update Company Policies

Revise your company’s policies to incorporate the SecureSavings Program’s requirements. This may involve updating employee handbooks, payroll procedures, and benefits communications to reflect the new program.

Even though employees are automatically enrolled, they need to understand their enrollment and what to do if they opt out of the program. Make sure they have access to the information they need in all official company literature.

Establish Payroll Deductions

Ensure your payroll systems are configured to handle automatic deductions for employee contributions to the program. This includes setting up the necessary processes for accurate deduction and reporting. Keep in mind that employees can adjust their desired contributions at any time.

Educate Employees

Communicate the details of the Colorado SecureSavings Program to your employees. Provide information on how the program works, the benefits of participation, and how to opt out if desired. Clear communication helps employees understand their options and make informed decisions.

The program is primarily employee-led, meaning employees can get answers to specific questions and review their options through the Colorado SecureSavings website. You don’t necessarily need to reiterate the same information; you only need to make sure they know how to access the information they need to make enrollment and participation decisions.

Monitor and Review Compliance

Conduct audits to ensure all employees are enrolled correctly and that contributions are deducted and reported accurately. Respond promptly to employees who wish to opt out, back in, or change their contributions.

Important compliance issues like ERISA compliance primarily fall on the state of Colorado when employees use a state-sponsored retirement program.

Address Compliance Issues Promptly

If any compliance issues arise, address them promptly to avoid potential penalties. That may involve correcting errors, adjusting payroll systems, and making necessary updates to guarantee ongoing legality.

Ensure Compliance With Mosey

The Colorado SecureSavings Program improves retirement savings for workers across the state, promoting financial security for retirees and automating assistance for people who may not already be sufficiently saving for retirement.

By familiarizing your organization with the program’s requirements, implementing effective compliance strategies, and staying informed about any changes, you can ensure your business supports its employees’ savings needs while avoiding penalties.

Mosey’s compliance automation system is designed to help employers manage state-level business compliance issues like the Colorado SecureSavings Program. Schedule a demo with Mosey to learn how our tools can simplify the process of compliance management within your organization.

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