Do you offer your employees retirement benefits? Most employers in the Centennial State don’t have a choice, thanks to the Colorado retirement mandate known as Colorado SecureSavings.
Several states have state-mandated retirement plans, including California, Illinois, and Minnesota. These mandates require that employers participate in the state-sponsored program or offer a qualifying alternative.
Why? It’s all in the name of helping employees save—and supplementing Social Security retirement benefits that typically aren’t enough to live on.
What is Colorado SecureSavings?
Colorado SecureSavings is a state-sponsored retirement program for employees in Colorado. The state requires that eligible employers participate in the Colorado state-mandated retirement plan or choose a qualifying alternative. Colorado launched the program in January 2023.
Here’s how Colorado SecureSavings works: Employers withhold a percentage of each employee’s wages through automatic post-tax payroll deductions. The contributions then go into a Roth IRA (individual savings account) for the employee.
Employees can adjust their contribution amount or opt out. Employers do not contribute to the employee’s plan.
Employers must register for the Colorado SecureSavings (or offer a qualifying alternative) if you:
- Have at least five employees
- Have been in business for more than two years
- Do not offer a qualified retirement program
Benefits for employers and employees
According to Colorado, there are several benefits of the state-sponsored program for both employers and employees.
Employer benefits include:
- No cost
- Minimal administration
Employee benefits include:
- A secure and simple way to save
- Employee-owned account
However, participating in Colorado SecureSavings isn’t your only retirement plan option…
Do I have to enroll in the Colorado state plan?
You do not have to enroll in the Colorado state-mandated retirement plan if you offer an approved, qualifying alternative.
You may be exempt from the state program if you offer a qualifying company-sponsored retirement plan.
Qualifying alternatives to Colorado SecureSavings include:
- 401(k) plans
- 403(a) qualified annuity plans
- 403(b) tax-sheltered annuity plans
- 408(k) SEP plans
- 408(p) SIMPLE IRA plans
- 457(b) governmental deferred compensation plans
Why consider an alternative? Employers may opt for an alternative plan, like a 401(k), to access employer benefits like tax credits, seamless integration with payroll, and more. Consider all available options to determine the best course for your business.
How do I exempt my business?
If you offer a qualified retirement savings plan, you can certify your exemption from the state-mandated program online.
You need the following information to exempt your business from the state program:
- Employer Identification Number
- Access code provided in the invitation to register
- Type of retirement plan (e.g., 401(k)) that allows you to be exempt
Learn more about the exemption process here.
Colorado retirement checklist for employers
Employers are required to facilitate the program or a qualifying alternative. Here’s a simple checklist for getting started with either option:
| Colorado SecureSavings | Alternative Retirement Plan |
|---|---|
| Enroll in the state-mandated plan here | Set up a qualifying alternative, like a 401(k) |
| Set up payroll deductions (5% is the default) | Set up deductions and contributions (if applicable) |
| Stop withholding deductions from employees who opt out | Administer your retirement plan |
Failing to sign up for the Colorado SecureSavings program or offering a qualifying alternative may result in penalties. You face fines of up to $100 per employee annually (up to a maximum of $5,000 annually).
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This is not intended as legal advice; for more information, please click here.
