APR 25, 2024

Colorado Secure Savings Program: What it Means for Businesses


Planning for the future is something every ambitious and responsible business owner is accustomed to doing. Whether it’s scheduling things for the near future – like supply chains and payroll – or planning for the long-term future – such as business expansions and partnerships – business owners like you are often called on to think ahead. But it’s not just your business you can put forethought into; looking out for the financial wellbeing of your staff is often what responsible and ethical employers take on, such as helping employees plan for retirement. While offering retirement plans has long been a voluntary practice for employers, in the U.S. things are changing. Programs like the Colorado Secure Savings program are being adopted or considered. Learn more about its effect on small businesses.


Defining the Program


The Colorado Secure Savings program is an effort by the Colorado state government to address the matter of small business employees who lack a retirement plan. The Colorado Office of the State Treasurer created the program in response to data indicating that, according to their website, over 40% of Colorado’s private sector workforce has little to no retirement savings. As an effort to safeguard the retirement goals of a large portion of the state’s workforce, the savings program was created. 


The program acts as both a mandate to employers in Colorado to provide for their staff members’ retirement, and as a guide to create a simple and effective means for employees to set aside money for when they leave the workforce. Colorado employers who’ve been in business for a minimum of two years and have five or more employees are required to either provide an independent retirement plan – through the business or a third-party provider – or enroll in the Colorado Secure Savings program. If employers choose to enroll, they’re guided through the creation of a Roth Individual Retirement Account (IRA) for their staff members. 


The next deadline for Colorado business owners will be May 15, 2024. Notification includes a code for either enrollment or application for exemption, the latter of which is possible if the business provides an independent retirement plan for its staff. 


It’s understandable why some business owners may balk at the idea of their state government telling them how to run their own companies. However, the intent of this program isn’t to exert authority over private companies or undermine business owners’ autonomy. Retirement should be an important factor in employees’ long-term financial planning; having a program in place to ensure each employee has some kind of nest egg building up for that day is to everyone’s benefit. 


The Boons of the Program


The Colorado Secure Savings program is of benefit to everybody participating, both employees and employers. For employees, the benefits are fairly evident. Enrollment is entirely voluntary, and employees are able to customize their contributions to their own retirement plan, giving them autonomy over their personal finances. Additionally, the program provides online tools for employees to manage their retirement accounts. Finally, the IRA set up by the program is transferrable between jobs, so employees don’t have to worry about losing their retirement savings should they change employers. 


There are also benefits to employers, especially when compared to 401(k) retirement plans. Financial publication Investopedia reported in February 2021 that the average 401(k) plan carries with it fees that average between 0.5% - 2% of the total assets. 401(k)s also require employers to provide a contribution in addition to that of the employees. But the Colorado program is based around setting up IRAs, where contributions come from elective employee payroll deductions. This ultimately means the state program is of no cost to the employers. 


Additionally, the program streamlines the IRA setup process, making it simple and straightforward for employers concerned about the complexity of creating and administrating a retirement plan. Being able to provide a retirement plan is also an asset when hiring new employees, keeping businesses competitive against other companies looking to hire. 


Overall, Colorado’s program provides a win-win option for businesses that otherwise wouldn’t be able to provide retirement plans for their staff. It serves as a simplified, how-to guide to the employer that doesn’t cut into their revenue, which the employer can use it for business growth and to compensate their staff. The employees, meanwhile, get access to an IRA with easy online management tools and control over how much of their own money they want to set aside for retirement. As retirement plans go, it’s as simple and painless as possible. 


Programs Beyond Colorado


Colorado isn’t the only state to adopt or explore a state mandated retirement plan. Independent recordkeeping service Acensus reports on its website that as of 2023, the majority of states have either adopted legislation for mandatory retirement plans or are exploring it, with only Florida, Alabama, and South Dakota yet to make recent efforts towards any sort of state program. 


These programs are in response to growing concerns about a lack of retirement savings in the American workforce. The Pew Charitable Trust reported in January 2024 that about 56 million private sector workers in the U.S. don’t have a retirement plan. The report goes on to say 51% of Americans are worried about poverty after they no longer receive a paycheck, and 70% of retirees wish they’d begun setting aside money for their retirement sooner. 


Programs like the Colorado Secure Savings program serve as a good model on which other states can base their own programs, and with so much work being done throughout the country toward this end, employers throughout the U.S. should prepare for this requirement. Providing for employee retirement helps ensure a stable economy by helping working men and women manage their finances. This, in turn, helps them maintain their standards of living and provides for their wellbeing both during and after their working lives. But setting up a retirement plan is more than just good business sense; it’s a part of an employer’s duty to provide for the employees that rely on them for the means to support themselves and their families. 

Set Up Your Staff’s Benefits with Payroll Vault


From payroll to hiring to benefits, we’re happy to offer your business our expertise. Our boutique-style payroll and human resources services will help you maintain payroll compliance and provide you with customized solutions for your HR needs. Visit your nearest Payroll Vault location today to learn more about what we can do for your business.