Colorado SecureSavings Program: Everything You Need to Know

In Colorado, the number of employees without access to a retirement savings plan at work is staggering, with almost 940,000 employees, or over 40% of the private-sector workforce, affected. To help close this retirement gap, the Colorado Legislature passed a law and launched Colorado SecureSavings. The program makes it easy for businesses to offer a retirement benefit by automatically enrolling employees and allowing them to contribute to a Roth Individual Retirement Account (IRA).¹

While the program seeks to make retirement planning more accessible, our research shows that many employers may not be aware of it. In fact, 78% of eligible Colorado-based employers have not heard of or aren't familiar with the SecureSavings program.²

Saving for retirement is important wherever you live. And in Colorado, the ninth most expensive state to retire, the average retirement spending for a comfortable retirement is estimated to be $1,125,680. That’s factoring in a life expectancy of 85 in a state where the cost of living is 2.9% higher than the national average. Now consider that a significant number of private employees in Colorado — nearly 940,000 workers, representing more than 40% of the private-sector workforce in the state — don’t have access to a retirement savings plan through their employer.

In this post, we’ll break down how the SecureSavings Program works, how much it costs, alternatives that your business can consider, and more.

How the Colorado SecureSavings Program works

Once an employer facilitates the SecureSavings Program, their employees are added to the program. If they don’t opt out after 30 days, they’ll be automatically enrolled at a set percentage, known as the default savings rate. The default savings rate is 5% of the employee’s gross income, which is deducted from their pay after taxes. Employees can customize their accounts by adjusting contribution amounts, beneficiaries, and investment options.

The program includes auto escalation as a default feature, which means that an employee’s contribution amount will increase by 1% in January of each year until a maximum of 8% contribution is reached. Employees can change their savings rate to as little as 1%, up to a max of 100%, within IRS limits, or they can opt out of auto escalation at any time.

Is the Colorado SecureSavings Program mandatory for businesses?

Yes. Eligible Colorado businesses are required to facilitate Colorado SecureSavings if they:

are registered to conduct business in the state;
have five or more employees;
have been in business for two or more years;
don’t already offer their employees the opportunity to participate in a qualified retirement savings plan.

The Colorado SecureSavings program will notify employers when it’s time for them to register. At that time, employers will need their Federal Employer Identification Number and their access code from the notification.

Businesses that offer a qualified retirement savings plan will need to certify their exemption by using their access code when the program fully launches. Employers who have questions about exemptions can call 1-844-692-1073.

Can employees opt out of the Colorado SecureSavings program?

Yes. Employees can opt out or re-enroll at any time. If they choose to opt out before the 30-day notification period, their account won’t be activated. However, if they opt out after 30 days, the employer will receive a notification to stop payroll deductions, and the employee can withdraw any deductions already made.

Who is eligible to participate in the Colorado SecureSavings program?

To participate in the program, employees must be at least 18 years old and have earned taxable wages for at least 180 days from their Colorado employer.

What are the deadlines for the Colorado SecureSavings program?

For the latest program deadlines, visit the SecureSavings website.

What are the consequences of not complying?

There may be penalties for failure to register or noncompliance with the Colorado SecureSavings program. According to program rules, there will be fines for employer noncompliance up to $100 per eligible employee annually, not exceeding $5,000 in a calendar year.

How much will the Colorado SecureSavings Program cost my business?

The program is free for businesses to facilitate. Employees pay an annual asset-based fee of approximately 0.32%, which is about $0.32 for every $100 in the account. They also pay a $22 account fee every year, which is charged $5.50 per quarter. Employers cannot contribute to or match their employees’ retirement savings with the SecureSavings.

What are the alternatives to the Colorado SecureSavings program?

For some businesses, the state mandate is a great option. But businesses looking for more flexibility and the ability to contribute to their employees' retirement plans can choose to offer their own private 401(k) plan.

Why would an employer choose to offer a 401(k) over the SecureSavings program?

Job candidates care more now than ever before about competitive retirement benefits. According to our research, Colorado-based employees who have a retirement benefit from their employer are 2.8 times as likely to be saving for retirement, compared to their peers who do not have the same benefit. Nearly 60% of those who work at small businesses in the state without a benefit today say that they would be more satisfied with their employer if they offered a retirement benefit.²

By opting for a 401(k), employers can contribute to their employees’ retirement savings. Additionally, private retirement plans have higher contribution limits and can provide both Traditional and Roth 401(k) options.

Guideline 401(k) vs. Colorado SecureSavings

Guideline 401(k)

Offers both Traditional and Roth 401(k) contributions
Low cost for employers, starting at $49 + $8 per participant, per month³
Employees can contribute up to $22,500 for 2023, with $7,500 in catch up contributions for a total amount of $30,000
Employers can make contributions for total savings up to $66,000 (2023)

Colorado SecureSavings⁴

Offers Roth IRA
Employers do not pay a fee
Employees can contribute up to $6,500 in 2023, with a $1000 catch‑up contribution limit
Employers cannot make contributions

As more states are beginning to mandate retirement savings plans, Guideline is committed to helping employers and employees understand how to comply. Stay up to date on the latest news on our blog. And if you’re an employer looking for an easy, affordable alternative to Colorado SecureSavings, here’s how you can get started with a Guideline 401(k).

The information provided in this article is general in nature and is for informational purposes only. It should not be used as a substitute for specific tax, legal and/or financial advice that considers all relevant facts and circumstances. You are advised to consult a qualified financial adviser or tax professional before relying on the information provided herein.

¹ This content is for informational purposes only and is not intended to be construed as tax advice. You should consult a tax professional to determine the best tax advantaged retirement plan for you.

² This survey presents the findings of a group of Colorado residents, consisting of 51 Employers and 211 Employees (52 with benefits, 159 without benefits). Interviewing for this survey was conducted April 21 through May 1, 2023 by Guideline utilizing SUZY research software. Guideline was not identified as the sponsor of the survey. The results of this survey may not be representative of all adults meeting the same criteria as those surveyed for this study.

³ Monthly Base and Participant Fees are applied to 401(k) accounts ranging from $49-$129 for Base fees, and $4-$8 participant fees depending on the plan tier. Guideline can waive any of the fees and offer discounts at their discretion. See our Form ADV 2A Brochure for more information regarding fees.

⁴ Guideline has prepared this summary from third-party sources as of May 17, 2023. The information herein is considered to be reliable at the time of writing, may not necessarily be all-inclusive, is not guaranteed as to accuracy and is subject to change at any time without notice. This information is general in nature and is for informational purposes only. It should not be used as a substitute for specific tax, legal and/or financial advice that considers all relevant facts and circumstances. [Deadlines, fees, and other program details] are subject to change by the state without notice and should be checked prior to making any decisions. For more information visit https://coloradosecuresavings.com/