Beginning in 2023, Colorado employees whose employers do not offer a retirement plan will have access to an optional retirement savings plan through a state-facilitated retirement savings program, the Colorado SecureSavings program.

Overview of the Program

The SecureSavings program requires all employers in Colorado that have been in business for two or more years, have five or more employees, and do not already have a retirement savings plan in place to facilitate the program by providing their employees the opportunity to save for retirement through payroll deductions.

All employees who are at least eighteen years old and have earned wages in Colorado for at least 180 days are eligible and will be automatically enrolled in the program. Once enrolled, employees will have thirty days to either opt out or to customize their contribution amounts, investment options, and beneficiaries. Employees who do not opt out within thirty days of their enrollment date will automatically have 5 percent of their compensation withheld on an after-tax basis and contributed to a Roth Individual Retirement Account (Roth IRA) on their behalf. Contributions will be automatically increased by 1 percent each January up to a maximum of 8 percent, unless otherwise adjusted by the employee. If an employee does not make an election regarding how his or her Roth IRA is to be invested, it will initially be invested in the Capital Preservation Option—a “cash-like fund” invested in money market securities—and then will be transferred to the Target Retirement Date Option with a target date that is closest to the employee’s expected year of retirement.

Employees are also permitted to make additional contributions to their Roth IRAs by check, from a bank account.

Employer Obligations

In early 2023, all Colorado employers will receive a notice from the state to register with Colorado SecureSavings.

  • If the employer sponsors a tax-qualified retirement savings plan for its employees (such as a 401(k), 403(b), Simplified Employee Pension (SEP), or SIMPLE IRA), the employer may opt out of the program.
  • If the employer does not sponsor a tax-qualified retirement savings plan for its employees, the employer must provide its payroll vendor’s name (if any), payroll schedule, company bank information, employer contact information, and an employee roster.

Employees included on the roster will be automatically enrolled and then have the option to opt out or make other elections as described above. Employees hired after the date of registration must be enrolled in the SecureSavings program within 180 days of their hire dates. Once employees have made their investment selections or opted out, employers will need to update participating employees’ contribution rates within their payroll system to ensure contributions are properly withheld and transmitted to the program. Contributions to the program must begin with the payroll immediately after the thirty-day opt-out period has passed, based on the employee’s contribution elections. Employers have an obligation to keep employee rosters and payroll contribution information updated.

Under the program, employers are prohibited from setting up or managing employees’ accounts, managing investment options, or answering questions about the program and its investment options. Additionally, employers are not permitted to provide any tax, legal, or other financial advice regarding their employees’ accounts. Further, contributions remitted to the program do not need to be reported on an employee’s Form W-2. Employees will receive a Form 5498 (IRA Contributions Information) directly from the trustee for the program no later than May 31 each year.

Next Steps

In early 2023, all Colorado employers should be on the lookout for a notification and information from the state regarding the program. The notice and information may be sent by email or by U.S. mail.

After receipt of the notification, employers will have thirty days to either register with the program or apply for an exemption. The deadline to register or apply for an exemption varies based on the size of the employer.

Employer size Registration deadline
Employers with 50 or more employees March 15, 2023
Employers with 15–49 employees May 15, 2023
Employers with 5–14 employees June 30, 2023

A failure to timely register or apply for an exemption may result in a fine of up to $100 per employee per year, up to a maximum of $5,000 per year.

Ogletree Deakins’ Denver office will continue to monitor developments with respect to the Colorado SecureSavings program and will post updates as additional information becomes available.