Colorado SecureSavings required employers to provide retirement plans. A few months later, SECURE 2.0 said they would pay for it. The state law is mandatory; the federal law is free money.
- Why it matters: Business owners cannot opt out of SecureSavings unless they provide their employees with a qualifying retirement plan. The question isn’t, “Will you offer a plan?” The question is, “Which plan will you offer?”
- The requirements of SecureSavings: All Colorado businesses that have been in business for two or more years and have five or more employees must register for the program. If they don’t have a qualified alternative, they must make automatic payroll contributions to an employee’s Roth IRA.
- The good news: Secure 2.0, a federal law, offers new incentives to small business owners, encouraging new retirement plans for employees.
- The benefits of SECURE 2.0: Secure 2.0 establishes a new “starter 401(k)” option, including automatic enrollment and simplified administration.
- The free💰money part: Secure 2.0 ups the credits designed to offset costs associated with retirement plans and credits to pay for matching contributions.
What you can offer
Since you are now required to offer a retirement plan opportunity for your employees, here are some pros and cons of the most popular choices:
| Type of Plan | Pros✅ | Cons❌ |
| CO Secure Savings Plan | -Simple to administer -Very little employer involvement | -No choice of administrator or investment options -Low contribution limits -Some employees may not be eligible but won’t know |
| SEP-IRA | -Reduces taxable income -Simple to administer | -Lower contribution limits1 -No employee participation -No Roth option available -Lots of restrictions |
| Simple | -Reduces taxable income -Simple to administer | -Lower contribution limits -Expensive to match employees -No Roth deferral available -Can be restrictive |
| 401(k) | -Highest contribution limits -Most flexibility -Can reduce taxable income -Flexible matching formulas | -Higher administrative costs -Must follow rules for matches consistently |
The tax breaks
There are some credits available for small employers establishing a retirement plan for the first time. There are two types of credits, one is for the cost of starting up the plan and the other is to give an employee match.
Here are some of the details:
| Type of Plan | Start Up Costs Credit | Credit for Employer Match |
| Colorado Secure Savings | $0 | $0 |
| SEP-IRA | $500 – $5,000 for each of the first 3 years of plan | Up to $1,000/employee for the first 2 years of plan, lesser credits for years 3 -5 |
| Simple | $500 – $5,000 Plus $500 for auto-enrollment for each of the first 3 years of the plan | Up to $1,000/employee for the first 2 years of plan, lesser credits for years 3 -5 |
| 401(k) | $500 – $5,000 Plus $500 for auto enrollment for each of the first 3 years of the plan | Up to $1,000/employee for the first 2 years of plan, lesser credits for years 3 -5 |
How Delagify can help
- Establishment and administration of your employer-provided retirement plan. We can be a “one-stop shop”, integrating existing services like tax preparation and payroll.
- Tax reporting and compliance for the plan
- Financial education materials designed to educate employees on the changes and benefits of their new retirement plan.
- Financial education workshops designed to complement financial education materials and allow for Q&A