Colorado the Latest State to Adopt an Auto-IRA Program
Companies lacking a retirement plan will be required to offer the savings option to their employees.
A bill signed this week by Colorado Governor Jared Polis will require employers that have at least five employees but don’t offer a retirement plan to provide a retirement savings opportunity through the state.
According to the bill’s text, more than 900,000 working Coloradans, or about 40%, do not have access to a retirement savings program at work. The bill establishes, in the office of the State Treasurer, the Colorado Secure Savings Program Board to create and implement the program. In broad terms, the program will automatically enroll employees into an individual retirement account (IRA), with the option to opt out. The default deferral, to be taken from their paychecks, is 5%.
News reports liken the Colorado program to OregonSaves. In addition to Oregon, the states of California, Connecticut, Illinois, Maryland and New Jersey have already implemented similar programs.
The California Secure Choice Retirement Savings Program is currently being challenged in a lawsuit alleging it is pre-empted by the Employee Retirement Income Security Act (ERISA). Text of the bill establishing the Colorado Secure Savings Program specifically says employers will not be fiduciaries and the program is not an employer-sponsored plan.
According to news reports, it is estimated that the Colorado program would be available in the second half of 2021.