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Colorado Secure Savings Act – Is Your Company Prepared?

Most people look forward to the time when they can retire and exit the working world. For some, it means spending more time with friends and family while others use it to pursue a hobby to see the world. Whatever the plan, it is critical to focus on retirement savings to ensure the needed funds will be available. Despite the obvious need for retirement savings, many Colorado residents have simply not saved enough. A recent survey found that only 56% of Colorado residents have a financial goal for retirement savings. In other words, most understand the need for retirement savings but have done little to make it happen.

One important method of savings is through an employer-sponsored retirement plan. Yet for those who work for small companies, such plans are simply not available. To help the state passed the Colorado Secure Savings Act, which requires certain Colorado small businesses to offer the state-managed retirement plan to employees. As January 2023 quickly approaches, Denver companies need to carefully review the requirements to ensure compliance. To help clients, prospects, and others, Whipplewood CPAs has provided a summary of the key details below.

Participation Rules

There are several criteria to review when determining if a business is required to participate in the program. The business must be registered to do business in the state, have at least five W-2 employees that have worked no less than 180 days, and have been in operation for two or more years. It is important to note that employees that live outside of Colorado need to be included in the calculation if the main place of employment is within the state.

Program Details

Outside of a few initial setup steps, employers are free of the typical management responsibilities common amongst most plans. The program features an automatic contribution rate of 5%, automatic annual increases of 1% per year until the 8% maximum is reached, contributions are not considered pre-tax, employees can opt out, and there is a new hire waiting period of 180 days.


Eligible companies that do not participate will be subject to fines and penalties. While enforcement will not start until the 2024 tax year, it is important to be aware of the risks of non-compliance. Specifically, there will be a $100 per eligible employee fine for nonparticipation with an annual maximum of $5,000.

Action Steps

Small employers need to start the registration process in early 2023. An access code will be sent via mail or email depending on what type of information is available to the state. For those businesses that are exempt (due to already offering a plan), the access code can be used to complete the exemption process.

Final Thoughts

Depending on the circumstances, some employers are better off with either a separate 401(k) plan or a group plan. One of the big advantages of using a 401(k) plan instead is that the plan can be set up so an employee needs a full year of service before eligibility. For employers with very high turnover, this can save a lot of administrative time and effort.

Contact Us

The state of Colorado is matching the efforts of other states by creating this mandated program. The good news is that registration is relatively straightforward, and the burden of plan management is largely assumed by the state. If you have questions about the information outlined above or need assistance with a plan audit, Whipplewood CPAs can help. For additional information call 303-989-7600 or click here to contact us. We look forward to speaking with you soon.