The future of attracting and retaining top talent in Colorado

As we celebrate Small Business Week—the backbone of our economy and local communities—there is real uncertainty as business owners face growing challenges attracting and retaining top talent in today’s increasing competitive market.

The COVID-19 pandemic has accelerated both cultural and economic shifts that have transformed how employees want to work, and businesses have been forced to adapt on the fly.  

Get an Edge On Your Competition 

 A company’s 401(k) plan is one of the most important benefits for current and potential employees. A 2019 study from the Society for Human Resource Management found that retirement benefits ranked second in importance (after health care) among all the benefits that employers offer. According to SCORE, (mentors to America’s small businesses) 94% of owners claim the 401(k) benefit aided in their recruitment and retention. 

Without a retirement plan through their employer, many employees find it extremely difficult to save on their own. Access to a plan with automatic salary deferrals can be a giant step in getting employees started on the path to building the retirement savings that they will eventually need.  

Spotlight Back on Employee Benefits & Retirement  

The pandemic has once again put the spotlight back on employee benefits and the impending retirement crisis, particularly for small business owners.  

As of 2019, only 51% of businesses with 10-24 employees offered retirement plans. Of small businesses with fewer than 10 employees, only 28% of the workforce had access to a retirement plan. Business owners cite expense and resources as the overwhelming reasons why they don’t offer one.  

In Colorado specifically, 82% agree that the nation is facing a retirement crisis. In 2020, 40% of Coloradans did not have access to a retirement plan. And 69% of Colorado workers in the lowest income quintile currently have no access to a retirement program.  

The Colorado Secure Savings Plan is Coming!  

In addition, local business owners of all sizes face new requirements. Like a number of other states, Colorado recently enacted legislation requiring most small businesses to offer a retirement plan to its employees.  

Under the Colorado Secure Savings program, all workers at companies with five or more employees will need access to an Individual Retirement Account funded with automatic salary deductions. Companies that don’t offer a retirement plan such as a 401(k) will have to offer an IRA option administered by the Colorado state treasurer under the direction of the Colorado Secure Savings Program Board. 

Most businesses in Colorado will have to offer this program to their employees unless they already offer a retirement plan like a 401(k) or SIMPLE IRA option.  

Businesses who had five or more employees over the past year who didn’t offer a qualified retirement plan for their employees will be required to offer this option once the Secure Savings program is launched. They will have the option to opt-out if they offer their own retirement plan at some later date.  

Program Fines and Fees 

It’s important that employers who will fall under the program stay up to date on registration deadlines and requirements. Fines can be steep for smaller businesses, and can reach up to $5,000 per employee.  

Registration deadlines are still being finalized. It is anticipated that larger employers, likely those with 100 or more employees, will have the earliest registration deadline with smaller employers being required to register after that on a phased basis.   

The state is planning on launching a pilot program in the second half of 2022, and some form of phased enrollment will begin soon after. 

Employer Options and Next Steps 

The implementation of the Colorado Secure Savings program is a great time for employers to evaluate their retirement plan options.  

The right 401(k) plan offering high quality, concierge-level service, low and transparent fees and smart investment solutions is highly valued by your employees. And you shouldn’t have to spend time on administration, education or implementation if you have the right 401(k) partner.  

While additional tax credits are being considered for the Colorado Secure Savings Plan, the current federal SECURE Act offers up to $16,500 in tax credits to businesses. 

Lastly, it can take some time to switch or set up a new employer retirement plan, so we encourage you to plan according to the upcoming updates about the Colorado Secure Savings program and future deadlines.   

 Ann Margaret Williams is the Director of Retirement Plan Services at Shelton Capital Management, a successful business owner and a veteran of the equity research sales and trading industry.