In 2015, the Oregon Legislative Assembly enacted legislation (HB 2960) which created OregonSaves – a state sponsored retirement program for employers who do not offer a qualified retirement plan. Oregon is the first state to implement this type of program. The program consists very simply of employer contributions to employee Roth IRA accounts. Last month, OregonSaves became operational in the form of a pilot program for employers who volunteered to participate. The program is mandatory for employers who don’t offer a qualified retirement plan and will be phased in for employers of various sizes as follows:
- November 15, 2017 – Employers with 100+ employees
- May 15, 2018 – Employers with 50-99 employees
- December 15, 2018 – Employers with 20-49 employees
- May 15, 2019 – Employers with 10-19 employees
- November 15, 2019 – Employers with 5-9 employees
- May 15, 2020 – Employers with 4 or fewer employees
The program comes at no cost to employers other than the internal administrative cost of compliance. Specifically, employers must notify employees about the program, make payroll deductions for those who don’t opt out, and provide updated information to employees. Enrollment for employees is automatic and starts at 5% of gross employee pay. The percentage increases by 1% per year after the employee has participated for 6 months, until it reaches a cap of 10%. Employees are able to opt out of the program or select different contribution levels, subject to the limits for Roth IRAs of $5,500 per year or $6,500 for employees who are 50 or older.
Employers will be notified by the state when their time comes. If they already have a qualified retirement plan, they will simply certify such to the state that they are exempt.
Bottom line is – if your business has employees (even a sole owner), OregonSaves is mandatory. If you find this distasteful, you have the opportunity to set up another retirement plan before your required enrollment date.
See the OregonSaves website https://www.oregonsaves.com/ for more information.
Zirkle, Long & Associates, LLC