Vermont has joined the growing list of states that require employers to offer retirement accounts to employees and it’s looking to jumpstart its new program by partnering with Colorado.
The partnership, which is currently under negotiation, will allow Vermont’s VT Saves auto-IRA retirement program to kick off by the end of the year, according to a news release from State Treasurer Mike Pieciak.
Unanimously approved by the state legislature last year, the program will give tens of thousands of Vermonters access to a workplace retirement plan.
Employers with five or more employees who do not already offer a retirement plan will be required to sign up for VT Saves. Employees will be automatically enrolled in a Roth IRA and can set their own payroll reduction rate or opt out. Employees will have access to any principal they put in without tax or penalties under the program, which will operate at no cost to employers.
By partnering with Colorado, Vermont will join a consortium of state-run retirement savings programs that also includes Delaware and Maine. “Partnering with Colorado will lower costs, help achieve better returns, and position VT Saves to launch sooner,” Pieciak said.
Colorado launched its own auto-IRA retirement savings program, Colorado SecureSavings, last year. More than 14,000 employers enrolled in the program’s first 14 months, accumulating more than $50 million of assets under management.
As of January, 15 states have enacted auto-IRA programs for private-sector workers who lack a workplace retirement plan. According to the Vermont release, 70% to 75% of eligible employees participate in such programs with average annual contributions of approximately $2,000.
A recent AARP study predicts that such programs will increase household wealth for workers who are classified as BIPOC — Black, Indigenous, and people of color — by roughly 100%, depending on the worker’s age.
