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Vermont Launches Retirement Savings Program for Small Employers
The Vermont Treasurer’s Office has officially opened enrollment for Vermont Saves, a new retirement savings program aimed at expanding options for small employers and their employees. Announced on Wednesday, the initiative seeks to address the pressing issue of retirement access, as an estimated 80,000 to 100,000 workers in Vermont currently lack employer-sponsored retirement accounts.
Vermont Saves, created under state law in 2023, mimics employer-sponsored individual retirement accounts (IRAs) with automatic payroll contributions, similar to a 401(k). State Treasurer Mike Pieciak emphasized the importance of accessible retirement plans, highlighting that individuals with workplace retirement savings are 15 times more likely to save for retirement.
Organizations with a minimum of five employees that currently do not offer retirement benefits must enroll by February. The program also permits self-employed individuals to participate independently. Eligibility requires participants to be at least 18 years old and earn a minimum of 500 hours of taxable wages from a Vermont employer.
The initiative is designed to alleviate the financial and administrative burdens often faced by small businesses. It is free for employers, who simply register their organization and integrate payroll contributions. Initial deductions will automatically set at 5% of wages, transitioning to 8% over time. However, employees can adjust their contributions up to the federally mandated IRA limits.
The program, administered by Vestwell State Savings and offering a selection of four investment types, aims to simplify retirement planning. While acknowledging the possibility of excluding some workers, Pieciak asserts that most participants will benefit, particularly those from small nonprofits and businesses.
Vermont joins Colorado, Delaware, and Maine in the Partnership for a Dignified Retirement consortium, which aims to reduce administrative costs. More information is available through the Vermont Saves website.
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Photo credit vtdigger.org
