Colorado SecureSavings vs. 401(k) for Small Employers
Colorado small employers that do not already offer a qualified retirement plan may need to take action under Colorado SecureSavings. For many employers, the real question is not whether they need to comply, but whether it makes more sense to use Colorado SecureSavings or set up a private plan such as a 401(k). National Benefits Consultants helps employers review both paths and choose the option that fits their business best. Colorado SecureSavings was created for employers that do not offer a qualified retirement savings plan, while employers that already offer a qualified plan can certify an exemption.
What Is Colorado SecureSavings?
Colorado SecureSavings is the state-facilitated retirement savings program for covered employers that do not already offer a qualified retirement plan. Employers that are covered by the program generally register, facilitate payroll deductions, and provide employee roster information, while the program handles much of the retirement account administration. It is designed for employers that want a compliance path without sponsoring their own private retirement plan.
What Is a 401(k)?
A 401(k) is a private employer-sponsored retirement plan that can allow employee salary deferrals and, depending on the plan design, employer contributions. The IRS notes that there are different types of 401(k) plans, including traditional, safe harbor, and SIMPLE 401(k) arrangements, and that employers need to follow plan rules and administration requirements to maintain tax-favored status.
Why Some Employers Choose Colorado SecureSavings
- they want a basic compliance solution
- they do not want to sponsor and administer a private plan
- they want a state-facilitated path for employee payroll deductions
- they are not ready to take on a broader retirement benefit strategy
Why Some Employers Choose a 401(k)
- they want a stronger employee benefit
- they want more control over plan design
- they may want employer contribution options
- they want a retirement benefit that can support recruiting and retention
- they want to stay outside the Colorado SecureSavings program by offering a qualified plan instead
Potential Tax Credit Opportunity
For some eligible small employers, starting a new retirement plan may also create access to federal startup tax credits. The IRS says eligible employers may be able to claim a credit of up to $5,000 for three years for the ordinary and necessary costs of starting a SEP, SIMPLE IRA, or qualified plan such as a 401(k). IRS instructions also explain that, under SECURE 2.0, eligible employers with 1 to 50 employees may qualify for a 100% startup cost credit up to the applicable limit, while employers with 51 to 100 employees may qualify for a 50% credit. Employers should review eligibility with their tax advisor.
Which Path May Fit Your Business Better?
For some Colorado employers, Colorado SecureSavings is the simplest way to meet the state requirement. For others, a 401(k) may be the better long-term fit because it provides a more customized retirement benefit and may better support hiring, retention, and broader employee benefits planning. The right choice depends on the employer’s size, budget, goals, and willingness to sponsor a private plan.
How National Benefits Consultants Helps
National Benefits Consultants helps Colorado small employers review retirement plan options and understand the difference between a state-facilitated compliance path and a private employer-sponsored plan. We help employers evaluate whether Colorado SecureSavings or a 401(k) may be the better fit based on the business and its goals.
Need Help Reviewing Your Colorado Compliance Options?
Need help comparing Colorado SecureSavings and 401(k) options? Call 720-488-9892 or contact National Benefits Consultants to review the retirement plan path that may fit your business best.