If you own a business in the state of Oregon, you might have heard about OregonSaves, the new state mandated retirement program that began on July 1, 2017 and will be enrolling businesses across the state over the next several years.
The program targets companies—most of which are small businesses—that don’t offer a retirement savings plan to their employees. It allows employees of these companies, as well as self-employed workers, to save for retirement using payroll contributions.
OregonSaves was passed in 2015 by the Oregon State Legislature in response to the current retirement crisis. Americans are healthier and living longer, with a life expectancy of 78.8 years, but aren’t saving enough for retirement. In fact, according to the National Institute on Retirement Savings, the average total savings per US household is only $3,000, and 31 percent of non-retirees say that they have saved nothing for retirement.
Workers who are stressed about finances are more likely to be distracted on the job, according to a 2017 survey by PricewaterhouseCooper (PwC).
The OregonSaves program aims to give employees a way to save for retirement. Here are some of the key features of the program:
- Employees make contributions by payroll deduction.
- Employees can opt out of the program.
- Employees save into a Roth IRA account, which is portable so that they can continue saving if they change jobs.
- The programs auto-enroll feature begins with a standard savings rate of 5 percent per year, which escalates by 1 percent each year up to 10 percent.
- The first $1,000 stays in a money market account; after that employees currently have two options for investment.
Aliat offers an alternative to OregonSaves
Although OregonSaves is a good start towards ensuring a more stable financial future for Oregon workers, it’s currently less effective for employees than the Aliat 401(k) program, which offers the ability to save more.
Have you been unable to offer your employees a 401(k) program, but want to help them save for retirement?
Aliat offers a retirement savings plan for employers that is similar to OregonSaves but that offers more flexibility and savings power to employees. It’s a good option for small businesses who wish to waive the state mandated plan.
Key features of the Aliat plan include:
- Savings via automated payroll deduction.
- No additional cost to the employer.
- Low fees for employees, similar to OregonSaves.
- The ability to save more money each year ($18,000, compared to $5,500 with OregonSaves).
- The option to choose either a Roth IRA or traditional account types, unlike the single Roth IRA option with OregonSaves.
- The ability for employers to contribute if they wish, unlike OregonSaves, which doesn’t allow employer matching.
- Auto enrollment and auto escalation features, like OregonSaves.
When Do I Need to File a Certificate of Exemption on OregonSaves?
OregonSaves is legally mandatory for employers, who are required to register or file a Certificate of Exemption based on the following registration schedule:
Wave 1, beginning October 2017: Employers with 100 or more employees will need to register by November 15, 2017.
Wave 2, beginning April 2018: Employers with 50-99 employees will need to register by May 15, 2018.
Wave 3, beginning November 2018: Employers with 20-49 employees will need to register by December 15, 2018.
Waves 4-6: Employers with 19 or fewer employees will need to register between 2019 and 2020.
No matter whether they employ one or hundreds of individuals, all Oregon businesses will need to either enroll employees or file a Certificate of Exemption.
The program comes at no cost for employers, but they will be responsible for handling payroll deductions. At this point, the State of Oregon Treasury hasn’t announced any penalties for employers who fail to register, but is considering several options that could be pursued further via legislation.
The registration process is intended to be straightforward, but the State of Oregon Treasury has announced that it will monitor the process and provide technical assistance to any employers who have difficulty meeting the deadline or completing their enrollment.
For more information about our retirement plan, get in touch with us.