RetirePath: What Business Owners and Plan Administrators Need to Know

Virginia’s new path to retirement security

Virginia has joined six other states in implementing legislation that helps to expand access to retirement savings. With research showing that people are 15 times more likely to save for retirement if given an option to do so through their employer, and 20 times more likely if the savings option is automatic, Virginia’s RetirePath program offers an opportunity to make saving for retirement more attainable.

What is RetirePath?

Born from 2021 state legislation, RetirePath is a retirement savings program designed to address the retirement savings gap and provide Virginians with more opportunities to achieve financial security. The Code of Virginia now requires certain employers to register for RetirePath, providing their eligible employees with the opportunity to save for retirement through payroll deductions to an IRA account.

Once a business registers, employees of that business are automatically enrolled into the savings program. Employees may opt out or make changes to their investment selections at any time. If no action is taken, the savings plan will default to the following:

• Contributions will go into a Roth individual retirement account (IRA) with the option to elect a traditional IRA.
• Automatic contributions will increase by 1% on January 1 after the account is open for 180 days and until a total of 10% of the employee’s pay is being contributed to this savings account.
• Investments will be administered by private-sector financial firms and managed by Virginia529.

RetirePath is not meant to replace or compete with your business’s existing retirement savings plan. Employer-sponsored plans, like a 401(k), may offer advantages to employees that the RetirePath program does not; such as, allowing for a higher contribution limit and providing employer contribution match opportunities. A participating employer’s role is to facilitate RetirePath Virginia for their employees and does not require any additional fiduciary responsibilities.

Is RetirePath required for your business?

Employers that already offer a qualified plan or are otherwise exempt from the Commonwealth’s mandate can certify an exemption.

Virginia law mandates all eligible employers to register for RetirePath or certify an exemption by February 15, 2024. Failing to do so may result in penalties of up to $200 per eligible employee. To find out if your business is eligible, you may take an Employer Eligibility Quiz online.

Virginia businesses who do not offer a qualified, employer-sponsored retirement savings plan may be required to register and facilitate RetirePath Virginia if they meet the following requirements:

• The business employs 25 or more employees who are over 18, earn income in Virginia and worked at least 30 hours for any portion of a week in the preceding 12 months.
• The business has been operating for two or more years at the time of enrollment.

Note: If a participating employer meets the eligibility criteria, seasonal or temporary employees who work more than 90 days a year must be enrolled.

How can your company participate in this new savings option?

Registration is now open for all eligible employers. Register your business online before the February 15 deadline.

Your Keiter Opportunity Advisors will continue to keep you updated on new and changing regulations that may impact your business’s retirement plan. Questions on this topic? Contact us today.