A recent study has shown that more than 45 percent of Virginia residents do not have access to retirement plans through their employer, which is remarkably higher than the national average of 33 percent. In order to aid residents, Virginia has created a new retirement savings program called RetirePath Virginia.

How RetirePath Virginia Works

RetirePath Virginia is a state-facilitated retirement savings plan with automatic employee enrollment. It is designed to help Virginia residents, who have no access to employer sponsored plans, establish financial security in their years of retirement.

Employee contributions are made through automatic payroll deductions starting at 5 percent of pay. Contributions will default to a Roth individual retirement account (IRA) but there is the option to convert savings into a traditional IRA. Individuals have the option to change or stop their contributions at any time.

The Cost to Employers

RetirePath Virginia is a great solution for smaller employers who may not have the resources to offer their own retirement plan. The program will cost nothing in terms of fees or financial responsibility to match employee contributions. The role employers play is simply to facilitate the plan for their employees.

Eligibility and Registration

An eligible employer is required to register with RetirePath Virginia based off the following criteria:

• Has 25 or more eligible employees
• Has been operating for two or more years
• Does not offer a qualified, employer-sponsored retirement savings plan

All eligible employers will receive a registration notice. Signing up is quick and simple, visit www.retirepathva.com and select “Register” at the top right of the page. All that is needed is a valid employer identification number (EIN) and the access code that was sent with the notice.

Employers who offer retirement plans to their employees but still receive a registration notice must opt out of the program by February 15, 2024. This can be done on the registration page as well. If an eligible employer fails to opt out, then they are faced with a $200 penalty per eligible employee per year. That means, at minimum, employers could be faced with a $5,000 fine per year.

RetirePath Virginia is now LIVE, and registration has opened. The sooner eligible employers sign up, the sooner their employees can begin saving for the future.

For more information on Virginia’s new savings program, please contact our office.