Saving for retirement can be difficult at any time, especially taking the time to setup a retirement plan. Only about half of working Oregonians have access to employer provided retirement plans. The rest must have initiative to do this on their own.
In order to promote saving and to ease the burden on working Oregonians, The State has established the Oregon Retirement Savings Plan. Large employers will be required to be compliant as of November 15, 2017.
The Oregon Retirement Savings Plan works like a 401(k) plan, in that employees elect the percentage of their pay they want to contribute to the plan. Contributions go to a state-run Roth individual retirement account established by the plan for each participating employee. Unlike a 401(k) or IRA, contributions are after tax contributions, which means that neither the contributions nor the earnings on the contributions are taxed when withdrawn beginning at age 59 ½.
Under the Oregon Retirement Plan, employees are automatically enrolled at a default contribution level of 5% of the employees’ pay with an automatic increase of 1% each year until a 10% contribution level is reached. Employees are allowed to increase or decrease the contribution levels at any time and choose not to make any contributions. Also, unlike a 401(k), employers may not contribute to the plan.
All private employers are required to participate in the Oregon Retirement Plan; however employers that offer a qualified plan to their employees (i.e. 401(k), 403(b), profit sharing) can avoid certain requirements of the Oregon Retirement Plan by filing a certificate with the state every three years. Employers that don’t offer qualified plans have a variety of duties to help its employees participate in the plan.
What should you do now? First, figure out your compliance date, which is determined by the number of employees on your most recent Oregon Quarterly Tax Report:
- 100 or more employees: November 15, 2017
- 50 – 99 employees: May 15, 2018;
- 20 – 49 employees: December 15, 2018
- 5 – 9 employees: November 15, 2019
- 1 -4 employees: May 15, 2020
Next, determine whether you are required to comply with the plan because you do not already offer a qualified plan to your employees. If you are not required to comply with the plan, you should register online at employer.oregonsaves.com/home/program-details/eligibility and file a certificate of exemption by the applicable compliance date. If you are required to comply with the plan, you can learn more about your obligations here: employer.oregonsaves.com.
Finally, those subject to the plan should make sure that payroll systems and office procedures are in place to handle payroll deductions and employee elections by the compliance date.
If you have additional questions, please see the following PDF which has a list of frequently asked questions or contact Eric Bell at 541-342-5161Oregon Saves FAQ