As an employer, you have an important role to play in helping Vermont's workforce save for retirement. Research indicates that eight of ten people offered a retirement plan at work will participate. Social Security cannot be expected to cover the financial needs of the growing number of retirees. Ultimately, it will be taxpayers who will bear the responsibility for seniors with insufficient savings.
Nationwide, 70% of businesses with fewer than 25 employees offer no formal retirement plans. Vermont's economy is driven by its small businesses, with 75% of the state's companies reporting nine or fewer employees. These businesses employ 21% of the state's workforce. Employers from the small business sector have the opportunity to make a major impact on the future economy of Vermont by helping ensure their employees have access to a retirement savings plan.
Offering such plans to your employees doesn't have to be expensive, confusing or time-consuming. To help facilitate the increased availability of retirement savings plans for Vermonters on the job, the State Treasurer's Office has grouped a number of resources here to help you.
Who Can You Work With to Select the Right Plan?
Vermonters should always "Ask & Check" to verify the registration (license) status of the individuals and companies offering them investment opportunities before actually investing. This can be done on the web site of the Financial Industry Regulatory Authority (FINRA), a non-governmental regulatory body, using their BrokerCheck system.
Vermont's Department of Financial Regulation regulates the activities of the financial services industry in Vermont. The department's Securities Division is tasked with the regulation of those offering and selling securities to Vermonters. You may call the Securities Division to discuss any questions or concerns you may have. Dial toll-free in Vermont 1 (877) 550-3907 or (802) 828-3420.
The Office of the State Treasurer offers these suggestions for evaluating a potential provider of a retirement savings product.
FINRA BrokerCheck is a free online tool to help investors check the professional background of current and former FINRA-registered securities firms and brokers. FINRA, the Financial Industry Regulatory Authority, is the world's leading private-sector provider of financial regulatory services.
Many of the same options to save for retirement on a tax-deferred basis available to employees of larger companies are also available to the self-employed. The IRS details these options for you.
This concise IRS publication includes a two-page chart that quickly summarizes key advantages to seven different retirement plans.
A SIMPLE (Savings Incentive Match Plan for Employees of Small Employers) IRA is available to businesses with 100 or fewer employees and in which each employee has a reasonable expectation of earning at least $5,000 a year. In addition, a business cannot implement a SIMPLE IRA if it currently offers another retirement plan. Administrative costs are low, no annual financial reports must be filed, and you may be eligible for a tax credit.
Simplified Employee Pension plans do not have the start-up and operating costs of a conventional retirement plan and allow for a contribution of up to 25 percent of each employee's pay. SEP contributions are tax deductible and your business pays no taxes on the earnings on the investments.
There are a variety of 401(k) plans you could offer as an employer. This IRS publication reviews the different types of plans and the employer's responsibilities as it relates to the ongoing management of the plan selected.
This link connects you to forms you may need to file with the Internal Revenue Service to set up your retirement plan. The information provided above on different IRA-based plans will list any needed forms.
In 2017 the Public Retirement Study Committee, Chaired by the Treasurer, recommended that the General Assembly direct the Office of the State Treasurer to work towards implementation of a “Voluntary open multiple employer plan (MEP)” with an overarching goal of increasing retirement security for all Vermonters. The Green Mountain Secure Retirement Plan is currently being developed.