Getting Started with OregonSaves
For many Americans, saving for retirement can be a difficult undertaking. Many states are working to combat this by requiring employers to help their workers save for the future. Oregon, in specific, has been leading this charge. Starting in 2017, the state of Oregon started providing the OregonSaves Plan and is requiring businesses by law to provide a retirement plan of some sort to their employees. It’s very important for Oregon business owners to understand this legislation and how it affects them.
What is OregonSaves?
OregonSaves is a state mandate requiring all Oregon employers to provide a retirement plan to their employees effective November 2017. It requires Oregon business owners to either sponsor a retirement plan or facilitate the OregonSaves retirement plan.
OregonSaves is an easy way for employees in the state of Oregon to plan and save for their retirement. Once the employer registers with OregonSaves (we’ll talk about how this process works in a bit), all W-2 employees (including part-time employees) are then eligible to participate. Employees can then customize their saving elections or choose to opt-out of the program.
What’s Included in the OregonSaves Plan?
Here are some helpful specifications to know about within the OregonSaves Plan:
- Employees are automatically enrolled to contribute 5% in the plan (unless they choose to opt-out annually).
- Employee contributions are automatically increased by 1% annually, up to 8% (unless they choose to opt-out annually).
- There is a contribution maximum of $6,000 per year.
- There is no pre-tax option. OregonSaves is for Roth-only contributions.
- It doesn’t allow employer contributions (such as employer matching)
- It’s limited to employees with an income < $135,000 per year.
What Counts as an Employer-Sponsored Retirement Plan
Determining if you should facilitate OregonSaves is based on if you’re already providing what is considered as an employer-sponsoring retirement plan. According to OregonSaves,
An employer-sponsored retirement plan includes a plan qualified under Internal Revenue Code sections 401(a) (including a 401(k) plan), qualified annuity plan under section 403(a), tax-sheltered annuity plan under section 403(b), Simplified Employee Pension plan under section 408(k), a SIMPLE IRA plan under section 408(p) or governmental deferred compensation plan under section 457(b). It does not include payroll deduction IRAs.
If you do provide an employer-sponsored retirement plan, you can certify an exemption from OregonSaves for your business. If you do not provide an employer-sponsored retirement plan as listed above, then your business should be looking into facilitating OregonSaves.
How to Facilitate OregonSaves as an Employer
The first step is essentially done for you! Your business will be (if it hasn’t been already) notified by OregonSaves when it’s time for your business to register. When initially registering your employees and business with OregonSaves, there are a few steps to get started:
- Add delegates or payroll representatives (people who will be helping you with your account maintenance) to your OregonSaves account.
- Add at least one payroll list to your account and set a payroll date that is at least 30 days from the date you create the payroll list.
- Add all employees (essentially an employee census) so that OregonSaves can contact them to make saving elections, or notify them of what actions to take if they’d like to opt-out of the program.
- During your usual payroll process, you will deduct a percentage of each participating employee’s pay and send it to OregonSaves. The percentage for each employee will be shown on your employer account page.
Once your account is up and running, you’ll have some general ongoing account maintenance throughout the year:
- You must submit an employee census to OregonSaves annually
- Track the eligibility status for OregonSaves for all employees
- Provide OregonSaves enrollment packets to newly eligible employees 30 days after hire
- Track which employees are opted in and opted out
- Repeat the auto-enrollment process each year for all employees who have opted out previously
- If the employee doesn’t opt-out within the 30 days after being notified, make sure to set up a 5% payroll deduction (their automatic 5% contribution)
- Auto-escalate all employees’ contributions by 1% each year (unless they have opted out)
- Hold open enrollment every 2 years
Penalties for Non-Compliance with OregonSaves
Oregon wants to make sure that all employers are supporting their employees’ retirement planning. Unfortunately, you may incur a penalty if you don’t offer an employer-sponsored retirement plan and haven’t set up your account with OregonSaves within 2 years of your deadline.
The state may impose a $100 fee per eligible employee if your business has not requested an exemption or signed up for OregonSaves. This penalty is capped at $5000 per year. Your business should have been notified when it’s your turn to register for OregonSaves. This deadline is based on the number of people you employ. Use the following graphic below to know when it’s your turn to register. Remember: you are required to register within 2 years of the date you see next to each bar.
Need help navigating the OregonSaves process or knowing if you’re eligible for an exemption? HR Annie is here to help or we can connect you with one of our trusted financial partners!