Did You Miss It?

Woops, did you miss the deadline? If you are an organization in Virginia with 25 or more employees and have been in operations for 2 or more years, February 15th was the deadline to register for Virginia’s state sponsored plan, RetirePath or to certify an exemption if already offering a qualified employer-sponsored retirement savings plan such as a 401k, SIMPLE IRA, or SEP.

Businesses that failed to respond or comply before February 15th may face an annual penalty of up to $200 per eligible employee, so if you find yourself in this situation, act quickly before these penalties start incurring!

My December blog touched on these details of state mandated plans, but here is a refresher on what the Virginia RetirePath plan entails as well as comparable options which we are happy to help walk our clients through.

As of October 2023, 19 states have pass laws or have pending legislation, almost all are mandatory and have various deadlines for enrollment over the last year and upcoming months. 9 states have active laws which includes Virginia.  In Virginia employer registration began in July 2023 and the deadline is February 15, 2024 for those with 25 or more employees.  If deciding to utilize the state plan, Retire Path VA, employers in Virginia can begin the registration process here – https://www.retirepathva.com/employers

The RetirePath Virginia plan is a basic one-size fits all retirement savings program for businesses that do not wish to sponsor a plan for their own employees.  Essentially the plan establishes Roth IRAs through the state for eligible employees.  Here is a helpful comparison of the RetirePath Virginia plan versus a customized plan such as a 401k:


Pre- and Post-Tax DeferralsRoth IRA w/ auto after-tax payroll deductionPre-tax or Roth elective deferral contributions
Contributions$7,000 – ($8,000 age 50+)Lesser of 100% of compensation or $23,000 ($30,500 age 50 or older)
Catch-Up ContributionsDetermined by Roth IRA contribution limits$7,500 annually for those age 50 and older
Employer MatchEmployers cannot contribute to the program such as matching funds.Available
Income LimitSavers not eligible for the default Roth IRA have the option to recharacterize contributions to a traditional IRANo income limits
Investment ChoicesLimited selection of low-cost investment optionsCan provide a wide variety from top asset managers
Automated Payroll IntegrationAvailableAvailable
Customizable for businessesNot customizableYes – for example, Safe Harbor, SIMPLE, Profit-Sharing & Cash Balance
Tax CreditNo, since there are no start-up costs for employersYes – 100% of the expenses paid up to the greater of $500 or the lesser of $250 for each non-HCE’s. A maximum tax credit of $5,000 per year would be available for 3 years.


If you are an employer located in another state – the current mandates and timelines can be found here: https://humaninterest.com/learn/articles/what-is-a-state-sponsored-retirement-plan/

In order for employers to remain compliant, you must:

  • Register by the deadline or offer a qualified option that satisfies the mandate
  • Set up payroll deduction for employees (the percentage of wages allocated per pay period has yet to be determined)
  • Hold an annual open enrollment period
  • The statute includes a provision to development enforcement mechanisms and penalties for noncompliance with the program.

While the RetirePath Virginia plan is very simple with no employer contribution requirements and low costs, the SECURE Act 2.0 (Setting Every Community Up for Retirement Enhancement) created tax savings incentives for businesses who are setting up a 401k for the first time.

The tax credits include:

  • 50% of your eligible startup costs, up to the greater of:
    • $500; or
    • The lesser of:
    • $250 multiplied by the number of NHCEs who are eligible to participate in the plan, or
    • $5,000.

Eligible startup costs

You may claim the credit for ordinary and necessary costs to:

  • Set up and administer the plan, and
  • Educate your employees about the plan.

Eligible tax years

  • You can claim the credit for each of the first 3 years of the plan and may choose to start claiming the credit in the tax year before the tax year in which the plan becomes effective.

No deduction allowed

  • You can’t deduct both the startup costs and claim the credit for the same expenses. You aren’t required to claim the allowable credit.

Auto-enrollment tax credit

  • An eligible employer that adds an auto-enrollment feature to their plan can claim a tax credit of $500 per year for a 3-year taxable period beginning with the first taxable year the employer includes the auto-enrollment feature.

These tax incentives coupled with the benefits of more customization, flexibility, and greater investment choices may make a 401k a more attractive option for employers.  Also keeping in mind that any employer contributions are a deduction to the business and pre-tax contributions are a deduction for employees.  However, if you are non-compliant with your state’s mandated rules and the deadline has passed, it’s important to get something in place sooner than later.

With so many options available it is recommended to consult with your accountant and advisor to see what makes the most sense for your employees and your business.  A few things to consider:

  • The total amount that you and employees can save each year, as well as whether those contributions will come with any tax benefits.
  • The time and manual effort it takes to set up and administer the plan. Some providers offer integration with payroll providers to automate employee contributions.
  • The cost to you, or your employees, and how those compare to the rest of the industry.
  • The level of support you and your employees desire, including help with setup and day-to-day administration, compliance, or choosing investments.
  • Whether you and your staff seek dedicated account management and ongoing support by phone or email.
  • The specific features of the plan, like whether or not investment education is included, vesting schedules, the type of investment options you’ll be able to access, the option to offer perks like an employer match, and more.

If you missed the February 15th deadline, time to take action!  Let us know how we can help you and your business.


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