OregonSaves is a new employee retirement savings program ("Program") that requires action by all Oregon employers. The Program has not received much media attention but the state is currently pushing employers to comply.
Oregon employers are required to either register with the Program or certify that the employer is exempt. Employees of employers that register with the Program are automatically enrolled and do not need to do anything to start saving. Once an employee is enrolled in the Program, the employee's retirement account through the Program is portable and can follow the employee from employer to employer.
Program compliance deadlines depend on the number of employees as follows:
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Number of employees
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Register by
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More than 49
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Now
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20-49
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Now
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10-19
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May 15, 2019
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5-9
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November 15, 2019
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4 or fewer
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May 15, 2020
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An employer may file a certificate of exemption exempting the employer from the Program if the employer already offers a qualified retirement plan to some or all of its employees. The exemption is valid for three years from the date the exemption is filed, so long as the employer continues to offer a qualified plan to some or all of its employees.
If the employer does not have a qualified retirement program, it must register with the Program. Once an employer registers with the Program, the employer is not obligated to do anything further except to recertify every three years.
The employer is not obligated to pay any costs associated with the Program or make out-of-pocket contributions. Instead, the employer is a facilitator for employee savings by providing employee data to the state, providing information about OregonSaves to employees, processing payroll deductions, tracking employee opt-out and contribution decisions, and providing updated employee information. An 82-page employer handbook on OregonSaves is available
here.
Employee participation is voluntary. If an employee does not opt-out, a default contribution rate of 5% of an employee's compensation will be used and applied on an after-tax basis. In addition, the default rate increases annually by one percentage point until the contribution level reaches 10% of compensation. Employees can designate as little as 1% of compensation or as much as permitted by law.
The employee's account under the Program is a Roth IRA and subject to applicable contribution limits under the Internal Revenue Code ($6,000 annually for employees under age 50 and $7,000 for employees age 50 and older but subject to phase-out for higher earners). Employees can select investment options within the Program based on the particular retirement horizon. Each IRA will be charged an administrative fee of 1% per annum.
Employers are not permitted to contribute to the Program. In addition, employers may not require, endorse, or discourage employee participation in the Program.
An employee may elect to opt out of the program if the employee notifies the employer's Program Administrator within thirty days prior to the employee's enrollment date. An employee's automatic enrollment date begins thirty after the employer registers for the Program or, for new employees, thirty days after the employer provides the required employee information to the state to enroll the employee in the Program.
Once the employer registers online to enroll in the Program, the OregonSaves administrator will provide the employer with information that the employer is to provide to its employees. An employee electing to participate in the program may enroll by submitting the form provided by the Program, establish an automatic contribution plan, or make a minimum initial contribution as required by the administrator. An employee who works for an exempted employer may also make non-payroll contributions, unless the exempted employer voluntarily agrees to process payroll deduction contributions. If an exempted employer agrees to process payroll deduction contributions for a participating individual, the employer does not automatically become a participating employer.
If an employer begins to offer a qualified retirement plan and thus certifies exemption from participation in the Program, the employer must notify the OregonSaves administrator at least sixty days prior to ceasing payroll deduction contributions to the Program. The employer must also inform its employers of its intention to terminate participation in the Program at least thirty days prior to cessation of payroll deduction contributions.
Every employer must take some type of action to remain in compliance with the Program requirements. This action could simply be filing an exemption form if the employer is exempt under the Program, or if not exempt, the employer will have to enroll in the Program. Ironically, there is currently no penalty for an employer that is not compliant with the Program.
While the goals of OregonSaves are perhaps noble to encourage employee savings, it is clear that the Program requires some level of action by all Oregon employers. Even if an employer already provides a qualified retirement plan, it must exempt itself. For employers without a qualified retirement plan, the employer will need to register with the Program and facilitate employee participation.
