House Bill 2960 is the new state sponsored mandatory retirement plan for companies which do not currently have a retirement plan in place. The primary purpose of this article is to inform employers, whom do not have a qualified retirement plan set up, that now is the time to begin gathering information so you can determine if you are better off setting up your own 401(k) plan, purchased through a private sector vendor, or utilizing the state sponsored plan.
Every Oregon Employer will be required to register under this new program with the State of Oregon. An employer that currently has a Qualified Retirement plan set up can claim an exemption from the program. A "Qualified Retirement Plan" is defined as a defined contribution, defined benefit, or IRA-based plan. This includes 401(k) plans, 403(b) plans, Profit Sharing plans, Money Purchase Pension plans, Traditional Defined Benefit plans, Cash Balance plans, Employee Stock Ownership plans, Simple IRA plans, or Governmental 457(b) plans.
My goal is to make sure that all businesses understand the deadlines for the new Oregon Retirement Law which became a law for all businesses without a retirement plan in place. The date of registration is determined by the size of the Employer as follows:
50 - 99 5/15/2018
20 - 49 12/15/2018
10 - 19 5/15/2019
5 - 9 11/15/2019
0 - 4 5/15/2020
Employers are REQUIRED to withhold and remit to the State of Oregon 5% of all eligible employees wages, after tax, unless the employee elects a different amount or declines the plan in writing. The plan starts with a withholding of 5% monthly employees paycheck which would be deposited into Oregon's state sponsored plan. This plan would be operated by the Oregon Retirement Savings Board established in the office of the State Treasurer.
This new law effects companies down to 1 person with a roll out schedule. If you do not have a retirement plan in place for your company, you are required to be in the new State Retirement plan.
Participation begins in Nov 2017 with a roll out plan, starting with company's employing over 100 employees. Each Employer must adopted the plan, coordinate the payroll deductions, communicate the plan to their employees, and enrolled them by the roll out date for their company size.
* Employees may opt out of the plan
* Employees may drop the plan at any time
* Employees plans remain with them when the change company's
* Contributions increase 1% each year until they reach 10% unless employee opts out of increasing contributions
* Creditors have access to the funds inside this account, yes, money in this account is subject to claims of Creditors
WHAT TO DO: If you want to be exempt from this government plan I can set up a 401(k) plan for you, prior to the roll out, as this plan has some major issues when compared to retirement plans currently on the market
DID YOU KNOW: Initial cost to set up a 401(k) is roughly the cost of 1 month of your health benefit plan.
I would be happy to meet up to discuss implementing a 401(k) plan, or reviewing your current 401(k) plan so that you can make an informed decision prior to the implementation roll out for your company size.
IF YOU CURRENTLY HAVE A 401(k) OR RETIREMENT PLAN IN PLACE: it should be reviewed every few years, as 401(k) administrators are very competitive lately and savings on fees alone can be big (Mgmt Fees, Annual Fees and Administration Fees).
At a review, we saved one of our clients 20,000 on their administration by setting up a new 401(k) and rolling over their funds from their old plan.
Let's talk in the next week to review or look at setting up a retirement account for your company.