Accounting & Tax Tips
April 19, 2024

What Employers Need to Know About RetirePath Virginia

Wendroff Insights:

Every quarter, the State of Virginia gets updated on businesses that may be eligible employers. The state sends an access code to eligible employers to set up the process with RetirePath. 

If a business meets the participation criteria and receives an access code, it can verify its identity here to begin the process: VERIFY IDENTITY

If a business is an eligible employer and did not receive an access code, it should do so immediately to avoid penalties of up to $200 per eligible employee annually: REGISTER NOW! (Choose RetirePath Virginia under Program and input remaining information.)

If a business receives an access code and does not want to participate in RetirePath, it must establish its own qualified retirement savings program for employees and then certify an exemption. It can do so by calling via phone at 1-833-608-6281.

What is RetirePath Virginia?

In response to concerning statistics showing that many Virginia employees lack a pathway to economic security through retirement savings plans, the Commonwealth created RetirePath Virginia. The statewide mandated program offers small businesses that may not have the resources to provide employer-sponsored retirement benefits a cost-free, easy-to-administer employee retirement plan.

RetirePath opened in June 2023 after a group of Virginia-based employers participated in a pilot launch with a goal of helping Commonwealth residents secure their financial future. 

What Businesses Are Required to Participate in RetirePath Virginia?

For-profit businesses and nonprofit organizations are required to register and participate in RetirePath if the following applies:

  • Business has a workforce of 25 or more eligible individuals
  • Business has been operational for a minimum of two years
  • Business does not offer a qualified, employer-sponsored retirement savings plan

What Employees Are Eligible for RetirePath?

All employees who are at least 18 years old, work at least 30 hours per week, work more than 90 days a year, and earn taxable wages from a VA employer need to be enrolled in RetirePath Virginia within 90 days of joining a business registered with the program. 

Temporary or seasonal employees working less than 90 hours have an option to independently open a RetirePath account. 

After receiving a notification from RetirePath, employees will have 30 days to take action on their accounts. They may choose to opt out and re-enroll at any time.

RetirePath Virginia Registration Deadline

Every eligible employer is required by Virginia law to participate in RetirePath. 

The deadline to register was February 15, 2024.

RetirePath Virginia Contribution Rate & Limits

By default, the RetirePath Virginia contribution rate is 5%. However, employees can adjust the rate from 1% to 100% whenever they choose, as long as the total annual contributions are within IRS limits. If employees do not adjust the rate, it will increase by 1% annually up to 10%. 

The total amount employees may save must be within the federal government’s annual contribution limits for IRAs and cannot exceed their earned income for the taxable year. In 2024, the maximum contribution is $7,000 per year up to age 49 and $8,000 for age 50 or older.

What Are the RetirePath Employer Benefits? 

The RetirePath program helps small businesses in Virginia that don’t have the resources to offer a retirement plan compete for talent with larger businesses. 

Additional benefits include: 

  • Easy Program Administration – a simple online registration process with minimal ongoing employer responsibilities. The program integrates with any payroll process and communicates directly with employees so you can focus on running your business.
  • No Cost Retirement Program – employers are not subject to any fees or fiduciary responsibilities and cannot contribute or match employee contributions. Participating employees will see a small fee deducted from RetirePath for the program administration. 
  • Tax-Free Rollover – Rollovers from a RetirePath account directly to another type of IRA are tax free and not subject to penalties. The IRS permits this type of transfer between IRA accounts once per year.

RetirePath Virginia Resources 

There are many online resources available to help employers and their employees understand and participate in the program. Here are some helpful, quick links:

RetirePath also offers employer assistance via phone at 1-833-608-6281 or website contact form.

If you need additional guidance registering for RetirePath Virginia or understanding how retirement program options may impact your business, contact us today using the FREE CONSULT button below. 

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