By Stacie L. Newnam, CPA, QKA

RetirePath Virginia, an automatic-enrollment, state-facilitated individual retirement account savings program, that is mandated by state law for certain Virginia businesses.  Starting in 2023, RetirePath Virginia sent eligible employers a series of emails and letters to inform them about the program and its requirements.  For businesses that were eligible in 2023 the deadline to register is February 15, 2024.  Businesses that fail to respond may face an annual penalty of up to $200 per eligible employee.

Hopefully, this is not the first time you have heard about RetirePath Virginia! For employers that offer a qualified plan you should have already opted out, if not there is still time before the deadline.  For clarity, qualified retirement plans include those under section 401(a), 401(k), 403(a), 403(b), 408(k), 408(p), or 457(b) of the Internal Revenue Code (IRC). They do not include payroll deductions for individual retirement accounts (IRAs).

Who must register?

Businesses that meet the below criteria are required to register by February 15, 2024:

  • 25 or more eligible employees
    • 18 years of age or older
    • Receive Virginia income
    • Employed at least 30 hours for any portion of a week in the preceding 12 months
      • May exclude temporary seasonal employees who work less than 90 days a year
    • In operations for 2 or more years at the time of enrollment
    • Does not offer a qualified, employer-sponsored retirement savings plan

RetirePath Virginia vs. Employer-Sponsored 401(k) Plan

RetirePath Virginia is limited in the plan design and doesn’t offer the depth of features available in an employer-sponsored 401(k) Plan.  This one-size-fits-all program provides an opportunity for individuals to save for retirement who might not have access to employer-sponsored plans but do not take into consideration varying risk tolerances or retirement goals.

Below is a high-level comparison chart to highlight the main differences.

Additional guidance can be found directly on RetirePath Virginia’s website: https://www.retirepathva.com/

Are you Considering an Employer-Sponsored 401(k) Plan?

While RetirePath Virginia aims to provide a retirement savings path for Virginians, it has limitations and may not align with your business goals.

If you prefer a qualified retirement plan that provides your employees with a more comprehensive 401(k) Plan, higher savings opportunities and more flexibility, the Retirement Plan Services team at PBMares, LLP is available to assist. Our team can design a plan that aligns with your business goals.

Please don’t hesitate to contact us to schedule a consultation.