Ensuring Future Financial Stability with Secure Savings Programs

Secure Savings Programs (or SSP) will be deployed in several states in the coming years. The states  (including California, Illinois, Oregon, Colorado, and counting) will require small employers (those with 5 to 25 full-time employees) to offer employees either a 401(k) or a state-mandated secure saving program. What is the Secure Savings Plan?  It is a payroll deduction automatically deposited into a Roth IRA, funded by employees’ after-tax dollars. Small employers can avoid the SSP by setting up a low-cost 401(k) plan. The 401(k) has many advantages over SSPs for employees, including tax deductions, 401(k) loans, and a broad spectrum of investment options.

The Secure Savings Program will be introduced state-by-state and ultimately will affect every business with five or more employees. Companies that offer 401(k) plans will be exempt from the SSP program. In addition, states will provide grants to small businesses to help defray the costs of setting up either an SSP or 401(k). Employers failing to offer either a 401(k) or SSP will be fined an average of $100 per eligible employee per year until one is established.