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 401k 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 401k plan. The 401k has many advantages over SSPs for employees, including tax deductions, 401k 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 401k 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 401k. Employers failing to offer either a 401k or SSP will be fined an average of $100 per eligible employee per year until one is established.