On June 1, 2023, Gov. Scott signed SB 135, establishing VT Saves, a mandatory state-run payroll-deduction Roth IRA program to take effect in 2025. Employers who do not otherwise offer a qualified retirement savings program will be required to enroll in VT Saves and allow employees to make contributions via automatic payroll deductions. Employers will be responsible for enrolling employees and coordinating salary deductions but are not required to make additional contributions. Employer enrollment deadlines have been set as follows:
- Employers with 25 or more employees - July 1, 2025
- Employers with 15 to 24 employees - January 1, 2026
- Employers with 5 to 14 employees - July 1, 2026
Employers who have not been in business during both the current and preceding calendar year are exempted. It is unclear whether employers with fewer than five employees will be required to enroll.
In general, an employee will be eligible to participate in VT Saves if they are at least 18 years old and paid Vermont-taxable wages from a covered employer. Future regulations will determine whether part-time, seasonal, or temporary employees will be included as covered employees. Participating employees are automatically enrolled with the default contribution of a 5% payroll deduction that increases by 1% annually with an 8% cap. Employees can opt out of the program, change their contribution rates, and choose their investments.
Employers with employees in Vermont should be aware of this new program. Since this is a new program, there are not many details about how the state will administer it. We will report new information concerning the program in future editions of Compliance Corner.