OregonSaves Retirement Program – An interview with Erik Daley, CFA
Staying on top of new developments in laws and regulations can be challenging. And, you certainly don’t want to miss opportunities to provide affordable benefits to the great people in your organization. You may have even previously considered offering a retirement plan, but found that they tend to be costly and cumbersome to administer.
With all that in mind, I wanted to learn more about OregonSaves – an inexpensive, payroll deduction retirement program sponsored by the State of Oregon. So, I reached out to a knowledgeable resource on all things retirement: Erik Daley, CFA. Erik is the managing principal with Multnomah Group – a Portland-based company that provides retirement plan consulting services. Erik is a member of Multnomah Group’s Investment Committee and leads the firm’s tax-exempt practice. Erik regularly consults with clients on a variety of retirement plan related topics to help manage their fiduciary risks. He is also a frequent speaker on the topic of retirement plan issues at local, regional, and national conferences and industry events.
The following is a bit of our Q&A on the subject of OregonSaves.
Q: So, Erik, what is the OregonSaves Program and why did the State of Oregon start it?
According to a study by the American Association of Retired Persons (AARP), Americans are 15 times more likely to save for retirement when they can do so by payroll deduction. However, the majority of businesses with less than 100 employees don’t sponsor a qualified retirement plan for their participants to utilize.
Oregon acknowledged that for a small business, and those that work within it, the cost to sponsor a retirement plan isn’t always feasible. In response, the state created OregonSaves as an inexpensive way for small businesses to extend retirement benefits to their employees.
Q: How does it work?
OregonSaves is a retirement savings program sponsored by the state of Oregon. The program allows employees to save into a Roth IRA account via payroll deduction. The money saved by each participant is their own and fully portable should they choose to leave the company. Employee participation is completely voluntary and employees can opt out at any time.
Q: What’s important for an employer to know about it?
Four important things to know are:
1. There are no out-of-pocket costs to employers for participating in OregonSaves. According to a Pew Charitable Trust study in 2017, 27% of small employers stated that establishing a retirement plan was too expensive and another 22% stated that their organization lacked the resources to maintain a plan. OregonSaves eliminates these problems.
2. By May 2020 all organizations with employees in Oregon must offer OregonSaves or another retirement plan option to their employees. It’s being rolled out in waves, starting with the largest companies. Right now, Wave 4 is in process – mandating enrollment by companies with 10-19 employees. Regardless of when your mandated enrollment is by employer size, small employers and even sole proprietors can begin participating at any time.
3. Employers cannot offer OregonSaves if they offer any other retirement plan to even some of their employees.
4. Employers cannot make company contributions into these accounts. It’s strictly payroll deduction from the employee’s pay – post-tax.
Q: What’s important for employees to know about OregonSaves?
Three things I like to be sure employees know are:
1. OregonSaves is setup as an automatic enrollment program. Employees who become eligible and fail to act would be automatically enrolled at 5% of pay. However, an employee can elect to save more or less than 5% by completing the necessary paperwork. There is no minimum as to how much they may defer.
2. Contributions must be after-tax – because it is a Roth IRA program. After-tax contributions ensure that the account with any gains will be subject to no taxation when it is taken out at retirement.
3. The money is theirs. These accounts are registered to the participants [employees] and remain the property of the participant regardless of whether they leave their employer. Because it is a Roth IRA, participants can have access to their contribution at any time.
Q: How do I know if this is right for my company and my employees?
If you have employees in the state of Oregon and do not sponsor a retirement plan covering those employees, then OregonSaves is not only right for you but it will be your obligation to facilitate participation. Any employer without a retirement plan can elect to participate effective right now, but all businesses will be impacted by May 15, 2020.
Q: Are any program developments being considered for OregonSaves?
Currently, if a company offers another retirement plan to any employees, they are not eligible to offer OregonSaves. That’s something OregonSaves is looking at. So, in the future they may provide employees who may not be eligible for their employer plan the ability to participate, and perhaps even those participants who are in an eligibility waiting period with their current employer’s retirement plan. We’ll need to watch how that develops.
Q: Where do we find my information?
The state has developed a great web tool to assist employers both in understanding the program as well as providing tools and resources for those beginning to deploy OregonSaves at their place of business. For more information go to employer.oregonsaves.com.
Q: What’s one take away you want to be sure people know about OregonSaves?
The financial health of our employees has a material impact on their happiness and productivity. OregonSaves provides a patch for the largest failure of the employer-based retirement system, coverage. Extending retirement plan benefits to small businesses and sole practitioners in the state is a model being copied by dozens of other states.
Special thanks to Erik Daley, managing principal with Multnomah Group, for providing this interview. I appreciate him sharing his time and expertise.
And here’s to you – the business leader — as you make your company a workplace where people want to be.
Yours in success,
Linda is the founder and Chief Executive Officer of Integrated Success HR Consulting & Coaching, She is a Gallup-certified Strengths Coach and a leader in strengths-focused development. Integrated Success works with organizations in developing effective teams and human resources practices to bring out the best of individuals for their own success and that of the organization. That’s why we say Integrated Success is the engine behind individuals and organizations thriving!