According to the Georgetown University Center for Retirement Initiatives, over 45% of private-sector employees in the state of Vermont lack access to a retirement savings plan through their workplace.

To bridge this gap, Vermont passed legislation that established a dedicated, state-run retirement program designed for businesses and their employees to build long-term savings. The program, Vermont Saves, provides an easy and automatic way for Vermont employees to save for their future.

In this article, we’ll answer some questions you may have about Vermont Saves and explain how it affects Vermont businesses.

How Does Vermont Saves Work?

Vermont Saves is a government-sponsored retirement plan that launched in 2024. Since its inception, Vermont employers who meet certain criteria are required by law to offer a qualified, employer-sponsored retirement plan or enroll their employees in the program.

Vermont employees may contribute to the program through automatic deductions from their paychecks into a Roth individual savings account (Roth IRA) unless they choose to opt out. The money in the account will grow tax-free, and employees won't have to pay income tax on any money they withdraw from their account during retirement. The default savings rate begins at 5% and increases by 1% annually up to 8%, but each individual can elect a higher or lower percentage.

Vermont Saves is overseen by the Office of the State Treasurer of Vermont.

Which Businesses Are Affected?

According to the Vermont Saves website, employers who meet the following criteria are required to register for the program:

• Have 5 or more workers
• Have been in business for at least 2 years
• Does not currently offer a qualified, employer-sponsored retirement plan to their employees

Employers who already offer a qualified plan, or choose to start one, can certify their exemption from the program.

Registration Deadline

Program deadlines for businesses are based on company size. The breakdown is as follows:

• Companies with 5+ employees | March 1, 2025

Penalties

Businesses that fail to comply with the requirements may face penalties. Fines for failing to enroll an eligible employee include:

• $10 per employee for the first year
• $20 per employee for the 2nd year
• $75 per employee for 3 or more years

Who Is Eligible to Save With Vermont Saves?

Individuals who are 18 years or older and work, or are expected to work, 500 hours in a calendar year are eligible to participate in the Vermont Saves program.

The program is voluntary for employees, and they can change their contribution amount or opt out at any time.

Conclusion

The Vermont Saves program represents a notable development in retirement planning for Vermont workers. Automatic enrollment and contributions made directly through payroll deductions simplify the process of saving for retirement, bringing retirement security to more individuals across the state.

The Vermont Saves program requires businesses with five or more employees to either participate in the program or certify an exemption, so it’s important for Vermont employers to familiarize themselves with the program details and requirements.

Looking for information on the requirements for other states? Check out our resource page here.