Did you know?
Under Vermont’s new law, employers with five or more employees will soon be required by the state to facilitate retirement savings – even if they don’t offer a plan. It’s called Vermont Saves, and while it checks the compliance box, it comes with government-mandated limitations and zero flexibility.
About the Rollout
The Vermont Saves program is rolling out in phases throughout 2025 and 2026, with mandatory compliance based on employer size. Under the mandate, employers will be required to register, upload payroll data, and automatically enroll their employees into a state-administered Roth IRA—unless they proactively opt out by offering a qualified private retirement plan. Businesses that fail to comply may face administrative penalties. While marketed as a simple solution, Vermont Saves gives employers zero control over plan design, investment options, or employee engagement tools—effectively outsourcing retirement planning to the state.
How HWC Can Help
HWC Financial is here to support small businesses through the Vermont Saves rollout by offering strategic, hands-on guidance every step of the way. We help employers review and compare private retirement plan options tailored to their workforce and budget—ensuring you not only meet state requirements but also gain a competitive edge in talent retention. Our team can also assist in responding to Vermont Saves notices and certifying your exemption from the state program by providing the necessary documentation that confirms your business sponsors a qualified private plan. With HWC, you avoid the red tape and retain full control over your retirement benefit strategy.
Impact on Employee Retention
- 78% of employees say a retirement plan is critical when deciding to stay at a job
- 65% of workers would leave a job for better retirement benefits
- Companies offering a retirement plan with matching see ~25% lower turnover
- Employers offering contributions report higher morale and engagement
As more businesses adopt retirement plans—either to comply with state mandates or to remain competitive—the absence of a private, employer-sponsored plan may become a red flag to job seekers. Candidates are increasingly prioritizing financial security, and retirement benefits are now a top 3 workplace benefit, especially for workers aged 30 and up. In today’s tight labor market, companies that proactively offer robust, flexible retirement solutions are not only more likely to retain top talent, but also better positioned to attract high-quality candidates who expect long-term value from their employer.
❌ Why Vermont Saves Falls Short
Private Retirement Plans | Vermont Saves | |
Employer Contributions | ✅ Allowed – match or profit-sharing boosts loyalty & savings | ❌ Not allowed – employee-funded only |
Contribution Limits | ✅ Up to $23,000 in 2025 (+$7,500 catch-up) | ❌ $7,000 limit (+$1,000 catch-up) |
Tax Treatment | ✅ Pre-tax AND Roth options; employer match is deductible | ❌ Roth-only; after-tax only |
Plan Customization | ✅ Fully customizable: vesting, eligibility, branding, auto-escalation | ❌ One-size-fits-all |
Investment Options | ✅ Broad menu: mutual funds, ESG, sector funds, managed portfolios | ❌ Limited: target date & stable funds |
Loans & Withdrawals | ✅ Loans and hardship withdrawals available | ❌ Not allowed under Roth IRA rules |
Employee Education & Tools | ✅ Robust dashboards, calculators, on-demand education, branded portals | ❌ Minimal educational resources |
Retention Impact | ✅ Proven to reduce turnover and boost morale | ❌ No retention benefit from employer |
Tax Efficiency for Owners | ✅ Valuable for owner-only and high-income individuals for tax deferral | ❌ Roth-only limits tax planning leverage |
