RetirePath Virginia: What Employers Need to Know About the State Retirement Mandate

According to the American Association of Retired Persons (AARP),¹ 44 percent of Virginia’s private-sector employees lack access to a workplace retirement program.

To address this issue, the Virginia General Assembly signed a bill establishing the VirginiaSAVES program in 2021. Now known as RetirePath Virginia, the legislation is designed to give more Virginians a way to save for retirement. The program is administered by the Virginia College Savings Plan board, which also runs the 529 program.

What Is RetirePath Virginia?

RetirePath Virginia is the Commonwealth’s automatic enrollment, state-facilitated individual retirement account (IRA) program. It gives employers a simple way to provide a retirement savings option for employees.

It is not meant to replace or compete with employer-sponsored plans, such as 401(k) plans, which can have advantages such as higher contribution limits.

What Businesses Must Participate in RetirePath Virginia?

Participation is mandatory for businesses that:

• Have had 5 or more employees in the previous calendar year (full or part-time), and
• Have been in business for two or more years, and
• Don’t offer a qualified employee retirement plan

Qualified retirement plans include 401(a), 401(k), 403(a), 403(b), 408(k), 408(p), or 457(b).

Employees that are eligible to participate include self-employed individuals, sole proprietors, non-governmental businesses, and other enterprises (both non-profit and for-profit).

Employers are required to automatically enroll eligible employees, who can choose to opt out. To be eligible, employees must be at least 18 years of age, employed full or part-time, and receive taxable wages in Virginia.

The default contribution amount is 5% per pay period with an annual auto-escalation of 1%, up to a maximum of 10%.

Employers cannot make contributions to the program or match funds.

What Are Employer Compliance Obligations Under RetirePath Virginia?

To avoid the risk of penalties, business must fulfill certain compliance requirements:

• The deadline for businesses with 10-24 employees is September 30, 2026. If you have 5-9 employees, you will have until October 30, 2026.
• All new businesses will have until Oct. 30 of the year after meeting the employer requirements to register.
• The business must set up payroll deduction for employees (the percentage of wages allocated per pay period).
• An annual open enrollment period must be held for employees.
• Noncompliance can cost businesses an annual penalty of $200 per employee.