The Employer’s Guide to Vermont’s VT Saves Program

The law establishing the Vermont Saves Program (also known as VT Saves Program) was enacted two years ago, but the program itself was launched in December 2024. There are more than 80,000 small businesses in Vermont, and among those with fewer than 20 employees, approximately 55% don’t offer a retirement plan. However, VA Saves is beginning to reduce the retirement gap for Vermont’s residents. As of April 2025, the retirement initiative has enrolled more than 1,000 Vermont employers, with 27% of them being younger than 30 years old.

What is the Vermont Saves Program?

VT Saves is a state-sponsored retirement savings program, overseen by the Office of the Vermont State Treasurer, Mike Pieciak. Vermont workers who don’t have access to a workplace retirement plan—whether they have an employer or are self-employed individuals—now have a potential path to secure retirement for their financial security and well-being during their later years. 

When qualifying employers register for the program, their employees can voluntarily participate in an automatic individual retirement account (an auto-IRA program) that is funded with contributions from their paychecks. It’s mandated for Vermont businesses that don’t offer a qualified retirement plan when they are at least 2 years old and have at least 5 employees. 

How does Vermont Saves work?

Once employers are registered and submit employee information, the state retirement program—not the employers—sends notifications to employees that they’ll be automatically enrolled in a Roth IRA, unless they choose to opt out of the program within a 30-day period. During that window, someone could also opt to save for retirement with a Traditional IRA instead. Some of the main differences between the two:

• With a Roth IRA, contributions are made with after-tax dollars, so the earnings from them are not taxed when distributions are taken after age 59½. 

• With a Traditional IRA, contributions are pre-tax, so the distributions after age 59½ are taxed as income based on when the withdrawals are made. They also don’t have income limits, unlike Roth IRAs.

Eligibility requirements for employees

There are very few barriers to participation, so employees only have to meet this simple set of criteria:

• 18 years old or older

• Employed in the state of Vermont, and earned taxable wages for at least 500 hours

• A full-time, part-time, seasonal, or temporary employee or a business owner who is considered an employee

In addition, the Internal Revenue Service (IRS) has established rules regarding the default account type, which is a Roth IRA, including the contribution limits based on income. For instance, they may only be able to contribute a limited amount to a Roth IRA, or won’t be able to contribute anything at all when these conditions apply:

• The employee’s modified adjusted gross income in 2025 is $150,000 or more if they’re filing taxes on their own, or it’s $236,000 or more for those filing joint taxes

Enrollment and contribution options for employees

When employees are enrolled, the default contribution rate is 5% of gross pay, which automatically increases by 1% each year in January, up to a maximum of 8%. However, savers can elect a higher or lower amount, or opt out altogether. During the 30-day enrollment period, employees can make these choices. 

If they don’t act, they’ll be automatically enrolled at the default rate. However, at any time afterward, they can elect not to participate or choose to simply change the contribution rate. When the choice is the latter, they can save as little as 1% or increase their contribution level to more than 5%, as long as the 2025 contribution limits set by the Internal Revenue Service (IRS) aren’t exceeded, whether they’re single filers or married filing jointly:

• $7,000 for those age 49 and younger 

• $8,000 for those 50 and up

Understanding the investment options

Contributions first go into the Capital Preservation Option for 30 days, and if no other election is selected, the savings will then be automatically moved into one of the target-date funds. The Target Retirement Date Option chosen is aligned with the saver’s expected retirement date based on their age. 

Each investment option has fees, as shown in the table.  Note that the Annualized Asset-Based Fee is calculated by adding the Underlying Investment Fund Fee, the 0.05% State Fee, and the 0.15% Program Administration Fee.

These are the investment choices:

For a $1,000 initial contribution with a 5% annually compounded rate of return (assuming annual asset-based fees remain around the same as they are now), this is a hypothetical illustration of how much it will approximately cost from one to 10 years, excluding what you will pay in state and federal taxes:

What employers need to know about Vermont Saves

Eligibility requirements and deadlines for employers

VT Saves is as straightforward to set up as it is to qualify for it. Employer eligibility includes the following:

• Be no less than two years in business and registered in Vermont

• Have at least five employees at any time during the previous calendar year

• Doesn’t already offer a tax-qualified retirement plan

Vermont employers who meet the criteria are expected to register online. If you haven’t already done so by March 1, 2025, then do so as soon as possible. If it applies to you, you will need to certify your exemption through the same portal you would use if you were to register.

Employer responsibilities with Vermont Saves

Vermont employers have very few obligations associated with the program. They can’t help employees choose investments or process change requests, do not manage investment options or process distributions, and have no oversight of VT Saves. Additionally, they do not have liability for decisions and outcomes made in connection with it. 

Employers don’t even enroll employees. VA Saves is responsible for that, along with the communications about enrollment. But there are some important tasks associated with the program that Vermont employers need to ensure they do, along with some clear things you should never do: 

VT Saves offers employers educational webinars and recordings of them to support business owners in facilitating the program.

Non-compliance penalties

If your business has five or more employees, and you haven’t claimed an exemption because you already offer a qualified retirement plan, you must register to administer VT Saves. If you don’t enroll your employees, these are the penalties for each calendar year or portion of the year that they’re not enrolled:

How to register your business for Vermont Saves

If you’ve received a notification to register from Vermont Saves and haven’t registered yet, don’t delay. Even if you didn’t receive a notification, but meet the criteria for eligibility, register today. When broken down into a few steps, registration is easy and fast. These are the key tasks and details:

• Go to vtsaves.vermont.gov to set up an employer account. 

• You’ll need your access code and your employer identification number (EIN).
  

  • VT Saves would have sent it to you via email or mail when you were due to register. However, if you misplaced the notification or don’t remember receiving it, you can request that the code be resent to you. Retrieve it through the portal or contact 1-844-599-4911 for employer assistance.

• Add your roster of employees, including their details such as Social Security numbers, full names, permanent U.S. addresses, birthdates, phone numbers, and email addresses.
  

  • VT Saves will send messages about opting in or opting out within 30 days. 

  • If they opt in, then contributions can be made and managed through the program.

  • If they fail to make a selection, they’ll be automatically enrolled in a Roth IRA with the default contribution selection of 5% of their gross pay after taxes have been deducted.

• You can invite someone to help with payroll or administration, including managing your employee list for the program and remitting their contributions. To support employers with efficiencies, VT Saves integrates with payroll providers, such as Gusto.

Benefits of Vermont Saves

Beginning early to consistently save for retirement has its rewards: Saving $150 per month starting at age 25 could yield more than $300,000 once you’re ready to retire. Yet of the 54% of American households that have retirement accounts, only 15.5% have between $100,001 and $500,000 in retirement account assets.

Vermont employers that don’t already provide another qualified plan can help their employees become a part of increasing that statistic by offering VT Saves. In general, when employers offer retirement programs, 70% of employees are more likely to participate, according to one source. And Gusto’s own research has discovered that not only does offering retirement benefits tend to increase employee retention and satisfaction, but that state auto-IRAs, specifically, increase employee participation in retirement by 20 percent.

Do businesses have to use Vermont Saves?

VT Saves isn’t mandatory for businesses of any size that already provide a tax-qualified retirement savings plan, such as:

• 401(k) plan or other 401(a) plan

• 403(a)—qualified annuity plan

• 403(b)—tax-sheltered annuity plan

• 408(k)—Simplified Employee Pension (SEP) plan

• 408(p)—Savings Incentive Match Plan for Employees (a SIMPLE IRA plan)

• 457(b)—Governmental tax-deferred compensation plan

Retirement benefits made easy with Gusto

Gusto can be added as your preferred payroll provider for your VT Saves retirement program if you qualify and do not have an employer-sponsored retirement plan. However, if you want your employees to have a retirement savings benefit that offers more advantages and flexibility, consider offering a 401(k) plan. 

There has even been a rise in 401(k) adoption among the smallest employers in Colorado and Oregon, which have similar programs (i.e., auto-IRA mandates) to those in Vermont. Here are some benefits of offering a 401(k):

• Reduced cost with tax credits: Eligible businesses may be able to claim up to $16,500 in tax credits for the first 3 years of their 401(k)—potentially covering 100% of plan costs. 

• Flexible and affordable plan options: Gusto’s growing list of 401(k) partners means plenty of plans to choose from at low price points to fit your budget.

• Integrated to make life easier: Gusto payroll syncs with your 401(k) plan to make automatic deductions. Employees manage their own Gusto accounts, with access to their pay stubs, W-2s, 401(k) accounts, and contribution details. 

• Great benefits help you build a great team: Because 401(k) plans have higher contribution limits, employees can save more money with an employer-sponsored 401(k) than with state-mandated IRAs. Gusto’s own analysis has even found that employer-sponsored 401(k) offerings increase employee retention.

To help you determine which retirement program is the best fit for your business, here is a comparison between the features of a 401(k) and VT Saves: 

If you have an existing Gusto account, learn more about our 401(k) partners here.

You can also create an account with Gusto to enroll in a 401(k) plan for your employees’ retirement security. Gusto’s platform makes that simple.