New retirement marketplace in Washington Simplifies Savings Plan

LAST REVIEWED Dec 29 2021 9 MIN READ

By The Human Interest Team

With the message that “retirement is possible,” Washington state’s Small Business Retirement Marketplace was launched in 2018 to support the nearly 119,000 private-sector workers who lack access to a retirement savings plan through their employer. The online marketplace aims to help workers compare low-cost retirement savings plans that have been verified by state officials. 

Administered by the Washington State Department of Commerce, the Small Business Retirement Marketplace does not require users to share personal information or register on the site—it simply allows for easy search and then links to various providers’ sites so that Washingtonians can identify the best option for their savings needs and goals. The financial firms on the marketplace have been verified as meeting stringent eligibility requirements by the Department of Financial Institutions 

What everyone needs to know:

  • Nothing is mandatory. Offering a retirement plan is voluntary for employers; participating in a retirement plan is voluntary for employees.

  • A new, improved marketplace was launched in 2020. The online marketplace lists retirement savings plan options available through the marketplace, and, to date, lists nine plans through three providers. It’s important to remember that there are other options to saving for retirement in addition to the plans listed in the marketplace.

What employers need to know

While many small businesses think of employee retirement plan as an expensive administrative burden, businesses that do offer a plan not only support the health of their employees and communities – they also support their own bottom lines: Employees are less likely to leave companies that offer retirement savings plans and are 15 times more likely to save for retirement, according to AARP. Employer contributions to retirement savings plans are tax-deductible, up to certain limits, which can lower the corporate tax burden while helping employees grow their savings tax-free.

Since 57% of Washington households struggle to set aside money for retirement and 66% are anxious about retirement security, according to AARP, these plans can increase financial capability and help more state residents adequately prepare for retirement. When employees enjoy more support and less stress, productivity increases while absenteeism decreases, and that helps a business’s bottom line.

Businesses can consult with their tax adviser to determine if they are eligible for a refund of administrative set-up costs with a Retirement Plans Startup Costs Tax Credit. The goal is to make it easy for businesses to offer retirement savings plans and easy for employees to sign up—a win-win for Washington.

The Employer Resources section includes information on plan requirements, workplace financial wellness, investment advisors, tax credits, and more.

Does your business qualify for 401(k) tax credits?

Learn if starting a plan comes with tax incentives.

What employees need to know

For employees without an existing work-sponsored retirement plan option, the Retirement Marketplace can help them get started—but it’s not an exhaustive listing of all retirement savings options. Likewise, if employees feel they aren’t already saving enough through an employer plan, they can supplement workplace retirement savings with an individual account.

All of the plans on the marketplace are verified and approved by Washington State officials, and the financial services providers listed cannot charge more than 1% in total annual administrative fees to those who enroll. The plans must also undergo an annual review and renewal process. Interested workers can review plans, choose and customize the one that best fits their needs, and enroll through the provider’s website.

In addition, employees should take note of the following:

  • Employees can take a guided tour of the site to receive plan recommendations and compare all plans side by side

  • Worker contributions are portable, so they can move from job to job prior to retirement

  • The site has options for small businesses and individuals, including the self-employed, sole proprietors, and gig workers

  • Calculators such as FINRA’s Retirement Calculator can help employees estimate how much they will need to save for retirement

  • Questions related to sign up and plan details are managed by the retirement plan provider, not the state Marketplace

Current investment options

So far, it’s not a complete marketplace. Presently, the Retirement Marketplace offers nine retirement plan options through just three companies: Aspire Capital Advisors, Finhabits and the Saturna Trust Company. A 2020 report published from the Washington State Department of Commerce recommended allowing providers to charge employer fees to attract more providers to the marketplace, as they usually cover the cost of enrollment and account maintenance.

Aspire Capital Advisors

  • Aspire Capital Advisors Roth IRA: Employees can contribute after-tax funds and pay no taxes if the funds are held until age 59½ or later as long as they’ve held the funds for at least five years.

  • Aspire Capital Advisors traditional IRA: Employees contribute pre-tax funds; withdrawals are taxable.

Finhabits

  • Finhabits’ Roth IRA plan: Employees can contribute after-tax funds and pay no taxes if the funds are held until age 59½ or later.

  • Finhabits’ traditional IRA plan: Employees contribute pre-tax funds via automatic contributions; withdrawals are taxable.

Saturna Trust Company

  • Saturna Trust’s profit sharing plan: Employers determine how much employees can contribute and what the amount is based on; employees don’t make their own contributions.

  • Saturna Trust’s solo 401(k) for the self-employed: Self-employed workers can receive similar tax benefits to a traditional 401(k) plan; this is only for business owners and their spouses.

  • Saturna Trust’s traditional 401(k) plan: Employees contribute pre-tax funds and the employer has the option to make a matching contribution.

  • Saturna Trust’s auto-enroll 401(k) plan: Similar to a traditional 401(k), this plan automatically enrolls employees with a specified percentage contribution; employees can choose to opt-out or select a different percentage contribution.

  • Saturna Trust’s safe harbor 401(k): Ideal for companies where business owners and highly compensated employees wish to maximize annual contributions, these plans offer a wider range of investment choices without the testing requirements of traditional 401(k)s.

Financial services providers who would like to be listed on the Marketplace must first be verified by a state-based regulatory agency and then complete the Washington State Department of Commerce Retirement Marketplace application. There is no application fee. The Department of Commerce website offers application information and links for financial services companies.

Simplifying the savings process

Simply put, access to an employer-sponsored retirement plan is the top reason that drives SMB employees to start saving for retirement in the first place. Likewise, many small businesses want to offer an option for their employees but struggle to understand the best and most affordable options in the sea of retirement savings plans.

Washington’s Small Business Retirement Savings Marketplace aims to make it easier for everyone to save for the future and reach their retirement goals—but it’s not your only option as a business owner (or employee). A modern 401(k) plan can help small businesses provide a flexible retirement plan to their employees. With Human Interest, you can get an affordable, full-service 401(k) or 403(b) plan for you and your employees in just a few minutes. 

Low-cost 401(k) with transparent pricing

Sign up for an affordable and easy-to-manage 401(k).

Want to hear more? Click here to learn more about our pricing or get started today.

The Human Interest Team

Article By

The Human Interest Team

We believe that everyone deserves access to a secure financial future, which is why we make it easy to provide a 401(k) to your employees. Human Interest offers a low-cost 401(k) with automated administration, built-in investment advising, and integration with leading payroll providers.

Subscribe to our Retirement Roadmap newsletter

Retirement isn’t just a destination. It’s a journey, and we’re here to help you. Our newsletter delivers succinct and timely tips, reviewed by Financial Advisors, to help you navigate the path to financial independence.

By providing your email above or subscribing to our newsletter, you agree to our Privacy Policy. You also elect to receive communications from Human Interest.