Virginia Expands RetirePath Retirement Program to More Small Businesses

More Virginia employers will soon be required to offer workers access to a retirement savings program under the state’s expanding RetirePath Virginia initiative.

Originally created by the General Assembly in 2021 and launched in 2023, RetirePath was designed to help private-sector employees who do not have access to a workplace retirement plan begin saving for retirement through automatic payroll deductions. The program is administered by Virginia529 and is part of a growing national movement to increase retirement savings among private-sector workers.

The expansion means many smaller employers that were previously exempt will now be required to register.

Why Virginia Created RetirePath

State lawmakers established the program after studies found that more than one million Virginia workers lacked access to an employer-sponsored retirement plan.

Without payroll deductions, many workers simply never begin saving for retirement. RetirePath is intended to make saving automatic while placing very little administrative burden on employers.

Virginia joins more than a dozen states—including California, Colorado, Connecticut, Illinois, and Oregon—that have adopted similar state-facilitated retirement savings programs.

Which Employers Must Participate?

Beginning in 2026, Virginia law requires employers to participate if they:

• Have been operating for at least two years.
• Have five or more eligible employees.
• Do not already offer a qualified employer-sponsored retirement plan, such as a 401(k), 403(b), SEP IRA, SIMPLE IRA or another qualifying retirement plan.

Employers that already sponsor a qualified retirement plan are exempt but must certify their exemption when notified by the state.

2026 Registration Deadlines

RetirePath is being rolled out in phases.

For employers becoming eligible during 2026:

• Employers with 10 to 24 employees must register and begin facilitating the program by Sept. 30, 2026.
• Employers with 5 to 9 employees and employers with 25 or more employees must register by Oct. 30, 2026.

Businesses that were required to register before 2026 have already passed their deadlines. Employers that remain out of compliance may face enforcement actions and financial penalties.

Who Is an Eligible Employee?

Virginia law defines an eligible employee as someone who:

• Is at least 18 years old.
• Works 30 hours or more per week.
• Receives wages from the employer.

Eligible employees are automatically enrolled unless they choose to opt out.

How the Program Works

RetirePath uses a Roth Individual Retirement Account (IRA) as the default savings vehicle, although participants may choose a traditional IRA if they qualify.

Employees contribute through after-tax payroll deductions.

The default contribution rate is 5% of pay, but participants may increase, decrease, or stop contributions at any time.

Because the account belongs to the employee—not the employer—it remains with the worker even after changing jobs.

The Employer’s Role

The state designed RetirePath to require minimal employer involvement.

Employers simply:

1. Register using their Employer Identification Number (EIN) and RetirePath access code.
2. Set up payroll deductions and submit employee contributions each pay period.
3. Keep employee records up to date.

Employers may also authorize their payroll company or payroll service provider to handle much of the process.

Importantly, employers are not responsible for:

• Managing investments.
• Answering employee questions about the program.
• Processing distributions.
• Providing financial advice.
• Making employer contributions.

Employee accounts are administered directly through RetirePath.

Does the Employer Pay Anything?

No.

RetirePath requires:

• No employer contributions.
• No employer matching funds.
• No fiduciary responsibility for investment decisions.
• No administrative fees are paid by the employer.

Instead, modest administrative fees are deducted from participating employees’ retirement accounts to cover operating expenses.

What Happens If an Employer Doesn’t Comply?

Virginia law authorizes enforcement against eligible employers that fail to register or facilitate the program.

The governing board may assess penalties of up to $200 per eligible employee each year for noncompliance.

Employers are encouraged to register promptly or certify their exemption if they already sponsor a qualifying retirement plan.

Can Employers Offer Their Own Retirement Plan Instead?

Yes.

RetirePath is intended primarily for businesses that do not have the time, resources, or budget to establish their own retirement program.

Employers remain free to offer a traditional 401(k), SIMPLE IRA, SEP IRA, or other qualified retirement plan at any time.

Once an employer offers a qualifying plan, it is no longer considered an eligible employer under the RetirePath law and is exempt from participating in the state program.

For many businesses, offering their own retirement plan can provide an important recruiting and employee-retention benefit while satisfying the state’s requirements.

What About Self-Employed Workers?

Self-employed Virginians may also participate voluntarily if they have Virginia taxable income that qualifies under the program.

The option allows freelancers, independent contractors, and sole proprietors to save for retirement through the same state-administered system.

A Growing Trend

Supporters say state-facilitated retirement savings programs help millions of workers who otherwise would have no convenient way to save for retirement through payroll deduction.

Critics argue that the programs create another regulatory requirement for employers.

Regardless of the debate, RetirePath is now firmly established in Virginia’s employment landscape. With the 2026 expansion lowering the participation threshold to five employees, thousands of additional small businesses across the Commonwealth will soon need to register, certify an exemption, or offer their own qualified retirement plan.

More information available at https://www.retirepathva.com/.