The VT Saves Program Starts July 2025 – What You Need to Know!

A state-mandated retirement savings program is coming to Vermont, and it’s not optional unless employees actively opt out. If you’re an employer or an employee, this will affect your paycheck and business operations starting in July 2025.

While the program aims to help workers save for retirement, forced participation, limited investment choices, and potential hidden costs have raised concerns about its fairness and effectiveness.

What is VT Saves?

VT Saves is a state-run retirement program requiring Vermont businesses with five or more employees—who do not offer a retirement plan—to automatically enroll workers in a payroll-deducted Roth IRA.

📌 How It Works:
✔ Employees will have 5% of their paycheck deducted automatically unless they take action to opt out.
✔ Annual automatic increases (1% per year, up to 8%) unless the employee manually stops them.
✔ Employers do not contribute financially but must facilitate deductions and enroll employees.

When Does VT Saves Start?

The rollout happens in three phases based on employer size:

July 1, 2025 → Employers with 25+ employees must enroll covered employees.
January 1, 2026 → Employers with 15–24 employees must enroll covered employees.
July 1, 2026 → Employers with 5–14 employees must enroll covered employees.

🔹 Employees 18 and older are automatically enrolled unless they opt out.
🔹 Employers must track opt-outs and handle payroll deductions.
🔹 Penalties for non-compliance start at $10 per employee and rise to $75 per employee after 2026.

🚨 The Problem With Automatic Enrollment

While helping people save for retirement is a good idea, forced enrollment creates problems for both employees and businesses.

1. Employees May Not Realize They’re Losing Money

At Vermont’s 2025 minimum wage of $14.01/hour, a full-time worker will automatically lose at least $1,457 per year unless they actively opt out.

For many struggling to afford rent, food, and gas, this paycheck reduction may be an unwelcome surprise—especially for younger workers or those who are unaware of the deductions.

2. Can You Get Your Money Back? Maybe, But at a Cost.

If an employee realizes after a few weeks or months that they’ve been auto-enrolled and wants their money back, they can withdraw their contributions tax-free (since it’s a Roth IRA).

But any earnings on that money may be subject to a 10% early withdrawal penalty and taxes if they withdraw before age 59½.

💡 Example:
A worker notices two months in and wants their money back. They get their contributions refunded, but if their account earned even $50 in interest, they’d owe a 10% penalty plus income tax on that $50.

Plus, if VT Saves charges the full $30 annual administrative fee before they withdraw, they might lose money even though they never intended to participate.

3. The State Picks Your Investments—And They Might Not Be the Best

VT Saves restricts investment choices, meaning workers cannot freely choose their IRA provider or pick higher-risk, higher-return options that younger investors may prefer.

💡 What’s the difference? A low-risk investment at 3% over 50 years might grow to $223,000, while a higher-risk, higher-reward IRA (7% return) could reach over $776,000—more than three times as much.

Because the state selects the financial provider that manages investments, and while the law doesn’t explicitly state they will be low-yield, state-run retirement programs typically prioritize safer, lower-risk investments over aggressive growth strategies to minimize liability—meaning workers could miss out on greater long-term wealth potential.

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🔧 Should VT Saves Be “Opt-In” Instead of “Opt-Out”?

Right now, workers are automatically enrolled unless they take action to opt out. A better solution? Make VT Saves opt-in instead!

✔ This would protect employee paychecks and ensure that only those who want to participate do so.
✔ Small businesses wouldn’t have to track opt-outs and deal with unnecessary administrative work.
✔ Workers would have time to consider private IRA options that might serve them better.

This isn’t about opposing retirement savings—it’s about financial freedom. Vermonters should have the right to choose where their money goes.

📢 What Can You Do?

If you believe workers should have a choice in their retirement savings, contact your state legislators and demand an opt-in amendment.

🔗 Find your legislators here: https://legislature.vermont.gov/people

💬 What do you think about VT Saves? Should the government be able to force workers into a state-managed retirement plan? Let us know in the comments!

🔎 Final Thoughts

VT Saves may have good intentions, but forced enrollment creates unnecessary complications for workers and businesses. Employees should not be forced to lose part of their paycheck unless they actively choose to save.

Would you sign up for VT Saves voluntarily? Or should Vermont workers be given a real choice? 🚨 Tell your legislators now! 🚨

Dave Soulia | FYIVT

#fyivt #Vermont #RetirementSavings #VTSaves

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