By Teresa Vomund, FSCP, Vomund Insurance and Financial Services, Inc.
Governor Spanberger signed House Bill 176/ Senate Bill 149 which expands the requirements for Small Business Owners to offer retirement benefits to their employees. This change affects businesses who have operated for more than two years, have five or more employees (up from 25 and includes part-time workers), and do not currently offer a retirement plan to their employees. The changes will go into effect on July 1, 2026.
Eligible businesses will receive notices outlining their compliance options and deadlines, businesses will receive a notice outlining the requirement to either register for the state sponsored plan, RetirePath Virginia, or offer their own qualified retirement plan. While RetirePath Virginia may seem simpler than offering your own retirement plan, there are some important things you should know before you decide it’s the way to go for your business.
1. RetirePath Virginia has no administrative costs to the employer but does not allow for employer matches to employee contributions.
2. RetirePath Virginia is an IRA-style program, which means it is subject to contribution limits ($7,500 for those under age 50 for 2026) as well as income limitations for Roth contributions (for 2026, <$153k for single individuals and <$242k for married filing jointly). Contributions to RetirePath Virginia also count towards the IRA contribution limits, so if you are currently contributing to an IRA, but open a RetirePath Virginia, the total contributions in both accounts cannot be more than $7,500 for those under age 50 in 2026.
3. RetirePath Virginia has limited investment options.
The consequence of the contribution limits is that most business owners will not be able to properly save for their retirement, even if this option is sufficient for their employees.
Fortunately, there are other options available to help you save enough for retirement and provide the required benefits to your employees.
SIMPLE IRA
For most small businesses, a SIMPLE IRA is the way to go. It’s designed for businesses with fewer than 100 employees, is easy to set up and administer, has no administrative costs, no filing requirement for the employer, has higher contribution limitations ($17,000 in 2026), and no income limitations, and has more investment options. It does require the employer to make either a 2% non-elective contribution for each employee OR a 3% match
to employee contributions. However, providing a match to employee contributions as a benefit helps with employee retention and shows employees that you care about their ability to retire.
401(k)
For larger businesses, or employers who need higher contribution limits, a 401(k) plan is available. While more expensive, and more complicated to administer, this plan allows for higher contribution limits ($24,500 in 2026), and more flexibility on the employer match.
If these changes affect you and your business, we’re here to help! Feel free to reach out to Chris and Teresa Vomund and we’ll be happy to chat about your options!
Chris Vomund ChFC® CLU® RICP®
State Farm Insurance – Agent [email protected]
540-993-4999
Teresa Vomund FSCP®
Financial Services Representative [email protected]
540-993-4999