Virginia has quietly removed a key exemption from the RetirePath VA program, and churches and other religious organizations across the Commonwealth need to know about it now.
In RetirePath VA: The Biggest Retirement Problem You've Never Heard Of, we introduced RetirePath VA, Virginia's state-facilitated retirement savings program designed to increase retirement readiness for workers who don't have access to an employer-sponsored plan. In that article, we noted that while automatic enrollment and payroll deductions sound helpful on paper, RetirePath VA comes with real drawbacks: IRA contribution limit concerns, administrative burden, and a lack of the flexibility and advantages that come with a traditional employer-sponsored retirement plan.
This article covers a new development that builds directly on those concerns, and it's one that religious organizations in particular need to pay close attention to.
When RetirePath VA launched, its website specifically listed three categories of organizations that were exempt from mandatory enrollment:
Notably, RetirePath never defined what actually qualified as a "religious organization." A church clearly fit the bill, but what about a daycare housed in and sponsored by a church? That kind of gray area prompted Brown Edwards to reach out to RetirePath VA directly for clarification.
The guidance we received back was inconsistent. When we pushed further, senior RetirePath personnel told us the conflicting information "will be corrected," without offering any further detail on what that correction would look like. Shortly after that conversation, every reference to a religious organization exemption disappeared from RetirePath's website and other materials.
The exemption wasn't clarified. It was removed.
If your church or religious organization has five or more employees, you are now expected to participate in RetirePath VA just like any other covered business. In practical terms, that means:
That last point is worth repeating because of how burdensome it is: business owners and nonprofit leaders are now expected to log into RetirePath before running every single payroll, just in case an employee has made a change. For organizations running weekly or biweekly payroll, that's a recurring administrative task with no advance notice built in.
If the idea of logging into a state portal before every payroll doesn't sit well with you, you have options. Setting up a qualified retirement plan gives your organization far more control and gives your employees far more flexibility than RetirePath VA does. A few paths worth considering:
At Brown Edwards, we take a white-glove approach to helping small and mid-sized organizations navigate exactly this kind of decision, easing the administrative burden as much as possible. If you'd like us to reach out and help determine whether a qualified retirement plan is the right fit for your organization, fill out the interest survey below.