Virginia's New Retirement Plan Mandate: What Employers Need to Know in 2026

According to RetirePath Virginia, more than one million Virginians do not have access to a workplace retirement savings plan. To combat this, the Commonwealth has expanded its RetirePath program. House Bill 176 and Senate Bill 149 were signed into law, expanding the Virginia RetirePath program. Starting July 1, 2026, many more Virginia businesses will be required to either offer a qualified retirement plan or participate in RetirePath Virginia.

With the new bill, the employee threshold drops from 25 to five employees. This expanded mandate affects thousands of small businesses throughout the state, leaving many employers wondering if they are affected and what options are available.  

In this article, we will break down the new requirements, identify which businesses must comply, and explore the retirement plan options available for Virginia employers.  

What is RetirePath Virginia?

RetirePath Virginia is a state-facilitated retirement savings program designed to help employees save for retirement when their employer does not sponsor a qualified retirement plan.  

Employees contribute to their retirement through payroll deductions to a retirement account. For employers, they simply facilitate the payroll deduction process. Employers are not required to make matching contributions and are not responsible for managing employee investments.  

What Businesses Are Required to Comply?

Starting July 1, your business may be required to comply if it:

-Has been operating for at least two years  
-Has five or more employees, including part-time employees
-Does not currently offer a qualified retirement plan

Notably, part-time employees now count toward the five-employee threshold, which may bring many smaller businesses under the new requirements for the first time.

This new legislation lowers the employee threshold, bringing thousands of additional Virginia businesses under the mandate and many Virginians more opportunities to invest in their future.

Eligible employers must either register with RetirePath Virginia or establish their own qualified retirement plan.

To stay in compliance with the new requirements, employers have several options to help support their employees’ retirement savings goals.  

What Should Your Business Do?

Offer your own retirement plan. If RetirePath Virginia is not a good fit for your own business, your business can offer its own retirement plan. Qualified plans such as SIMPLE IRAs, SEP IRAs, and 401(k)s often offer higher contribution limits and greater flexibility than RetirePath Virginia. This can also present potential tax advantages and can be used for stronger employee recruitment and retention.

Enroll in RetirePath Virginia. Through enrolling with RetirePath, the program provides a simple solution for eligible employers. The program does not require employer contributions, has no employer fees, and has minimal administrative steps in managing this program.  

RetirePath Virginia can also auto-enroll employees once the organization enrolls. Employees are automatically enrolled but may opt out at any time.

RetirePath handles account administration and investment management, reducing  the employer’s administrative responsibilities. However, utilizing RetirePath can leave little room for investment customizations. Using the state-facilitated program leads to tighter constraints on what you can offer your employees such as lower contribution limits, fewer investment options, and does not allow employer matching contributions.  

Bottom Line

Notices from the state of Virginia began being sent to businesses on July 1. Employers who receive notices from the state should act quickly to determine the best compliance solution for their business. Failure to comply with this new law can lead to the following non-compliance penalties:

July 2026 – June 2027: $20 per employee per year

July 2027 – June 2028: $50 per employee per year

July 2028 and onward: $100 per employee per year

Penalties are assessed by employee, making costs add up quickly depending on the size of your team.

We Are Here to Help!

At Kembel Tax Services, we help Virginia businesses make informed financial decisions. Our team can determine whether your business is affected by the new RetirePath requirements and help evaluate whether a private retirement plan or RetirePath is the best option for you.

If you are unsure about the next steps for your organization, contact our offices in Roanoke or Salem. To learn more about our tax preparation, small business, retirement, and financial services, visit, https://www.kembeltax.com/ .  

Taking action now can help your organization avoid penalties while providing valuable retirement saving opportunities for your employees.

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