The CalSavers Retirement Savings Program was created by legislation to help ensure that all employed by a California employer have access to a retirement savings plan through payroll deduction. Today, California state law requires California employers to participate in CalSavers if they do not sponsor a retirement plan and have five or more employees. Here’s what California employers should know:
- Not all employers are required to participate. Only employers without a retirement savings plan and have five or more employees must participate in CalSavers.
- If required to participate, the employers must register their company and submit information on each employee.
- The employer facilitates the program by adding and maintaining their employee roster and submitting contributions from employee payroll deductions.
- There are no employer fees, and employers do not make contributions to employee accounts.
- Employers have ongoing support from the program with a detailed description of their role and templates to use.
- The CalSavers retirement plan vehicle is a Roth IRA; employees that exceed the income threshold will have an IRA instead of the Roth IRA.
- All employees are automatically opted-in and have a 30-day waiting period until they can opt-out; no action is automatic enrollment.
If you’re a California employer, be aware of these mandated deadlines:
- If your deadline was September 30th, 2020, June 30th, 2021, or June 30th, 2022, compliance enforcement is underway, and if you haven’t already done so, register your company today.
- If your deadline is December 31st, 2022, registration materials have been sent to your company and need to be completed.
If you’re unsure of your deadline, contact Aspen HR today since your company may receive a financial penalty for not complying with this California law.
Employers with five or more employees must develop a retirement savings program for their company if they don’t want to participate in the state-sponsored plan. Participating in a multiple employer 401(k) plan through Aspen HR can help ensure you meet the requirements while keeping it affordable for your company.
As an employer, offering an attractive employee retirement savings plan as part of your benefits package can help attract and retain the talent essential to your success. A well-designed 401(k) shows candidates and employees that you are concerned about their financial wellness in retirement when you offer an employer match that meets or exceeds your industry’s benchmark.
At Aspen HR, we design and implement cost-effective defined contribution and defined benefit plans tailored for you. Through our PEO solution, we offer a multiple-employer plan which shields you from fiduciary liability and leverages the scale of thousands of employees to offer you a cost-effective 401(k) plan. We also provide tax-advantaged retirement programs for executives and highly-compensated employees.