Many states have started to launch “state-run” retirement programs and California is no exception. The California program is called “CalSavers”. This is a state mandated program with penalties for non-compliance. All employers will eventually be required to participate if they do not have or do not adopt an exempted retirement program by the appropriate deadlines (discussed below).
What is Calsavers?
A state mandated automatic ROTH After tax IRA contribution program.
- ROTH contribution rate of (5%) of pay: age eighteen (18) and employed at least 30 days
- Automatically escalates by one percent (1%) per year to a maximum of eight percent (8%)
- The individual employee may elect a different amount, elect out of auto-escalation, or completely opt-out of the program.
When Employers Must Register
June 30, 2020
Businesses with 100+ employees
June 30, 2021
Businesses with 50+ employees
June 30, 2022
Businesses with 5+ employees
Let us help!
We will explain your options and determine the best course of action for your business
What happens if the employer doesn’t take action?
Employers need to be aware, there is no option not to act.
- Lack of action, whether registering for an exemption or failing to enroll employees, may result in
- Employers may face financial penalties for non-compliance.
- Fines range from $250 per eligible employee after 90 days from failure notification and can grow up to $500 per eligible employee after 180 days after a failure notification from California.
See how CalSavers compares to other private retirement programs like 401(k)’s and the advantages for both employees and business owners.