In 2012, California was the first state in the nation to pass legislation establishing an automatic enrollment retirement policy for private sector workers who lack access to work-based retirement plans. Authorized in final form in 2016, The California Secure Choice Retirement Savings Trust Act, or “CalSavers” program fully launched on July 1, 2019.
Operating at no taxpayer expense, CalSavers is professionally managed by private sector financial firms with oversight from a public board chaired by the State Treasurer.
The mission of the CalSavers program is to ensure all Californians have a path to financial security in retirement by providing a simple, portable, low-cost way for workers to choose to invest in their futures by requiring employers to participate in the program if they do not offer a retirement plan.
Employers with five or more workers who did not register with CalSavers by June 30, 2022, are out of compliance and must register immediately or face enforcement action that includes financial penalties.
Each spring, CalSavers assesses employer mandate status using employee data that employers submit to the Employment Development Department (EDD). Employers who reported an average of five or more employees on the four DE9C filings for the prior year are mandated and have a registration deadline of December 31.
Affected employers can satisfy this new requirement in one of the following ways:
California recently passed legislation (SB 1126) to expand the CalSavers mandate to employers with at least one employee. Starting on January 1, 2023, employers with 1-4 employees can begin to register with CalSavers. This segment of mandated employers has until December 31, 2025, to register their business.
Businesses that do not employ any individuals other than the owners are exempt from the expansion of the mandate. Additionally, the usual categories of exempt employers will remain exempt. That includes government entities, religious and tribal organizations, and employers that sponsor a retirement plan.
How do I register?
Employers who have not received an Access Code may request a code on the home page or in the Help Center. To request the code, you will need to have your Federal Employer Identification Number (EIN/TIN) number and zip code ready.
Does a SEP IRA or Simple IRA meet the requirement?
Yes. You may report your company as “exempt” if you sponsor a SEP IRA or Simple IRA.
If I register for CalSavers, who do I need to enroll?
All staff, including part-time, temporary, and full-time, must be enrolled within 30 days of hire.
How do employees qualify?
All employees of a participating employer are eligible as long as they are at least age eighteen and have the status of an employee under California law. There are no minimum requirements based on hours worked or tenure with their employer.
What are my administrative duties if I register for CalSavers?
You will be responsible for enrolling staff, maintaining staff roster, setting up automatic payroll deductions, and transmitting the funds to the plan each payroll.
How soon do employee contributions start?
Employee contributions to CalSaver do not begin until the first payroll following the 30-day notification period, so depending on the length of employment, short-term employees may not be able to make contributions.
What if I do not have five employees yet, but anticipate having more then five in the future?
Employers with one to four employees are required to register beginning January 1, 2023 through the December 31, 2025 deadline.
No. Employers are not allowed to make contributions on behalf of, or as a match to, employee contributions in this program. If an employer wishes to make contributions to a retirement plan on behalf of their employees, they should explore offering an employer-sponsored retirement plan.
How do I assist my employees with their accounts?
Employees are responsible for maintaining their account information once it is established. It will be tempting to want to help, but please direct them to the CalSavers employee portal or have them speak with a CalSavers representative. Employers must not:
What do I do if an employee leaves the practice?
Notify CalSavers of the employee changes through your CalSavers Dashboard.
What happens with my employees account if they leave my employment?
The plan is portable from employer to employer. A CalSavers account belongs to the employee and is not tied to an employer. Employees can keep the account throughout their career. If they change employers, the employee's money remains in the account, and they can contribute to it independent of an employer.
If an employee should work for a new employer that facilitates the CalSavers Program, then they will receive enrollment notification and payroll deductions into their CalSavers account will begin with their new employer unless the employee chooses to opt out.
What happens if I fail to comply?
Beginning in January of this year, CalSavers began to impose penalties for non-compliant employers.
The initial legislation that passed in 2016 established that a non-compliant employer would be penalized $250 per employee upon the first penalty notice and, if noncompliance persists another 90 days, an additional $500 per employee penalty would be imposed, for a total of $750 per employee for sustained non-compliance.
This could mean an employer of fifteen employees who fails to comply could face $11,000 in fines.
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