CalSavers Retirement Savings Program expands to include employers with 1-4 employees

Employers with 1-4 employees must register with CalSavers by December 2025
December 13, 2022
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Quick Summary:
Dentist employers who have five to 50 employees and do not sponsor a retirement plan are already required by state law to enable CalSavers participation for their workers. Legislation signed into law in August newly requires employers with one to four employees to either establish a payroll-deposit retirement savings program or register their workers in CalSavers no later than December 2025. CalSavers participation is optional for employees, but employers must facilitate initial enrollment and any ongoing payroll contributions for them.

Soon, all California employers with at least one full- or part-time employee and no employer-sponsored retirement plan will be required to facilitate CalSavers enrollment for their workers, including new hires within 30 days of hiring. 

Nearly all employers in California, including dental practice owners, who have five to 50 employees and do not sponsor a retirement plan are already required by state law to enable CalSavers participation for their workers. CalSavers is the state’s Roth IRA voluntary retirement savings program initiated in 2019 for workers who do not have access to a retirement plan at work.

The legislation signed into law in August by Gov. Gavin Newsom requires newly eligible employers with one to four employees to either establish a payroll-deposit retirement savings program or register their workers in CalSavers no later than Dec. 31, 2025, but employers can choose to start the enrollment process sooner as the program will begin accepting registrations Jan. 1, 2023.

Employee participation is optional, but employers must facilitate enrollment

CalSavers participation is optional for employees. They can choose not to participate in the program and to reduce or increase their payroll contributions, which are otherwise set at 3% of the worker’s annual salary or wages, but employers must facilitate initial enrollment and any ongoing payroll contributions for them.

The CalSavers FAQ for employers states, "All employees of a participating employer are eligible if 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."

Exempt employers — those who employ only the business owner or who already provide an employer-sponsored plan as defined in the bill — should visit the CalSavers website to exempt their business as early as possible but no later than December 2025.

The new law only expands the program to the smallest employers; it does not make any procedural or other changes. Employers do not pay any fees for participating in the program, and they are prohibited from contributing to employee accounts.

Employers with five or more workers who did not register with CalSavers by June 30, 2022, as CDA previously reported, are out of compliance and must register immediately or face enforcement action that includes financial penalties.

Registration timeline and FAQ

CDA members can log in to their account to view CDA’s CalSavers resource, which includes more background about the program, a step-by-step on the registration process plus frequently asked questions covering exemption, employers’ administrative duties and how they can and cannot assist employees with their accounts, what happens to an employee’s account if they leave employment and much more.

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