Gov. Jerry Brown signed into law Senate Bill 1234, also known as CalSavers, on 9/29/2016. CalSavers mandates all California employers offer either a retirement plan for their employees OR join the CalSavers program. CalSavers defines employees as anyone over 18, paid by W-2, and worked for 30 days.
June 30, 2020 Businesses with 100+ employees
June 30, 2021 Businesses with 50+ employees
June 30,2022 Business with 5+ employees
- Roth IRAs only.
- Eligible employees auto enroll at 5% of pay contributed to account. There is an option to “opt-out.”
o Auto escalation of 1% annually.
- Eligible employees are responsible to know if they are eligible for Roth contributions, as income limit still apply.
- No employer contributions.
- Eligible employees pay all fees.
- Very limited investment choices.
- Required to submit and keep updated employee census.
- Track all eligible employees.
- Penalties for non-compliance.
Establish 401K Plan
- Tax deferral, better for higher wage earners.
- Can design strategically for max contribution.
- Roth option with no income limits.
- Can provide employer match AND profit sharing.
Pooled Employer Plans
- Significantly lower costs.
- Eliminate individual plan 5500 filing.
- Eliminate annual audit.
- Turnkey solution for employers to meet CalSavers requirements AND establish low cost, easy to use retirement plan.
Questions about CalSavers? We’re here to help.