Eligible employers as of July 1 can now register for CalSavers, the state’s new retirement savings program for private sector workers.
Employers are eligible to participate in CalSavers — a Roth IRA (after tax) — if they have five or more employees and do not already offer an employer-sponsored retirement plan. Employers pay no fees for participating in CalSavers, and they are prohibited from contributing to employee accounts.
Employers of all sizes can voluntarily register in advance of the following registration deadlines:
- 5-50 employees: June 30, 2022
- 50-100 employees: June 30, 2021
- More than 100 employees: June 30, 2020
Eligible employees will be automatically enrolled in the program 30 days after the employer’s registration, but as the program is voluntary, employees can choose to opt out at any time.
The program is intended to minimize administrative burden and remove any liability for participating employers. Once registered in the program, employers will only take one additional step to complete their account setup and will be responsible for two ongoing actions:
- Provide CalSavers with personal information about each employee. CalSavers will then contact each employee to customize their account, make savings elections and explain how to opt out.
- Review each employee’s selected contribution rate and calculate the amount to deduct for each employee.
- Remit the employee’s contributions to the CalSavers program administrator within seven days of the salary deduction.
CalSavers accounts have a default savings rate of 5% of the employee’s gross pay, but employees can change their rate at any time. Also, employees who do not have access to a retirement savings plan through their employer may apply on their own, as opposed to applying through their employer.
The CalSavers program was established as part of Senate Bill 1234 as a “simple and effective way for employees to save.” Signed into law in 2016, SB 1234 requires all California employers with five or more employees to offer a retirement savings option or facilitate their employees’ access to CalSavers. Eligible employers may be fined under the Unemployment Code if they do not currently offer a retirement savings plan and fail to allow their eligible employees to participate in CalSavers.
Employers can register for the program online, by phone or mail. The program website is available in English, Spanish and simple Chinese.
Register for the CalSavers program or find more information, including FAQ.
This column was authored by Cindy Hartwell, dental benefits analyst at CDA Practice Support.