What Employers Need to Know about California’s New CalSavers Program
What Employers Need to Know about California’s New CalSavers Program
In 2016, the California legislature passed Senate Bill No. 1234 (SB-1234) which laid the foundation for the new state-sponsored CalSavers retirement savings program for California workers. The CalSavers Retirement Savings Board adopted final regulations for the new CalSavers program in 2018, and employer registration for the program is now open.
Under the new law, all California employers with at least five California employees are required to offer their California employees a retirement savings plan, either from the private market or by registering to participate in the new CalSavers program. All eligible employers must either register for CalSavers or opt-out by the following deadlines:
- September 30, 2020 – for employers with over 100 employees
- June 30, 2021 – for employers with over 50 employees
- June 30, 2022 – for employers with 5 or more employees
What is CalSavers?
The CalSavers program is a new California retirement savings program for private sector workers whose employers do not already offer a retirement plan. CalSavers is an automatic enrollment individual retirement account (IRA) with no employer fees or fiduciary duties. CalSavers is not sponsored by the employer, and therefore the employer is not responsible for the program or liable as a program sponsor. The program is professionally managed by private sector financial firms and overseen by a public board chaired by the California State Treasurer.
What Action is Required of Employers?
If you are a California employer of five or more California-based employees, and you do not offer a retirement savings plan for your California employees, you must either:
(1) register your business for CalSavers, or
(2) obtain a qualified retirement plan for your employees through the private market
by the applicable state-mandated deadline.
If you choose to obtain a private retirement savings plan for your employees, or if you already offer one to your employees, then you are exempt from participation in CalSavers. If you believe you are exempt, you must opt-out of participation in the CalSavers program by the applicable deadline above.
How to Register for CalSavers
Registration for CalSavers is free to employers and is currently open. Eligible employers must register by the state-mandated deadline. Employers can register online through the CalSavers website, by calling the Client Services team, or by mail. In order to register, employers must obtain an access code from the CalSavers website. Employers can begin the registration process online at https://employer.calsavers.com/
How to Opt-Out of CalSavers
Employers who are eligible to opt-out of the CalSavers program must do so by the state-mandated deadline. Employers can opt-out by certifying an exemption online through the CalSavers website, by calling the Client Services team, or by mail. Employers can begin the exemption process online at https://employer.calsavers.com/
More information on the CalSavers program and registration or exemption can be found at the CalSavers website, https://www.calsavers.com/.
