Have you heard of CalSavers? Mandated and administered by the state of California, CalSavers is a newly-launched auto-enroll ROTH IRA program for employees, aimed at California employers to help today’s workforce adequately prepare for a financially secure future. The state legislation requires eligible California employers to offer a retirement plan to their workers.
California employers are required by state law to facilitate CalSavers if they don’t offer an employer-sponsored retirement plan and have five or more employees. All eligible employers can register at any time prior to their registration deadline.
Eligibility and the deadline for implementation is determined by the size of the business. Size is based upon the average number of employees reported to the Employment Development Department (EDD) quarterly.
- Employers with more than 100 employees: June 30, 2020 is the deadline.
- Employers with more than 50 employees: June 30, 2021 is the deadline.
- Employers with 5 or more employees: June 30, 2022 is the deadline.
- Penalties are stiff starting at $250 per employee if noncompliance extends past 90 days.
There is no direct cost to the employer for the program. CalSavers doesn’t take funds out of business owners’ pockets because the plan is state-funded and state-run.
However, the employer can expect a time expense in learning administration and answering employee questions, necessary to implement the program. Currently, if employees do not ‘opt out’, employers will send payroll contributions to a CalSavers account. The process is similar to paying payroll taxes, Social Security, and Medicare.
The State has made a concerted effort to make facilitating CalSavers as easy as possible. Learn more at the CalSavers website…