Eligible California employers with at least five employees may now register for the CalSavers Retirement Savings Program (CalSavers), and must do so by June 30, 2022.
CalSavers is a retirement savings program for private sector employees whose employers don’t offer a retirement program. More specifically, it gives employees the opportunity to defer their wages, through payroll deductions by the employer, to a state-managed individual retirement account (IRA) program.
California employers that are not exempt by way of providing a qualified retirement plan are required to register with CalSavers by certain deadlines, based on number of employees.
The registration deadline that applied to employers with more than 50 employees recently passed on June 30, 2021. According to CalSavers, each eligible employer that, without good cause, fails to allow its eligible employees to participate in CalSavers, on or before 90 days after service of notice of its failure to comply, shall pay a penalty of $250 per eligible employee if noncompliance extends 90 days or more after the notice.
Employers can register any time before their deadline.
Private sector employers with at least five California-based employees, at least one of whom is at least 18 years old, and don’t sponsor a “qualified retirement” plan, are required to register for CalSavers by June 30, 2022.
Qualified retirement plans include:
- 403(a) Qualified Annuity Plan or 403(b) Tax-Sheltered Annuity Plan.
- 408(k) Simplified Employee Pension (SEP) plans.
- 408(p) Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) IRA Plan.
- 401(a) Qualified Plan (including profit-sharing plans and defined benefit plans).
- 401(k) plans (including multiple employer plans or pooled employer plans).
- Payroll deduction IRAs with automatic enrollment.
Exempt employers may, but are not required to, inform the CalSavers Administrator of their exemption.
Within 30 days of registration, employers must provide CalSavers with certain contact and identifying information for eligible employees, and must also set up a “payroll deposit retirement savings arrangement,” through which employers can remit employees’ contributions to the CalSavers Trust.
After the employer registers, the CalSavers Administrator delivers to all eligible employees an information packet describing the program and giving employees 30 days to opt out.