CalSavers: Everything You Need To Know
All employers of five or more employees in the state of California are required by law to offer an employer-sponsored retirement plan 401(K) or register for CalSavers Retirement Savings Program. The deadline to register for CalSavers is fast approaching. Businesses of more than 100 employees have until September 30, 2020 to register or file their exemption if they already sponsor a 401(k) plan. Businesses who fail to comply with the CalSavers mandate could be subject to a fine of up to $750 per eligible employee.
What is CalSaver & How Does it Work?
FAQ
I am an employer in CA, do I have to offer the CalSavers plan?
Every employer in California is required by law to offer a retirement plan to their employees. If you already offer a 401(k) or other qualified retirement plan (403(b), SEP IRA or Simple IRA), your business is exempt from the CalSavers mandate. If you aren’t required to register to CalSavers, you will still have to file an exemption by Sep 30, 2020 (for businesses of 100+ employees).
When is the deadline to register or file my exemption?
The deadline to register for a retirement plan is based on the number of W-2 employees your business hires.
100+ Employees: September 30, 2020
50+ Employees: June 30, 2021
5+ Employees: June 30, 2022
Are there penalties if my business fails to comply with the mandate?
Yes, your business could be subject to penalties of up to $750 per eligible employee. It is important that you file before the deadline to avoid any penalties.
$250 fee for every eligible employee 90 days after notice of non-compliance
$500 fee for every eligible employee 180 days after notice of non-compliance
How much does CalSavers cost?
CalSavers does not incur any direct cost to the employer. The fee is based on the employee’s assets and is collected annually. It varies from 0.825 to 0.95% depending on the investment choice.
What are the on-going tasks associated with CalSavers?
CalSavers comes with lots of on-going administrative tasks and responsibilities.
You will be required to submit an employee census annually, track the eligibility status of all the employees, provide enrollment packets to each new employee 30 days from the date of hire, keep track of opt-ins/outs, set a 5% payroll deduction if employee doesn’t opt out within 30 days of notification, provide help and support to enrolled employees, manually auto-escalate employees each year, annually auto-enroll employees who have opted out, track auto-escalation, provide a 60-day notice for Jan 1st auto-escalation process, hold open enrollment every two years, track and auto-enroll any employee who has not been participating for at least 1 year.
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