What is CalSavers?
It’s a retirement savings program run by the state for private-sector employees whose employers do not offer a retirement program.
June 30, 2022, is the FINAL deadline
If you employ 5 or more employees and do not offer a qualified workplace retirement savings plan this affects you. By law, in California, you will be required to offer and facilitate access to CalSavers for your employees.
Once you provide CalSavers with a list of your employees, they will be auto-enrolled in a basic savings and investment election. An employee may choose to customize their contribution and investment preferences or opt-out altogether. It is important to note that the employee is not required to participate in the CalSavers program. As the employer, you are required to offer it. CalSavers is administered by a private-sector firm with a public board chaired by the State Treasurer.
Are you exempt?
If you have less than 5 employees this requirement does not apply to you. If you offer a retirement savings plan that meets requirements this does not apply to you.
As an employer of more than 5 employees, you must first register for CalSavers. Within the next 30 days, you will need to create a payroll list on the site, listing all employees. You will then calculate each employee’s deduction. It will be your responsibility to submit employee contributions to CalSavers. Make sure you update the payroll list if there are any changes.
If you employ independent contractors or have less than 5 employees, you can inform them that they have the option to enroll independently at calsavers.org
The benefit to you as the employer is that there is no fee to use CalSavers nor are you required to match or add to the employee’s contribution.
Your only task is to enroll in CalSavers and facilitate your employee’s registration and contributions. You are not to offer any investment advice and remain neutral about the program entirely. CalSavers will be providing your employee with any and all participation and investment information. They will also respond to any questions your employee may have.
What should I tell my employee?
Inform your employees that they may choose the amount they contribute as well as make investment choices. They may decide to opt out at any time and opt back in at any time. They will need to contact Calsavers directly via online, phone, or mail-in form. It is important to let your employee know that they have 30 days to customize or opt out before they are auto-enrolled in the standard elections.
Standard savings and investment elections:
5% of the employee’s gross income is earned with the facilitating employer.
Effective April 2021, instead of the first $1,000 of contributions being invested into the CalSavers Money Market Fund, initial contributions will be invested in the CalSavers Money Market Fund for 30 days, after which all subsequent contributions, along with any earnings in the Money Market Fund, will be re-allocated to a CalSavers Target Retirement Fund based on saver age and the year closest to when a person that age is expected to retire.
Detailed information about the contribution amounts, automatic increases and investment options can be found in the CalSavers Program Disclosure Booklet.
What happens if you miss the deadline?
If you employ 5 or more employees you will pay a $250 fine per eligible employee. If you miss the deadline and decide not to comply with this California law you will pay an additional $500 penalty per eligible employee.
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