California Employers Mandated Retirement Program

California Employers Mandated Retirement Program

September 29, 2023

 During September 2023, CalSavers began issuing notices to employers who are not in compliance with the California business retirement program. If you own a company in California with at least one employee, there are some things you need to know.

What is CalSavers Retirement Savings Program?

The CalSavers program was created by state law as a retirement saving program to be available to employees in the private sector, whose employers do not provide a retirement plan option available. Retirement savings are set up as automatic payroll contributions implemented by the employer.

Who’s Required to Apply?

If you are a California employer, and the following apply to you, you are required to enroll and setup the CalSavers program for your employees:

  • You have one or more employees who are 18+ years of age
  • You do not offer a retirement plan through the company

You are not required to setup CalSavers if any of the following apply to your company:

  • You sponsor a tax-qualified retirement plan, or
  • You do not employ any employees other than the owner(s), or
  • The business was closed in 2022, or
  • The business is a religious organization, tribal organization, or government organization, or
  • merged with another company

Is there a Deadline to Apply?

Yes, however deadlines vary based on the number of employees you have. Prior to new legislation passed in 2022, CalSavers was only mandatory for CA business with 5+ employees. As of January 1, 2023, it now applies to businesses with an average of 1-4 employees as well. The current deadline for registration with employers who have 1-4 W-2 employees is December 31, 2025. If an employer fails to register by the deadline that pertains to them, penalty fees will be apply due to noncompliance. Please visit CalSavers website for current deadlines and how employee eligibility is determined.

How Grigg Financial Group Can Help

We routinely open employer-level retirement plans for clients. These plans include 401k, SIMPLE IRA, SEP IRA, DB, Cash Value, and DB-401k combo plans. We also know how to implement Mega Roth 401k Plans to supercharge your retirement and self-funding techniques. These plans are more effective than the CALSAVERs plans.

Have questions about GFG's business consulting services? Get in touch with Brian Grigg, CPA / PFS today and schedule your free consultation.