Beginning as early as June 30, 2020, California employers with 5 or more California-based employees not already offering an employer-sponsored retirement plan will have to begin offering a retirement savings program, either through the private market or by facilitating access to CalSavers, the state-run program.
The CalSavers program, established under SB 1234 in 2012, is intended to assist the estimated 7.5 million California employees without employer retirement savings plans. A pilot program was undertaken in late 2018, and beginning July 1, 2019, eligible employers of all sizes can register through the CalSavers website. Mandatory compliance is phased-in over time and will depend on the size of the employer.
Specifically, employers with more than 100 employees not already offering a retirement plan will have until June 30, 2020 to register. Employers with more than 50 employees will be required to register by June 30, 2021, and those with 5 or more employees have until June 30, 2022 to register. However, the state encourages eligible employers of any size to register at any time, regardless of their registration deadline, at https://www.calsavers.com/. Self-employed and “gig” workers can enroll beginning September 1, 2019.
The program website states that employer registration is “quick and easy” and “employers play a limited role as facilitator.” California employers are not required to make contributions to the retirement account, which is funded by a default rate of 5% per paycheck. Employees can choose a different savings rate or opt out at any time. Accounts remain with employees even if they change jobs.
The author would like to gratefully acknowledge the assistance of Joanne Warriner.
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