Dear Clients:
Do you have 5 or more employees? If so, you may have recently received an email or a notice in the mail stating that you must register for California's mandatory retirement plan program - CalSavers.
Under California law, all employers must offer their employees some form of a retirement plan or utilize automatic enrollment into the State's payroll deduction IRA known as "CalSavers" if no other approved retirement vehicle is provided to the employees.
If you currently offer a retirement plan to your employees, you must still certify an exemption for your business through the CalSavers website. See https://www.calsavers.com/
If you do not offer a plan for your employees, you must enroll each of your employees in a CalSavers account unless the employees opt out. CalSavers accounts are Roth IRA accounts subject to contribution and participant income limits applicable to all other Roth IRA accounts.
Once registered, an employer must provide CalSavers enrollment notification packets to employees who are age 18 or older during an annual enrollment period. The law does not provide any exceptions for short-term or part-time employees. So, any employee age 18 or older must begin funding the plan or opt-out by their first paycheck issued 30 days after the employee notification.
The employer must collect, remit, and report contributions for each payroll period for employees who do not opt out. An employee’s initial default contribution rate is 5% the first year the employee is enrolled, increasing by 1% each year, up to 8%. Employees choose how their money is invested and have the option to:
- Opt-out at any time; or
- Pay lower or higher contribution rates.
Employers who fail to comply with the program requirements will be subject to a $250 per employee penalty after receiving a notice of noncompliance. The penalty will be increased to $500 per employee if the employer does not comply within 180 days.
Employers do not have any liability for an employee’s decisions to participate in the program, for their investment decisions, or the performance of those investments.
To register in the CalSavers program or to certify an exemption for your business goes to:
https://employer.calsavers.com/californiaertpl/enroll/createEmp/viewCollectEmpPreRegDetails.cs
Please contact us should you have any questions or we may help to register your business.
