Understanding CalSavers: A Mandate For Employers
California's CalSavers Retirement Savings Program is a state-mandated initiative designed to ensure that employees across the state have access to retirement savings options. All California employers with five or more employees must either offer a private retirement plan or facilitate access to CalSavers for their employees.
With CalSavers, small businesses can keep employees engaged and attract new talent without incurring the overhead and administrative costs of a retirement plan. This law also aims to address the growing retirement savings gap, especially among workers who do not have access to employer-sponsored retirement plans.
How CalSavers Works
CalSavers is an automatic enrollment program, meaning eligible employees are automatically enrolled unless they opt-out. Contributions are made through payroll deductions, and employees can choose to save a portion of their wages into a Roth IRA. The program is designed to be simple for both employers and employees, without employer fees or fiduciary responsibilities. Employers are required to register with CalSavers and upload their employee roster, after which employees are notified of their enrollment.
Key Features Of CalSavers
- Automatic enrollment: Employees are automatically enrolled but have the option to opt-out.
- Roth IRA contributions: Employees contribute post-tax dollars, with a default contribution rate of 5%, though they can adjust this rate.
- Portability: The account is tied to the individual, not the employer, meaning employees can take their savings with them if they change jobs.
Newly mandated businesses with five or more employees must register by the end of the calendar year in which they become subject to the mandate. Business size is based on the average number of employees reported to the Employment Development Department on the four DE9C filings from the previous year.
Beyond California: Similar Programs In Other States
California isn't alone in implementing a state-mandated retirement savings program. Several other states, including Oregon, Illinois, Colorado, and New York, have launched or are in the process of launching similar initiatives.
These programs share a common goal: to increase retirement savings among workers and reduce the burden on public assistance programs. For employers operating in multiple states, these varying requirements can become complex and challenging to manage. Each state’s program may have different deadlines, contribution rates, and administrative requirements, making compliance a potential headache for businesses.
How GMS Can Help
Navigating the intricacies of state-mandated retirement programs like CalSavers can be challenging, especially for businesses operating in multiple states. GMS is here to simplify the process. Our experts stay up-to-date with the latest regulatory changes across the country, ensuring that your business remains compliant no matter where you operate. We can help you implement and manage retirement savings programs that meet state requirements, so you can focus on growing your business while we handle the complexities of compliance.
Whether your business is in California, Colorado, New York, or any other state with similar mandates, GMS provides the support you need to stay ahead of these changes. Contact us today to learn more about how we can assist you in navigating retirement savings laws and ensuring your business remains compliant nationwide.