According to the Labor Center at UC Berkeley, sixty-one percent of private sector employees in California, do not have access to an employer-sponsored retirement plan. CalSavers is a program designed to help bridge that gap by offering a state-run Roth IRA program. A Roth IRA is an individual retirement account similar to a traditional IRA with the most notable difference being that Roth IRA’s are funded with after-tax dollars; the contributions are not tax-deductible.
The program stipulates that eligible California employers must offer a retirement savings plan of their own OR offer CalSavers to their employees. If they fail to offer anything, a fine will be issued by the CalSavers Retirement Savings Investment Board.
How does it work?
Enrolling in Calsavers is not mandatory; It is mandatory that an employer that falls within the stated guidelines, offer a qualified retirement savings plan to its employees.
If a qualified employer fails to comply the fines will be issued as followed:
There are no fees for employer’s participating in CalSavers and they will not be considered as fiduciaries. Employers will simply submit participating employee contributions to CalSavers via a payroll deduction.
What does it include?
What employers are eligible?
The requirement to offer CalSavers Or another qualifying retirement savings plan is being phased in gradually based on headcount. However, all employers can enroll into CalSavers at any time.
The deadlines to meet the requirements are:
Get expert HR and payroll assistance with your retirement plans and ensure accurate processing and compliance. We can guide you through the process of obtaining the information necessary to comply with CalSavers guidelines.
Contact Payroll Systems and let one of our payroll specialists walk you through our easy-to-scale solutions for your business.
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This article provides general information and shouldn’t be construed as legal or HR advice. Since employment laws may change over time and can vary by location and industry, please consult a lawyer or HR expert for advice specific to your business. You can also contact Payroll Systems to inquire about our HR support services.