CalSavers and Employer Sponsored Retirement Plans
CalSavers: Also known as California Secure Choice, this is a state-run, auto-enroll Roth IRA launched in 2019 as a response to California legislation for all types of employers to offer some type of retirement plan to employees.
Who: California business owners with 5 or more employees
What: Business owners will be required to set up a retirement plan or enroll employees into CalSavers.
When: Employers with 100 or more employees will be required by June 30, 2020; 50 employees by June 30, 2021; and 5 or more employees by June 2022.
Why: This is due to the rising costs for California’s aging population, including medical and other state programs.
How: Employers will be identified using EDD and FUTA payroll records. Employers with a private retirement plan are exempt and only need to certify that they offer a retirement plan to their employees.
Penalties: The authorizing legislation passed in 2016 establishes that non-compliant employers will be penalized $250 per employee upon the first penalty notice and, if non-compliance persists another 90 days, an additional $500 per employee, for a total of $750 per employee for sustained non-compliance.
First, it's an either/or question. As the employer, if you participate in CalSavers, you do not need to establish a separate retirement plan for your business. If your business has an existing retirement plan, then you do not need to join CalSavers; however, you will need to certify with the state through the California Secure Choice website that you have an existing plan and are offering it to your employees.
Employers may choose to enroll in CalSavers on the internet or with phone support. The CalSavers employee education is the fiduciary responsibility of the employer, although many will likely direct their employees to the "do-it-yourself" website. There, the employee can choose to opt out or review and select investment options. Employees will access their accounts via the internet. There are some very nice people at