By Kate Kriner

This article was edited on 6/17/2020 to update the June 2020 deadline to September 30, 2020

As your efforts to retain good employees in the current labor market become more challenging, you might have considered offering a Retirement Saving Plan to your employees and for one reason or another decided against it.  Well, the State of California beat you to the punch and will require such plans for employers beginning July 1, 2019.

In 2016, CA enacted the CalSavers Retirement Savings Program with the passing of SB 1234, which you may have read about in our 2017 Employment Law Overview and Legal Update.  This bill gave the Board (California Secure Choice Retirement Savings Investment Board) three years to design and implement a program for those employers that do not currently offer a retirement plan and have 5 or more employees.  If you do not offer any sort of retirement plan (i.e., 401(k), SIMPLE IRA, etc.), now’s the time to read on….

As of July 1, 2019, the State of California will open the CalSavers program for all participants with an enrollment deadline varying depending on your size.  Check out the details at https://www.calsavers.com/

When is the deadline for action?  

Well, it depends.  There is a rolling deadline depending on your number of employees.  Those employers with 100 or more employees will need to be registered in the program or offer another plan by June 2020 (6/17/2020 edit: This deadline has been extended to September 30, 2020); 50 or more by June 2021; and then 5 or more by June 2022.  If you do not choose to enroll in CalSavers, you will still need to have a retirement savings plan in place.

What is the employer’s responsibility?

  • Register the business and designate a payroll company.
  • Upload employee information into the CalSavers database.
  • Facilitate automatic payroll contributions; transmit payroll contributions and distribute the state developed materials.

What isn’t the employer’s responsibility?

  • Employers are not expected to explain or advocate for the program—merely provide the information. If your employees have questions you are encouraged to direct them to call CalSavers.   CalSavers will communicate with your employees about enrollment and changes to their account.
  • Employee participation—employees can opt out of the plan.
  • Contributions—as the program is an IRA, employer contributions are not allowed.

As we often see in CA there will be fines and penalties assessed if an employer is not in compliance.    We recommend employers begin researching all their options to have a retirement plan (either CalSavers or their own retirement savings plan) in place by the deadline.