Important News for California Employers
September 29, 2021. Manadatory retirement plans deadline for employers with 5 or more employees is quickly approaching.
The California mandatory employee retirements savings accounts for employers with 100+ employees (deadline for compliance 9.30.20) and 50+ employees (deadline for compliance 6.30.21) effective dates have both passed, leaving the final employer group of 5+ employees reaching their deadline for complying June 30, 2022.
What does this mean? Employers with 5 to 49 (full or part-time) employees will join the larger groups, thus being required to provide a company qualified retirement plan (401(a), 401(k), 403(a), 403(b), 408(k), 408(p), or 457(b).), OR if no plan, then enroll in the state-sponsored option CalSavers (no employer fees, fiduciary responsibility; only minimal ongoing responsibilities).
Thus, if you are 5 or more employees, you are required to offer a qualifying plan and if you do not, you must be enrolled in CalSavers. Non-profit employers must also comply with CalSavers, but some are exempt (such as government entities).
CalSavers is currently no cost to the employer, but does require submitting employee information (hire, term, etc.).
Under CalSavers:
What are the consequences of non-compliance? Penalties of $250 per employee if the employer does not comply within 90 days of receiving a notice requiring registration and $500 per employee if the employer does not comply within 180 days of receiving the notice may be imposed.
In closing, employers with 5-49 employees still have some time to get things in place for the 6.30.22 deadline. If you are an employer with 50 or more employees AND you do not offer a company-sponsored/qualified retirements plan IT IS CRITICAL to get the retirement plan in place ASAP.
Here is a link to the CalSavers site. https://employer.calsavers.com/home/employers/program-details.html?language=en#
What does this mean? Employers with 5 to 49 (full or part-time) employees will join the larger groups, thus being required to provide a company qualified retirement plan (401(a), 401(k), 403(a), 403(b), 408(k), 408(p), or 457(b).), OR if no plan, then enroll in the state-sponsored option CalSavers (no employer fees, fiduciary responsibility; only minimal ongoing responsibilities).
Thus, if you are 5 or more employees, you are required to offer a qualifying plan and if you do not, you must be enrolled in CalSavers. Non-profit employers must also comply with CalSavers, but some are exempt (such as government entities).
CalSavers is currently no cost to the employer, but does require submitting employee information (hire, term, etc.).
- Under the CalSavers program, employee deductions are automatically set to 5% of an employee’s gross pay (similar to other state retirement plans).
- Employees can adjust their contributions setting to a higher or lower percentage of their pay.
- However, employees can opt out of the state retirement savings program (though they have to re-opt out every two years).
Under CalSavers:
- Employers will have no liability for an employee’s decision to participate in, or opt-out of, CalSavers;
- Employers will have no liability for the investment decisions of participating employees;
- Employers will not be a fiduciary of CalSavers; and
- Employers will not bear responsibility for the administration, investment performance, or the payment of benefits earned by participating employees.
What are the consequences of non-compliance? Penalties of $250 per employee if the employer does not comply within 90 days of receiving a notice requiring registration and $500 per employee if the employer does not comply within 180 days of receiving the notice may be imposed.
In closing, employers with 5-49 employees still have some time to get things in place for the 6.30.22 deadline. If you are an employer with 50 or more employees AND you do not offer a company-sponsored/qualified retirements plan IT IS CRITICAL to get the retirement plan in place ASAP.
Here is a link to the CalSavers site. https://employer.calsavers.com/home/employers/program-details.html?language=en#