New Retirement Savings Program Now REQUIRED
In 2016, Governor Brown signed Senate Bill 1234 into law for employers to offer a workplace retirement savings program. The state’s Secure Choice Retirement Savings Investment Board began working on a solution in 2016 known as CalSavers for private sector workers who do not receive a retirement plan through their employers. The program is required to have minimal administrative requirements for employers and the state law protects employers from any liability or fiduciary responsibilities. Beginning in July 2019, employers can begin signing up for the plan. Employers with five or more employees will be required to either provide a retirement plan for their workers or register for CalSavers and facilitate employee’s contributions to Individual Retirement Accounts.
The following information is relevant for you to know moving forward:
The compliance deadlines vary by size of business
5 or more employees: June 30, 2022
Over 50 employees: June 30, 2021
Over 100 employees: June 30, 2020
CalSavers is part of California’s universal retirement arrangement access effort
An employer already offering a 401(k) plan, commercial individual retirement account (IRA) program, or some other commercial arrangement is already compliant
Participation is voluntary for employees
Employers will not receive a tax incentive for using the state IRA program
The only cost is the time and effort by the part of the employer to comply with the mandate
Commercial retirement savings arrangements could be better than CalSavers-type programs
CalSavers will limit contributions to just $6,000 per year and does not offer company contribution
Currently four other states are offering retirement savings programs with Oregon (OregonSaves) running since July 2017. The California Secure Choice Retirement Savings Investment Board is in charge of the program and the chairman is the California state treasurer.
HR Ledger can help.
Please call Malcolm or Scott today at 800-451-1136.