CalSavers Help Self-Employed Save for Retirement

The Golden State is usually out ahead of many trends especially when it comes to various labor and employment related issues. One such interesting program that began a pilot program this past November and is set to open at-large in a few months beginning July 1, 2019 is the CalSavers Retirement Savings Program. This is the most ambitious push to expand retirement security since the passage of Social Security over 80 years ago.

CalSavers provides employees a retirement savings program without the administrative complexity, fees, or fiduciary liability of existing options. Any employer with at least five employees will be required to either begin offering a retirement savings vehicle via the private market or through CalSavers which is administered through the State Treasury.

The deadlines to comply are

  • June 30, 2020 for 100< employees
  • June 30, 2021 for 50< employees
  • June 30, 2022 for 5+ employees

CalSavers allows employees to contribute to a state-run retirement plan if their employers sign up for the program. Participants are able to adjust the rate of their income but the default rate is set at 5% of income. Enrollment will be automatic but employees can opt-out at any time.

Of course, as with any law of this scope, there are court challenges that are currently winding their way through the courts but California plans to push forward as the legal status continues to clarify.

Employers who are noncompliant will face fines ranging from $250 per eligible employee after 90 days of noncompliance and $500 after 180 days of noncompliance.