Employers of Five or More Must Register for CalSavers by June 30, 2022

By June 30, 2021, California employers with more than 50 on payroll were required  to ● offer employees a retirement savings plan such as a 401(k); or ● to facilitate employee access to CalSavers, a state-run savings program for automatic payroll deductions deposited into a Roth IRA.  See Mandatory Options for Retirement Funding: Mid-Size Employers Must Register for CalSavers by June 30, 2021 (June 4, 2021).

Affected smaller employers – those with a minimum of five on payroll which do not have existing retirement plans – must register with the program by June 30, 2022 and comply with the required administrative duties (see Employer FAQs ).

While registration is free, employers who fail to register within 90 days of service of a noncompliance notice will be charged a $250 penalty for each eligible employee, increasing to $750 per employee after 180 days.

Employers must only offer CalSavers participation.  They may not advise employees on investments or savings, promote or discourage CalSavers participation, or make/match contributions.

Upon an employer’s registration, CalSavers will contact each employee directly. Employees may  opt out within 30 days of receiving the initial paperwork (see Employee Program Details) and are otherwise automatically enrolled. Participants will accrue five percent interest on their set-asides. Employers must show these retirement deductions on the worker’s itemized wage statement (see California Labor Code section 226(a)(4)).

Take-Away: Companies employing five or more and that do not already offer employee retirement accounts must register with CalSavers by June 30, 2022.

For more information, please contact Tim Bowles, Cindy Bamforth or Helena Kobrin.

See also:

• Chill, It’s the Law – California’s Mandatory Seventh Day Off Rules (April 7, 2022)
• The Peril of Ignorance – Know and Comply: California’s Itemized Paystub Requirements (May 6, 2021)

Helena Kobrin
April 15, 2022