MANDATORY OPTIONS FOR RETIREMENT FUNDING « Law Offices of Timothy Bowles | Top Employment Law Firm in Los Angeles

MANDATORY OPTIONS FOR RETIREMENT FUNDING

Mid-Size Employers Must Register for CalSavers by June 30, 2021

To level the playing field for those without access to workplace-based retirement plans, California is phasing in employer requirements to either: ● offer a retirement savings vehicle such as a 401(k) plan; or ● facilitate employee access to CalSavers, a state-run savings program in the form of an automatic payroll deduction Roth IRA.

Affected employers must register with CalSavers and comply with specified administrative duties (see Employer FAQs ).

Registration deadlines vary by business size:

  • 101 or more employees: September 30, 2020
  • 51 to 100 employees: June 30, 2021
  • Five to 50 employees: June 30, 2022

Employers must not encourage or discourage employee CalSavers participation, relay investment or savings-related advice, or make/match any additional contributions.

If employees take no action within 30 days of receipt of their initial CalSavers paperwork, they will be enrolled under the current default saving rate of 5% of gross pay after tax withholdings. (See Employee Program Details). Employers must show these deductions on the worker’s itemized wage statement (see California Labor Code section 226(a)(4)).

There is no employer fee for program participation. However, affected employers who fail to register within 90 days of service of a noncompliance notice shall pay a $250 penalty for each eligible employee and, after 180 days, an additional $500 per employee.

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

See also:

Cindy Bamforth
June 4, 2021

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