CalSavers Registration Requirments
Employers Requirements to Register for CalSavers Retirement Program
By Jennifer A. Mancera
Before June 30, 2020 many California employers, who do not already offer a qualifying retirement savings program, will need to provide their employees access to a workplace retirement savings plan known as CalSavers. CalSavers is a public-private partnership program for employees who are not offered a qualified employer sponsored retirement program. Employers will have minimal administrative requirements for the plan, which will be managed by a private sector financial services firm and overseen by a public board chaired by the State Treasurer. Employers offering a 401(a), 401(k), 403(a), 403(b), Simplified Employee Pension (SEP) Plan, Saving Incentive Match Plan For Employees (SIMPLE) Plan, or Payroll deduction IRAs with automatic enrollment offer “qualified” retirement saving plans and are exempt from CalSavers participation.
The CalSavers program has requirements for employers, options for employees, and employer penalties for non-compliance.
What Are Employers Required to Do
Employers with more than five employees who do not already offer a qualified retirement savings plan are required to register for the CalSavers program. Although CalSavers was officially open for registration as of July 1, 2019, employers with over 100 employees are not required to register until June 30, 2020. Employers with over 50 employees will be required to register before June 30, 2021 and employers with five or more employees must register by June 30, 2022.
CalSavers is in the process of mailing information, access codes, and registration instructions to employers with five or more employees. Employers can register by phone, mail, or online at CalSavers.com. There are no employer fees and no employer fiduciary responsibilities associated with CalSavers. Within 30 days of registering, employers will need to provide the CalSavers program administrator with information for each employee. Once an employer uploads employee information, CalSavers will provide each employee with a packet of information, making the employee aware of the program and its opt-out provisions.
Additionally, employers will be responsible for deducting the employee’s contribution, as shown on the employer’s CalSavers account, from the employee’s paycheck and remitting it to the CalSavers program within seven business days of the deduction. Furthermore, employers will need to provide on-going maintenance by adding new employees to CalSavers or removing employees who no longer work for the employer.
Although employees may choose not to participate in the program, employers are prohibited from encouraging or discouraging employees from doing so, from providing investment advice, and from deducting and remitting contributions for an employee who elected not to participate in CalSavers. Employers are not responsible for answering questions about the program, processing distributions, or managing beneficiary information for the program.
What are Employees Required to Do
Employees are not required to do anything other than decide whether to participate or not. Employees will be automatically enrolled in CalSavers unless they contact CalSavers and opt-out, by phone, mail, or online at CalSavers.com. Participating employees will be able to customize their account, change their default contribution rate, and set investment choices directly with CalSavers.
What if the Employer Does Not Register
Employers that fail to register eligible employees will be subject to penalties for non-compliance. Employers may be fined $250 per eligible employee after 90 days of non-compliance and an additional $500 per eligible employee after 180 days of non-compliance.
Detailed information about CalSavers is available online at www.calsavers.com.
This article is intended to address topics of general interest and should not be construed as legal advice
