What California Employers Need to Know About Calsavers

CalSavers is a state-mandated retirement savings program aimed at providing a simple, low-cost retirement savings option for employees in California who do not have access to an employer-sponsored retirement plan. For employers, understanding the requirements and benefits of CalSavers is crucial to ensure compliance and support employees’ financial futures. Here’s a comprehensive guide to what employers need to know about the CalSavers Program.

Understanding CalSavers

What is CalSavers?

CalSavers is a retirement savings initiative mandated by the State of California, designed to address the significant gap in retirement savings among private-sector employees. This program is especially beneficial for employees of small to medium-sized businesses that do not offer their own retirement savings plans. The primary goal of CalSavers is to provide a seamless and straightforward way for employees to save for their retirement without placing a heavy administrative burden on employers.

Key Features of CalSavers

• Employee-Centric Design: The program is structured to be highly accessible to employees. Enrollment is automatic, making it easy for employees to start saving without needing to take initial action. This feature ensures that more employees will participate and benefit from the program.
• Tax-Advantaged Savings: Contributions are funneled into Roth IRAs, which provide tax-free growth and withdrawals in retirement, assuming certain conditions are met. This allows employees to accumulate savings efficiently over time.
• Seamless Portability: The accounts are fully portable, meaning employees retain their CalSavers account even when they switch jobs. This portability is crucial for maintaining continuous retirement savings and reducing the complexity of managing multiple retirement accounts.
• No Costs for Employers: One of the most appealing aspects for employers is that there are no fees to facilitate CalSavers. This eliminates financial barriers for businesses looking to support their employees’ retirement savings.
• Flexible Contribution Options: Employees can choose how much to contribute from their paychecks, offering flexibility to adjust their savings rate according to their financial situation. They also have the option to opt-out if necessary.

Employer Responsibilities

Who Needs to Participate?

Employers with five or more employees who do not already offer a qualified retirement plan are required to facilitate CalSavers. This includes:

• Employers with an average of five or more employees in the previous calendar year.
• Employers who do not sponsor a tax-qualified retirement plan, such as a 401(k) or similar plan.

Registration Deadlines

The registration deadlines for employers are phased based on the size of the business:

• Employers with over 100 employees: June 30, 2020.
• Employers with 50 to 99 employees: June 30, 2021.
• Employers with 5 to 49 employees: June 30, 2022.
• Employers with 1 to 4 employees are now included and have until December 31, 2025, to comply.

How to Register

Employers must register with CalSavers through the official website. The process involves:

1. Creating an Account: Employers need their Federal Employer Identification Number (FEIN) and CalSavers access code to set up their account.
2. Adding Employee Information: Employers must add eligible employees to the system within 30 days of registering their business and update the list as needed.
3. Setting Up Payroll Deductions: Ensure that the payroll deduction line item is configured in your payroll system and begin submitting employee contributions. Regular payroll deductions are crucial for the ongoing contribution to the employees’ retirement accounts.

Skip the Paperwork with our CalSavers Services

Steps to Ensure Compliance

Employers are responsible for maintaining their CalSavers account, including:

• Keeping employee information up to date.
• Managing payroll deductions accurately.
• Adding new employees within 30 days of their hire date.

Penalties for Non-Compliance

Employers who fail to comply with the CalSavers mandate may face penalties:

• $250 per eligible employee if non-compliance extends 90 days or more after receiving a notice.
• An additional $500 per eligible employee if non-compliance extends 180 days or more after the notice.

Benefits for Employers

No Financial Cost

There are no fees for employers to facilitate CalSavers. The program is designed to minimize the administrative burden on businesses, making it a cost-effective way to offer retirement benefits.

Simplified Process

CalSavers simplifies the process of providing retirement benefits by handling account management, investment options, and employee communication. Employers only need to handle the initial registration and ongoing payroll deductions.

Supporting Employee Financial Health

By facilitating CalSavers, employers can help their employees build a more secure financial future without the complexity and cost of managing a traditional retirement plan. This can also enhance employee satisfaction and retention, as offering retirement benefits is a significant factor in job satisfaction.

How iPay Solutions Can Help

Comprehensive Management

iPay Solutions can handle all aspects of CalSavers for your business, from registration to ongoing management. This includes ensuring compliance with state mandates and managing employee enrollments and contributions. By outsourcing these tasks to experts, businesses can avoid the administrative burden and focus on their core operations.

Expert Support

Our team provides dedicated support to both employers and employees. We assist with account setup, answer questions, and help manage contributions and account changes. This support ensures that all participants have a clear understanding of the program and can maximize its benefits.

Streamlined Administration

With our expertise, we can streamline the administrative processes, reducing the burden on your business and allowing you to focus on your core operations. Our services ensure that your business remains compliant with all state requirements and that your employees’ contributions are managed efficiently.

Skip the Paperwork with our CalSavers Services

Getting Started with CalSavers

If you’re ready to comply with the CalSavers mandate and support your employees’ retirement savings, contact iPay Solutions today. Our team will guide you through the entire process, ensuring a smooth and hassle-free experience.

For more information about CalSavers, visit the CalSavers Employer Information site. We look forward to helping you provide this valuable benefit to your employees.