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CalSavers Retirement Savings Program Deadline Is June 30

June 13, 2022

California state law requires California employers who have five or more employees and do not offer an employer-sponsored retirement plan to sign up for CalSavers by June 30, 2022. Employers who already sponsor a retirement plan will need to report their organization as exempt as CalSavers is not intended to replace or compete with current employer-sponsored plans.

Background

CalSavers is California’s retirement savings program designed for the millions of Californians who lack a way to save for retirement at their job. CalSavers is an automatic enrollment individual retirement account (IRA) with no employer fees, no employer contributions or fiduciary liability. This program is professionally managed by private sector financial firms with oversight from a public board chaired by the State Treasurer. 

The plan is administered through automatic payroll deduction and deposited into the employees’ IRA account. The employees’ savers account is portable even if they change jobs. Savers will pay a small fee to cover the program administration costs. Options are simple and use standard contribution and investment settings or can be customized.

What You Need to Do and Eligibility

Employers must register or exempt their business by the June 30 deadline. Other steps include submitting the company roster of eligible employees into the Employer Portal. CalSavers sends a notification to the employees either by email or mailing address. Employees have a 30-day decision period to either do nothing to be auto enrolled and keep standard choices, customize their account or opt out. The employer then begins initiating payroll deductions through their payroll platform. 

To be eligible, employees must be employed in the state of California, are 18 years of age or older and have a Social Security number or Individual Taxpayer Identification number. Employers are required to offer CalSavers to all eligible employees; however, employees can opt out or opt back in at any time.

Employees’ initial contributions will be invested in the CalSavers Money Market Fund for 30 days. After this period, existing savings and future contributions will be invested in a CalSavers Target Retirement Fund based on the saver’s age and the year closest to when a person that age is expected to retire.

If you have questions or need assistance, contact our experts.

 

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