Under Senate Bill 1126, California law requires businesses with at least one California-based employee, even if the business is located out of state, to offer a workplace retirement savings program by December 31, 2025. Previously, the law did not apply to employers with fewer than five employees. Eligible employers must offer a retirement savings program. This can be done by either:
- Providing a qualified private market plan, which could include establishing a payroll deposit retirement savings arrangement, such as an Individual Retirement Account (IRA).
- Participating in the CalSavers Retirement Savings Program (CalSavers).
About CalSavers
CalSavers is a state-sponsored retirement savings program designed to be:
- Low-cost
- Automatic enrollment
- Payroll deduction IRA program
- Voluntary for employees
- Portable across jobs
- Professionally managed
- Overseen by a public, transparent board of directors chaired by the California State Treasurer
Compliance deadlines
Eligible employers must comply with the following phased-in deadlines:
| Size of Business | Deadline |
| Over 100 employees | September 30, 2020 |
| Over 50 employees | June 30, 2021 |
| 5 or more employees | June 30, 2022 |
| 1 to 4 employees | December 31, 2025 |
If an employer’s deadline has passed and they haven’t registered with CalSavers or provided a qualifying retirement plan, they are out of compliance and must register immediately to avoid enforcement action and financial penalties.
Key points for employers
- Cost: CalSavers operates solely through participant fees, with no cost to employers or taxpayers.
- Registration: Employers can typically register their business in just a few minutes.
- Role: Employers facilitate the program by adding employees and submitting participating employee’s contributions via payroll deduction.
- Fees: There are no fees for employers, and they cannot contribute to employee accounts.
- Exemptions: Businesses that only employ their owners are not affected. Exempt employer categories include government entities, religious and tribal organizations. Visit the CalSavers website to see if your organization may be exempt.
Employee information
- Accounts are Roth IRAs (contributions are post-tax).
- Default savings rate is 5% of gross pay, adjustable at any time.
- Auto-enrollment occurs 30 days after employer registration, unless the employee opts out.
- Employees can opt out and opt back in at any time.
- Accounts are portable and stay with employees even if they change jobs.
Additional resources
For more information and to register, visit the CalSavers website.
BPM for HR and People Services
BPM, one of the largest California-based accounting and consulting firms, offers comprehensive HR solutions. From HR outsourcing and consulting to recruiting and culture development, our HR team can adapt to your organization’s needs.
For strategic solutions to any HR challenge, contact us.
