Large employers with no employee retirement plan should prepare for CalSavers obligation

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Employers with over 100 employees who do not offer an employee retirement plan should prepare themselves in the upcoming months to institute the state’s CalSavers program, which will take effect on July 1, 2020.

Back in 2016, Governor Brown signed Senate Bill 1234 requiring the state’s Secure Choice Retirement Savings Investment Board to begin development of a workplace retirement savings program, known as CalSavers, for private sector workers whose employers do not offer an employer-sponsored retirement plan or automatic enrollment payroll deduction IRA. Fortunately the program is designed to have minimal administrative requirements for employers and state law protects employers from any liability or fiduciary responsibilities. However, covered employers must take affirmative steps to join the program.

The program phases-in according to a schedule based on employer size as follows:

CalSavers compliance deadlines, by business size

Size of Business Deadline
Over 100 employees June 30, 2020
Over 50 employees June 30, 2021
5 or more employees June 30, 2022

All eligible employers can already register for the program. Once the program is set up, the employer has the continuing responsibility for submitting employees’ contributions and adding new employees or removing employees who have left your company. However, employers are NOT responsible for:

  • Enrolling employees, disseminating information, or answering questions about the program.
  • Managing investment options, including choice of investment funds and processing employee investment change requests.
  • Processing distributions.
  • Answering questions about investment options. Employers should not give investment or tax advice.
  • Managing employee changes or account maintenance, which include but are not limited to Contact information and Beneficiary information.

Moreover, CalSavers does not require any employer fees or employer match contributions.

Further information about the program, including enrollment instructions can be found at: