Posted on July 26th, 2021
Below is a complete transcript of this video.
What’s up fellow entrepreneurs today. I want to talk about the Cal savers retirement savings program. So when I first heard that California was starting a program that required California employers to offer employees a retirement plan, I was a little dismayed.
However, now that I’ve read the requirements, it’s not as bad as I thought it would be, but before we get into the details as always, I’m an attorney, but I’m not your attorney. So please seek out competent legal counsel for your specific legal needs.
So what is Cal savers to help encourage more individuals to save for retirement? California introduced a new initiative called Cal savers retirement savings program, or Cal savers for short, the program enables eligible employees to automatically contribute a portion of their paycheck to a Roth IRA. With the goal of helping employees save for retirement with Southern deadlines approach.
And here are the basics you need to know. So first all California employers with five or more employees are required to give employees access to Cal savers unless they offer a company sponsored retirement plan, like a 401k 401k plan.
The deadlines to adopt the plan was September 30th, 2020 for businesses with more than a hundred employees. So this deadline has already passed obviously June 30th, 2021 is the deadline for businesses with 50 to 99 employees and June 30th, 2022 for businesses with five to 49 employees.
So while companies with five to 49 plays have more than a year to make the switch, the deadline for mid-sized businesses is quickly approaching. And the deadline for large companies of course has already passed.
By the deadline, by the deadline stated, companies will have to either give employees access to the Cal savers retirement savings program or offer a company sponsored alternative.
Okay, so the second thing you need to know, and I think most important to business owners, there is no cost to the company for this program.
So employees pay all of their own administration fees to participate in the program. And there’s not any requirement for the employer to match contributions.
The only requirement for the employer and this program is to sign up for the, for the program and offer it to employees. So the only catch is that if an employer misses the adoption deadlines or fails to allow employees to participate in the program, they can face penalties of $250 per employee.
If they don’t comply within 90 days of receiving notice and then the penalty and increases to $500 per employee after 180 days.
So that’s the gist of the Cal savers program, but please do your own research and seek your own advice.
So all in all, not a bad law until next time be productive.
