California Employers are now mandated by law to offer a retirement plan for their employees or join the CalSavers plan. Beginning July 2019 employers can voluntarily start participating in CalSavers.

The mandated deadlines are as follows:

June 30, 2020 (extended to Sept 30, 2020) – Businesses with 100+ employees.

June 30, 2021 –  Businesses with 50+ employees.

June 30, 2022 –  Businesses with 5+ employees.

CalSavers definition of an employee:

  • Age 18, paid by W-2, and worked for 30 days from D.O.H.


Roth IRA’s only:

  • IRS 2022 Limit $6,000.00.


Employees will be Auto-Enrolled at 5% of employee’s compensation:

  • Auto-Escalated up 1% each year after that up to 8%.
  • They have the option to opt-out, or make a different election.


Employees are responsible for knowing if they are eligible for the Roth IRA:

  • The MAGI (Federal Modified. Adjusted Gross Income) Limits still apply.
  • $137,000 for single filers and $203,000 for married couples filing jointly.


No correction for the employees that forgot to opt-out or that didn’t qualify. CA is handling the record-keeping for CalSavers. The employees pay all fees associated with CalSavers:

  • Estimated at 0.82% to 0.95% of their account balance.

Employer Administration with CalSavers:

  • Required to submit a full employee census to CalSavers (keep them updated).
  • Track all eligible employees.
  • Provide enrollment packet to all employees 30 days after DOH.
  • If no election is made in the next 30 days (60 days from DOH).
  • Set up the 5% Auto Enroll in payroll to send the Roth IRA contribution to CalSavers.
  • Track in payroll and implement the Auto Escalate of 1% each year up to 8%.
  • Auto Escalate employees that did not make a separate election to opt-out of auto escalation.
  • Hold Open Enrollment every year (Oct 1st – Nov. 30th).
    • Re Auto Enroll anyone that is not participating for 6 months or longer.
  • 6 month look back each year for Auto Escalate.
    • Track if employee has been participating for 6 months with no auto escalation.
    • Provide 60 day notice that they will be auto escalated Jan 1st if they do not opt-out again.

Proposed penalties to the Employer for non-compliance with the law:

  • 90 Days after notice of non-compliance.
    • $250 per eligible employee.
  • 180 Days after notice of non-compliance.
    • $500 per eligible employee.


What can Employers do to Avoid CalSavers?

  • Establish your own independent Employer Sponsored 401(k) Plan.
    • Administratively more manageable.
  • Employee: Age 21 with 1 Year of Service and 1000 hours.
  • Semi Annual Entry: January 1st and July 1st.
  • Your choice to add Auto Enroll and Auto Escalation.
  • Benefits of a 401(K) Plan.
  • Employees can save $20,500 or $27,000 with catch-up of all pre-tax dollars.
  • They can choose Roth with no income limitations.
  • Employer can provide a tax deductible Employer Match or Profit Sharing Contribution.
  • Tax Credit up to $5,000 for setting up plan each year for 3 years.
  • Employee Attraction and Retention Tool.
  • All money in the trust is protected from bankruptcy, creditors, etc…
  • All 401(k) Plan fees are tax deductible to the business.

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Office: 916.625.4298
Boyd's Mobile: 530.417.1129

Our mailing address

P.O. Box 540
Rocklin, CA 95677

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