California is Forcing you to Save. YES!

Yes, in fact, California is making you save for retirement. What exactly?

California state law as of June 30th, requires California employers to participate in a program called “CalSavers” if they do not sponsor a retirement plan and have 5 or more employees. One problem is that few people know the specifics so it probably makes sense to draft a Q&A of sorts answering questions about the rather unique plan. Here goes…

As an employer, do I have to facilitate CalSavers? Who is an eligible employer?

If you have at least five California-based employees, at least one of whom is age eighteen, and don’t sponsor a qualified retirement plan, your business is required to register for CalSavers.

Qualified retirement plans include:
401(a) — Qualified Plan (including profit-sharing plans and defined benefit plans)
401(k) plans (including multiple employer plans or pooled employer plans)
403(a) — Qualified Annuity Plan or 403(b) Tax-Sheltered Annuity Plan
408(k) — Simplified Employee Pension (SEP) plans
408(p) — Savings Incentive Match Plan for Employees of Small Employers (SIMPLE) IRA Plan
Payroll deduction IRAs with automatic enrollment

If employers already offer a qualified retirement plan above, inform CalSavers of the exemption on the employer portal.