Why Expert Guidance Matters for California Business Owners

The December 31^st deadline for newly eligible California business owners to register for a retirement savings program is fast approaching. Your clients may have questions swirling around in their heads about which option is right for them. They may even be tempted to make an impulsive choice instead of the smartest one.

It’s up to you to bring them the peace of mind they need. You’re trusted to provide superior options and continuous support. This isn’t the time to shirk your responsibilities. Use this handy guide to help cement your status as the advisor your clients depend on.

Key Takeaways:

• Keep your California business owners informed of their obligations as mandated by the state.
• Ensure your solopreneur clients are prepared for retirement as well.
• Show your clients that a more advantageous alternative does exist.
• Demonstrate your expertise by estimating your clients’ potential tax savings in real time.
• Only you can keep your clients at ease by providing them with unmatched guidance and ongoing support.

Review California’s retirement savings requirements:

Your first order of business should be to set up consultations with all your California clients to educate them about California’s retirement savings mandate. As their financial advisor, you’ve got to let them know their responsibilities.

Inform them that in California, businesses with even one employee are required to register for CalSavers—the state’s IRA program, or a qualifying retirement plan by December 31^st of this year (2025). Failure to meet the state’s requirements and automatically enroll their employees in a retirement savings program could result in costly fines. If employers do not enroll their employees in CalSavers or a qualifying retirement plan within 90 days after employment, they may have to pay $250 per employee. If the employer’s non-compliance continues for an additional 90 days, they could face an additional $500 fee per employee for a grand total of $750 per unenrolled employee. It’s worth noting that employers must enroll their employees automatically; however, employees can opt out at any time.

While solopreneurs are exempt from the mandate, it would be wise for them to consider their own retirement needs. An ePlan Services Solo 401(k) plan can help them secure their future nest egg. Don’t let your solopreneur clients rest on their laurels; failure to plan could mean planning to fail.

Review your clients’ options:

Now that your clients are in the know, help them understand that they do have options. Many California business owners might choose CalSavers by default; you can point them in a smarter direction.

Solidify their trust in your expertise by presenting them with a turnkey retirement plan solution— an ePlan Services 401(k) plan. Its fee transparency and easy plan management tools make this plan a preferred choice. But what may be more valuable to your clients is all that it has to offer them and their employees. You can also explain that a 401(k) plan allows:

• A higher annual contribution rate— $23,500 compared to only $7,000 permitted by an IRA. (2025 limit)
• A higher catchup contribution rate— $7,500 compared to only $1,000 permitted by an IRA. (2025 limit)
• Employer matching— Permitted to match up to 100% of an employee’s salary (subject to IRS limits).
• And potential tax breaks— For starting a new plan, adding an automatic enrollment feature, and making matching contributions.

Calculate your clients’ potential tax credits:

It’s not enough to let your clients know about the potential tax savings they could receive by sponsoring a 401(k) plan. Seeing numbers in real time may be just what they need to close the deal. Set up a time to meet with your clients, pull out your laptop, and guide them through the SECURE Act Tax Credit Estimator. You’ll input information related to their businesses and click the calculate button.

In minutes, your clients’ potential tax savings are revealed. This is a unique service that you alone can offer— positioning yourself as an industry leader and helping you stay ahead of the competition.    

Provide your clients with ongoing support:

After informing your clients about their retirement plan options, you should also expertly guide them through the plan setup process. Your clients may be pleased to learn that their 401(k) plans can be set up in as little as 15 minutes and funded within 24 hours. But your client service duties don’t end when the deal is done. Expert guidance from you will be needed long after their plans have been successfully set up.

Take the initiative to check in with your clients periodically to ensure that everything is running smoothly. Be there to answer any questions they may have. Do they need help choosing the right investment funds? You can go one step further by helping your clients estimate a more robust retirement outlook by calculating specific investment information provided by you.

This is also a prime opportunity to slip your other services into the conversation. Maybe in addition to retirement planning, your clients would also like you to guide them through wealth management.

Regular check-ins give you a chance to deepen your relationship with existing clients. This, in turn, could lead to an increased book of business for you in the future.

Conclusion:

It’s getting down to the wire for California business owners to provide a retirement savings program or face the consequences. Your expert guidance is needed now more than ever. Help them comply with the state mandates while also offering them a plan that gives them the most bang for their buck. Demonstrate why your clients need your services today and potentially increase your retirement business later.