California’s state retirement savings program
Under California law, millions of businesses operating in the state are required to offer either the state-facilitated retirement program or a qualified alternative to their employees.At ePlan Services, we’re here to help you understand your state’s requirements and set up a plan that fits your or your client’s needs. Act now to ensure the business complies with the state’s retirement mandate and avoids penalties.
What to know about CalSavers
CalSavers is California’s retirement savings program. Here are the basics:
- Program Status: Open for enrollment
- Employer Participation: Mandatory
- Program Type: Roth IRA (traditional IRA option for alternative election)
- Penalty: $250 per employee for non-compliance 90 days post-notice, then: $500 per employee (180 days post-notice), $500 per employee (each subsequent year and any nonconsecutive year of noncompliance)
- Employers Requirement: Employers with one or more employees in California
- State Website: California CalSavers opens in a new tab
ePlan Services vs. CalSavers
See how California’s retirement savings program measures up against an ePlan Services 401(k)
Potential for up to $5,000 start up credit and $500 automatic enrollment credit for 3 years, plus available employer contribution credit of up to $1,000 per employee
Roth IRAs do not qualify
Yes
Matching is not permitted
Yes
The state manages the plan solely
Yes
Restricted options
$24,500
+ $8,000 (age 50-59, 64+) or $11,250 (age 60-63) in catch-up contributions
$7,500
+ $1,100 in catch-up contributions (age 50+)
Meet your regional retirement wholesalers
Pacific Northwest & Northern California
Southern California
Quick and easy plan setup
Plan setup can be easily completed online so you can focus on helping more clients.
Higher contribution rates
401(k) retirement accounts have higher contribution limits than IRAs—putting more in your clients’ pockets down the road.
Potential tax breaks
SECURE Act offers tax credits to employers who start plans, add an auto-enrollment feature, or make contributions.
Prepare Your Clients for CalSavers
In 2019, when CalSavers—California’s retirement plan mandate—was first signed into law, financial advisors significantly increased the number of 401(k) plans they sold in the Golden State. However, that mandate only affected a small proportion, less than 2%, of overall businesses in California. That is changing this December, when businesses that employ between 1 and 4 people will also be required to comply with the law. The size of this opportunity for financial advisors is staggering. Here’s what you need to know.
Why Expert Guidance Matters for California Business Owners
The December 31st 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.
6 Ways to Reach Small Business Owners in California
California is booming with opportunities to grow your retirement business, especially as the state’s retirement savings program registration deadline, December 31st, draws near. Approximately 1.5 million businesses in California with one or more employees will be affected by this mandate. This presents a prime opportunity for you to cast a long line into the surf and catch as much new business as possible. And your bait? These actionable strategies for gaining and retaining business in and outside of California.
