In 2019, when CalSavers\u2014California\u2019s retirement plan mandate\u2014was 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\u2019s what you need to know.<\/p>\n\n\n\n
In 2019, when CalSavers<\/a> was first launched, employers with 100 or more employees were required to enroll.<\/p>\n\n\n\n In the last 6 years, that has changed dramatically. Starting December 31, 2025, businesses with even 1 employee or more are required to enroll in CalSavers or another qualifying retirement plan. If they don\u2019t, they could pay the price of up to $500 per employee.<\/p>\n\n\n\n Nearly 1.5 million enterprises fall into the mandated range, employing between 1 and 4 people<\/a>. In other words, this December, three quarters of businesses in California will be legally required to establish a retirement plan. The market for businesses impacted by the mandated deadline is huge. How should financial advisors prepare?<\/p>\n\n\n\n Start with your network of California-based entrepreneurs. By giving your contacts a heads-up and helping them prepare for the new implementation, you can help strengthen your professional bonds and open conversations around the benefits of a retirement option beyond what\u2019s mandated.<\/p>\n\n\n\n Some of your California contacts with small businesses may be unaware of CalSavers. Or they may misinterpret the requirement, thinking it doesn\u2019t apply to their businesses (more on that below). You wouldn\u2019t want your connections to end up like some business owners in Oregon who claim they didn\u2019t find out about Oregon\u2019s retirement savings mandate from the state, but from their payroll provider. Others have said the state didn\u2019t make it clear that the savings program was a requirement, so they initially ignored the notification. Misunderstandings like this can cause delays in plan implementation, which could eventually result in costly fines. (If you have a client who needs a 401(k), fast \u2014reach out to us. Your client\u2019s plan can be set up and funded within 24 hours.)<\/p>\n\n\n\n Your inner circle needs to understand the state\u2019s mandate and what it means in relation to their businesses. More importantly, they must understand the price they\u2019ll have to pay if they fall into non-compliance.<\/p>\n\n\n\n Proactively sharing your knowledge with your professional network could allow you all to stay on the same page, helping to ensure more cohesive working relationships down the road.<\/p>\n\n\n\n Don\u2019t let your solopreneur clients get lost in the shuffle. When researching this topic, we uncovered confusion from solo entrepreneurs regarding the December 31, 2025 deadline. It mandates that companies with between 1 and 4 employees are obligated to establish a retirement plan or enroll employees with CalSavers. If your client runs a business of 1, does that include them?<\/p>\n\n\n\n No, it does not include solo entrepreneurs. Your solo clients may breathe a sigh of relief to hear that…if they\u2019re misinformed, that is. Because, while they may be exempt from California\u2019s retirement savings mandate, that doesn\u2019t mean their retirement planning should fall by the wayside.<\/p>\n\n\n\n After all, shouldn\u2019t all their sweat equity and hard work pay off with big retirement savings? Now is your chance to present them with their options, such as a solo 401(k), so they can start preparing for their future. As a trusted authority in your industry, it\u2019s necessary to make sure that no client gets left behind in the journey to saving for a comfortable retirement.<\/p>\n\n\n\n Initially, your clients may have reservations about sponsoring a retirement plan for their employees, even if it\u2019s a legal requirement. Common objections range from setup is too difficult to retirement plans are too expensive. By anticipating these objections, you\u2019ll be ready to provide them with an exceptional solution.<\/p>\n\n\n\n For starters, your clients can have an ePlan 401(k) plan set up in just 15 minutes and ready to fund within 24 hours. We\u2019ll even provide smooth plan administration so they can rest easy.<\/p>\n\n\n\n Your clients might think that sponsoring a plan isn\u2019t worth the expense, but what they may not realize is changes from the SECURE Act allow special tax breaks for employers who setup new retirement plans<\/a>, add an automatic enrollment feature<\/a>, and provide employer contributions<\/a>.<\/p>\n\n\n\nConnect with your professional network today<\/h2>\n\n\n\n
Connect with your solopreneur clients<\/h2>\n\n\n\n
Review the benefits of establishing a retirement plan<\/h2>\n\n\n\n