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The CalSavers Retirement Program: Everything You Need To Know

Illustrated map of the United States with California highlighted and a green flag with a checkmark planted on it, labeled CalSavers Program.

The Golden State is making its residents' golden years a bit more comfortable.

California was the first state to pass legislation to establish a state-run retirement savings program for private-sector workers. The result of this legislation is the CalSavers retirement savings program, designed to improve the financial health of California's workers.

In this article, we'll answer some questions you may have about the CalSavers program and explain how it affects California businesses.

How Does CalSavers Work?

CalSavers is a government-sponsored savings program created to help employees working in California build savings for retirement. California business owners who meet certain criteria are required by law to offer a qualified, employer-sponsored retirement plan or enroll their employees in the program.

California employees can make contributions to the program through automatic deductions from their paycheck into a Roth individual savings account (Roth IRA) unless they choose to opt out. The money in the account grows tax-free, and employees won't have to pay income tax on any money they withdraw from their account during retirement.

CalSavers is overseen by the CalSavers Retirement Savings Board and administered by private-sector partners. The program launched in 2019.

Which Businesses Are Affected?

According to the CalSavers website, employers who meet the following criteria are required to register for the program or certify an exemption:

  • Have 1 or more employees in the previous calendar year
  • At least one employee is 18 years or older
  • Does not offer a qualified, employer-sponsored retirement plan

Registration Deadline

Eligible employers must register or certify an exemption by December 31 of the current year. Businesses that become newly eligible during the year have until December 31 of that year to act.

If you were notified in an earlier year and haven't registered, you may already be out of compliance and should act now.

Penalties

The penalties for noncompliance are $250 per eligible employee after 90 days and an additional fee of $500 per eligible employee after 180 days.

Who Is Eligible to Save With the CalSavers Program?

Any resident of California who is 18 years or older and is employed is eligible to participate in CalSavers. Self-employed individuals and business owners are also eligible and can use the self-enrollment process to open accounts.

The program is voluntary for employees, and they can change their contribution amount or opt-out at any time.

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