Are you aware of the changes being made to the CalSavers mandate in 2025? These changes will require all employers with 1 or more employees to offer a retirement benefit through their business or face fines of up to $750 per employee.
Here’s everything you need to know about the CalSavers Mandate of 2025:
What is CalSavers?
CalSavers is a retirement plan for all businesses located in California.
Who is Required to Comply?
All California employers with one or more employees must register with CalSavers or provide an alternative qualified retirement plan. Owners are excluded from this count.
- 5+ employees: Deadline passed in June 2022
- 1+ employees: Deadline is December 31, 2025 (Final Phase)
If you are already offering an alternative qualifying retirement plan such as a 401(k), SIMPLE IRA, etc, then you are exempt from complying.
Steps for the Employer
- Enroll using the CalSavers Portal
- Notify members of your team about enrollment & opting out
- Process any necessary deductions from payroll.
- Employers must set up the payroll deductions through their payroll provider or employers can manually set up deductions through CalSavers
Penalties for Non-Compliance
As enforced by the California Franchise Tax Board (FTB)
- A $250 fine per eligible employee after 90 days of non-compliance
- A $500 fine per employee after 180 days of non-compliance
What do Employees need to know?
Per the CalSavers Mandate, employees have access to:
- Automatic enrollment
- Contributions are made to a Roth IRA, unless you choose to opt-out for a traditional IRA
- Employees can control timeline & contribution percentages (employers can’t contribute to this plan)
- Default Contribution Rate:
- Starts at 5% of gross pay
- Automatically increases 1% each year (up to 8%) unless changed by employee
- 100% Employee Owned! Your account stays with the employee, even if the employee chooses to leave the job
Alternatives to CalSavers: Should You Offer Your Own Retirement Plan?
Here are some alternative retirement plans:
Benefits:
- Flexibility in contribution amounts
- Higher contribution limits than a Roth IRA
- Potential tax benefits for employers
Need Help?
Need help navigating compliance or setting up a better retirement plan? Contact your payroll provider for help with the process or our team for more overall expert guidance!
