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Committee Blog: Retirement Plans Required for Small Employers in California!

Committee Blog: Retirement Plans Required for Small Employers in California!

CCIA Risk Management Committee

Retirement Plans Required for Small Employers in California!

Have 5 or more employees? 

The State of CA says it’s time to have, or consider setting up, a retirement plan!

A law commonly known as CalSavers was passed in 2016 and requires employers to offer one of the following, by the deadline:

  1. An employer-sponsored qualifying retirement plan.
  • Qualifying retirement plans include:
    • 401(k), 401(a), 403(a) or (b), 408(k), 408(p), Union and Payroll deduction IRAs with automatic enrollment.
  1. CalSavers.
  • State-run alternative for employers who do not offer employees a retirement plan.

Deadlines by business size: 

Size of Business


Over 100 employees

September 30, 2020

Over 50 employees

June 30, 2021

Over 5 employees

June 30, 2022

Note that:

  • Employers with 5 or more employees are next up to comply with the requirement.
    • This is employees receiving a check – full or part-time status does not matter.
  • Penalties for non-compliance can be sizable. 
    • The State will send a notice to employers with an access code to register the employer’s status.
      • Employers need to respond if they have a qualifying plan or will use the State-run CalSavers plan.
      • State will send a flyer for distribution to employees. 
    • The penalties are:
      • $250 per eligible employee if noncompliance extends 90 days or more after the notice date. 
      • $500 additional per eligible employee penalty if noncompliance extends 180 days or more after the notice date.
  • Employer-sponsored plan vs. CalSavers plan - there are pros and cons to each choice.

Next step? 

  • Reach out to your Employee Benefits Advisor or Union.
    • They can assist with:
      • Discerning which best suits your organization’s and your employees’ goals.
      • Working through the compliance details.
      • Finding vendors that are plant-touching friendly.
  • The CCIA risk management committee has members who are available to answer your questions.
  • Employers can go to at any time and register their employer-sponsored plan or indicate interest in the State-run option.
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