New California Mandate: Retirement Accounts for Your Employees
In September 2016 Governor Jerry Brown signed SB 1234 which requires California employers who do not offer retirement benefits to their employees to enroll in the CalSavers program. That requirement begins to take effect this year. Employers with over 100 employees must enroll by June 30, 2020. Employers with over 50 employees must enroll by June 30, 2021. And employers with 5 or more employees must enroll by June 30, 2022.
CalSavers provides ROTH IRA retirement accounts to individuals. Employers enrolled with CalSavers are required to report their employees and new hires to the program. Employees are then automatically enrolled, and after 30 days employers must begin withholding 5% of a worker's paycheck and report the amounts to the program. Each subsequent year the rate increases by 1% up to a maximum rate of 8%. Once an employee is added to the CalSavers system they will receive notification directly from CalSavers to access their account online where they can choose to opt out or change their deferral percentage from the standard rates. If an employee requests a change to their deferral on the CalSavers website you will receive a notification from CalSavers to change the rate in payroll. The state reserves the right to penalize employers found to be in noncompliance at $250 per eligible employee after 90 days and an additional $500 per eligible employee after 180 days.
Once again ABC is here to help with multiple solutions to meet every budget! Whether you want total control of your integration with CalSavers or want to outsource it we've got you covered. Give us a call today at 1-800-242-5155 to learn more.