By June 30, 2022, any California business owners with five or more employees are required to have a retirement plan for their employees.
California businesses with five or more employees must comply with the statewide mandate and offer a retirement plan to their employees by the deadline. Businesses can either go through a private-market option, like a 401(k), or through the state-run CalSavers program.
If any California business owners do not provide a retirement plan for their employees by June 30, there will be a penalty of $250 for each employee. Penalties will increase if initial penalties are not addressed.
If you’re an employer with over fifty employees, the deadline has passed and there may be penalties. To avoid further penalties, California business owners should register as soon as possible.
How to Register for CalSavers Program
For registering, employers will be notified via letter of their requirement to register with the CalSavers program. An access code will be given to them in the letter and the employer must register on the CalSavers website: https://employer.calsavers.com/. If the employer didn’t receive an access code or if it’s been lost, they can ask for an access code on the website.
When employer is registered, they must enter an employee roster onto their CalSavers account, providing basic employee information such as their name, address, phone number, e-mail address, and external payroll ID (this is all done on an Excel spreadsheet).
If an employee does not respond to CalSavers after contacting the employee, they will be automatically enrolled in the program with a 5% contribution rate. The contribution rate will be posted on the employer’s portal on the CalSavers website and any changes to the contribution rate will be e-mailed to the employer by CalSavers.
Within 30 days of uploading the employee list, the employer must begin to collect, remit, and report contributions for each payroll period. If you need more information about how this is done, click here: https://employer.calsavers.com/home/employers/resources.html.
If an employer does not comply with the program requirements, they will be subject to a $250 per employee penalty after receiving a notice of noncompliance from the EDD. After 180 days of the notice, the penalty will be increased to $500 per employee. The FTB will collect the penalty.
Employers do not have any liability for an employee’s decisions to participate in the program, for their investment decisions, or for the performance of those investments.
To register for CalSavers and learn more details about the program, go to the CalSavers website at www.calsavers.com.
Wright Ford Young & Co. is headquartered in Irvine, CA and is the largest single office CPA firm in Orange County. WFY is a full service corporate accounting firm offering audit, tax, estate and trust, and business consulting services to closely held company and family business owners. More information about our Firm can be found at www.cpa-wfy.com