Question: Is it mandatory to provide a retirement plan for all of my employees?


Answer: Not exactly.  California established the CalSavers Retirement Savings Program (“CalSavers”), an IRA designed to benefit employees whose employers do not offer traditional retirement plan programs.  With minimal action required and no fees or liability for employers, CalSavers is a simple and effective way for employees to save money and plan for retirement.


With automatic enrollment and contributions made through payroll deductions, CalSavers makes it easier for employees to save for retirement. Once an employee is enrolled, the money saved belongs solely to the employee and the account can move freely with the employee from one job to the next.  CalSavers is not sponsored by the employer, meaning the employer is neither responsible nor liable for an employee’s decision to participate in the program or the performance of investments.  An employer’s responsibilities under CalSavers are limited to registering for CalSavers, providing employee information to the CalSavers administrator, and remitting employee contributions through payroll deductions.


CalSavers is mandated for all California private for-profit and non-profit employers that do not already sponsor a retirement plan for their business and that have more than five full- or part-time employees over the age of 18 with at least one employee working in California.  Eligible employers that fail to enroll are subject to a penalty per eligible employee.  Employers that maintain or contribute to a Tax-Qualified Retirement Plan which qualifies for favorable federal income tax treatment, regardless of whether all employees are eligible for the Plan, as well as employers with fewer than five employees, are prohibited from participating in the CalSavers program.


Prior to the effective dates listed below, employers must log on to the CalSavers site to either register online or certify their exemption from CalSavers by stating that their business already maintains a retirement plan:



Effective Date Number of Employees
June 30, 2020 More than 100
June 30, 2021 More than 50
June 30, 2022 More than 5


Existing employees of employers that participate in CalSavers must be enrolled within 30 days after the employer registers with CalSavers. Employees hired after the employer registers will be automatically enrolled within 30 days of their date of hire or date of eligibility.  Despite this automatic enrollment, participation in CalSavers is voluntary, and employees may choose to opt out at any time.


Once the employer is enrolled, on each payroll date, it must deduct and transfer each participating employee’s contribution to the CalSavers administrator. All employee contributions must be remitted as soon as administratively possible, not to exceed seven business days from the date of deduction.


When providing information about CalSavers to employees, employers are required to remain neutral about their employees’ participation in the program. The CalSavers regulations expressly preclude employers from requiring, endorsing, encouraging, prohibiting, restricting, or discouraging employee participation in CalSavers, or from providing any advice or direction regarding any employee decision about CalSavers (e.g., investment choices, contribution rate, etc.).  To maintain neutrality, CalSavers will provide an email template at the time of registration that employers may share with employees to inform them that CalSavers will reach out to them.  The employees can then communicate with CalSavers directly to get further information and to ask any questions they may have.


Although CalSavers becomes effective next year, employers may begin registering now at the following link: