Business Guides and Tips

CalSavers Program: What It Means for Employers in California

According to a survey conducted by TD America, 67% of Americans plan to retire by age 67. To do so, they’ll need savings that they can rely on in later years. However, 32% of individuals aged 40 to 79 have less than $50,000 saved for retirement. 

In that age group, only 21% have saved more than $500,000. With inflation spiraling and costs for basic expenses climbing, having the money available to pay for retirement is essential. 

Employers who offer a retirement plan can assist employees with their savings. While most larger businesses have retirement plan benefits for their employees, many smaller organizations do not. In an effort to help people save for retirement, many states have chosen to pass laws mandating employers to offer retirement savings plans to their employees.

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California Retirement Plan Mandate

A survey of California residents found that 7.5 million employees did not have access to a retirement plan through their employer. As a result, California passed a bill mandating that all businesses with five or more California-based employees over the age of 18 must offer a retirement savings plan to their employees.   

Here’s what you need to know about the CalSavers Program:

What Is the CalSavers Program?

CalSavers was established by the California Retirement Plan Mandate passed in 2016. The bill created a state-wide retirement plan option for employees working in the private sector. Its mission is to make retirement plans accessible to all employees working in the private sector. 

Is CalSavers Mandatory? 

While businesses are required to comply with the California Retirement Plan Mandate, businesses are not required to enroll with CalSavers. Companies that already offer a qualified retirement plan, such as a 401(k) or SIMPLE IRA, do not need to register for CalSavers. If you already provide a qualifying retirement plan, you must request an exemption before the deadline.

If you don’t currently offer a qualified retirement plan, you can either register through CalSavers or work with a qualified financial service provider like Penelope. There are many retirement plan options available that may offer additional benefits to your employees. You and your employees are not limited to the CalSavers plan. 

How Do I Comply with CalSavers and the Retirement Plan Mandate?

What should I do to comply with CalSavers? The first step is to determine if your company falls under the mandate. Deadlines to enroll for the CalSavers Retirement Savings Program were established according to how many employees a business has. 

Companies with over 100 employees had to register by September 30, 2020, and organizations with more than 50 were required to enroll by June 30, 2021. Businesses with more than five employees must enroll by June 30, 2022.

The next step is to decide if you want to register with CalSavers or a separate provider. If you choose to go with an independent provider, you need to provide that information to the state of California and request an exemption from participating in the CalSavers program.

How Does CalSavers Work?

Before enrolling in CalSavers, you’ll need to determine whether your business is eligible. Companies that do not have more than five employees or those that already have a qualified retirement plan in place are not required to enroll. 

If you have fewer than five employees but want to offer your workers a retirement plan option, you can still register for CalSavers at no cost to your business other than the time required to set up your plan.

CalSavers is also an excellent option for independent contractors or freelancers who don’t have access to traditional retirement plans. Freelancers can enroll themselves into the plan and manage their contributions. CalSavers is also available for individuals who want to save a little extra outside their regular 401(k) retirement savings vehicle.

If you decide that CalSavers is the right retirement plan option for your business, you can handle your registration entirely online. You’ll need your company’s Federal Employer Identification Number or Tax Identification Number (FEIN/TIN) and a CalSavers Access Code. 

Upon initial enrollment, you’ll be required to input all of your employees’ personal information into the system. Each employee will have their own log-ins that they can use to manage the amount of money they wish to save each pay period and how they want their money invested. Employees can opt-out if they prefer not to participate in the program. 

How can employees opt out of CalSavers? Employees have 30 days to adjust their preferences for the CalSavers Program. During this period, they may choose to opt-out of the program. After the 30-day period ends, deductions from payroll should begin. 

Contributions to the CalSavers Program must be facilitated via bank transfer. Once they are received, administrators of CalSavers will apply the contributions to each employee’s account and invest them in the designated funds. Workers can monitor their investment performance and contributions using their log-in details.

Is CalSavers mandatory for employees? No. Those who prefer not to enroll in the program can choose to opt-out.

Are All of My Employees Eligible for the CalSavers Program?

Not all employees are eligible for CalSavers. To be eligible, employees must:

  • Be employed in the state of California
  • Be age 18 or older
  • Have a Social Security Number or Individual Taxpayer Identification Number

If an employee is eligible for the program but does not want to participate, they may opt-out.

Is CalSavers Right for My Business? CalSavers vs. Employer-Sponsored Retirement Plans

CalSavers is a good option for companies that want to support their employees by offering a retirement plan but can’t afford to go the traditional route by matching employee contributions or paying fees for a commercial retirement plan. 

The CalSavers vehicle is a Roth IRA, meaning contributions are made after tax. Employees can choose how much money they want to put towards their plan. The IRS sets contributions for Roth IRAs. For 2022, the maximum amount is $6,000. Individuals aged 50 or over can contribute an additional $1,000.

Enrolling in CalSavers is free for employers. However, there are also no tax credits available to the employer. 

Other employer-sponsored retirement plans offer tax credits for companies that match their employees’ contributions. In addition, businesses may be able to deduct costs related to administering or setting up a traditional retirement plan, such as a 401(k) or SIMPLE IRA, from their yearly income taxes. 

Businesses that choose to select a conventional retirement plan may need to pay fees for using the investment platform.

We recently talked with Penelope’s CEO and founder Jan Smart about state-sponsored retirement mandates and what they mean for your business. Listen to the discussion here to dive deeply into CalSavers vs. other retirement platforms.


Benefits of Offering Competitive Retirement Plans

Companies that offer retirement plans often see significant benefits, including enhanced employee retention, access to a greater pool of talent, and potential tax advantages. Now that states like California are mandating that employers offer retirement plans, simply offering this benefit is no longer a differentiator for companies.

Many other options outside of CalSavers offer employer-sponsored retirement plans that may have better benefits for employees and employers alike. 

Options for Employer-Sponsored Retirement Plans

Besides CalSavers, other employer-sponsored retirement plans are available for small and large businesses. These retirement plans offer tax benefits, and employees can benefit from the ability to deposit higher amounts of money into them. Here are a few options:


Penelope is a streamlined retirement plan administration service offering digital 401(k) retirement plans that best fit your company's needs, from pricing to investments to administration. 

The company offers transparent pricing and a variety of funds to choose from through Vanguard. Some of their options include Pooled Employer Plans (PEP), Traditional 401(k)s, and Solo 401(k)s for employers and self-employed individuals.


Guideline offers 401(k)s, SEP IRAs, and Personal IRAs for small businesses and solo entrepreneurs. Companies pay a monthly subscription fee that varies based on the types of services they seek. There is a monthly fee for each employee enrolled. Employees can choose from a variety of Vanguard funds.

The company offers an easy-to-use platform that is accessible through their app or online.


While ADP is widely known for its payroll solutions, they also offer retirement planning services

Companies that use ADP for their payroll may prefer to enroll in the organization’s retirement plan services to minimize the effort required to integrate other services. 401(k), SIMPLE IRA, and SEP IRA retirement plans are all offered by ADP. You’ll need a tailored quote for your business to get pricing details.

Make Sure Your Business Is Compliant: Find the Right Solution  

For most employers, the deadline to enroll in CalSavers or an alternative retirement plan is June 30, 2022. There are companies like Penelope, whose mission is to make saving for the future more manageable and affordable.