CALSAVERS DEADLINE APPROACHING

Do you have between 5 and 50 employees? If so, you need to offer a retirement savings plan to your employees by June 30th.

If you have five or more employees, California Senate Bill 1234 requires that you either offer a qualified retirement plan through the private market or give your employees access to the CalSavers program by June 30th, 2022.

(If you have over 50 employees, the deadline was June 30, 2021.)

What if I already have a retirement plan in place?

You need to go here and certify your exemption.

Will this cost me anything?

As an employer, no it will not.

Is this a good plan for my employees?

I don’t think so. Here’s why I don’t like the CalSavers options for your employees:

1. High Fees: The fees for CalSavers range from 0.83%-0.95%. In other words, for every $100 you have invested, CalSavers takes between 83 and 95 cents. This quickly adds up – with 10 employees who each have $50,000 invested, that’s at least $4,125 ($412/employee) each year in fees for administering the account (not helping you invest or plan your retirement). Private 401(k) plans often have much lower fees. For example, Guideline offers admin fees of 0.08%.
2. Limited Tax Saving Options: CalSavers only offers Roth plans, which are post-tax deductions. There are no options if you’d prefer to reduce your tax liability now with a tax deductible contribution.
3. Limited Investment Options: I believe there are only five options for those using CalSavers plans.

Is it easy to set up a private 401k plan?

Generally, yes. Talk to your payroll provider.

I use and enjoy Gusto (use this link to get $100 for signing up) and have always found them to be very helpful.