California is mandating a retirement savings program for private sector companies who currently do not offer a retirement plan. This mandate is being phased in, but employers who don’t offer a retirement plan must participate in CalSavers or face possible financial penalties*. 

Deadlines are based on company size.  The implementation deadlines are as follows:

·       Sept. 30, 2020: Businesses with 100-plus employees

·       June 30, 2021:  Businesses with 50-plus employees

·       June 30, 2022:  Businesses with five-plus employees

If the Company does not already have a qualified plan in place, to comply they will need to follow the requirements below:

  • Companies must register their business with CalSavers. Once registered, they have one year before the mandated deadline stated above. 
  • Company contributions will not be permitted and will be required to enroll eligible employees and submit employee contributions.
  • Employees will be automatically enrolled unless they go on CalSavers and decline.  

 

The Pasadena Chamber offers an alternative to CalSavers

  • Multiple Employer 401(k) Plan (MEP) 
  • Companies may choose their own amounts to contribute to the plan 
  • Employees may enroll or decline with their employer under the Chamber MEP plan. They are not required to enroll.
  • Transamerica Retirement will provide the platform and administrative channels to automatically process contributions and other transactions. 
  • You can save money on administrative costs. Your employees can see lower fees.
  • You are relieved of burdensome reporting and enrollment requirements under CalSavers. 

 

Here is an overview of the Chamber MEP 401K plan: 

Please feel free to reach out for more information to Brian Muth of Pasadena Private Wealth at BMuth@pasadenapw.com. 

*Employers could face financial penalties for not having a retirement savings plan available for eligible employees to join. The proposed fines range from $250 per eligible employee if an employer remains noncompliant after 90 days of being served notice, escalating to $500 per eligible employee if noncompliance reaches 180 days or more after the notice.