California set to fine employers that have ignored auto-IRA registration-Pasadena Chamber Multiple Employer Plan could avoid penalties for your company as you provide enhanced benefits for your employees

More than 650 employers in the state will be sent notices that they're not in compliance. Fines start at $250 per employee.

 

California is starting to crack down on businesses that haven’t registered for its CalSavers automatic IRA program and don’t offer their own retirement plans, the state announced Wednesday.

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The Pasadena Chamber of Commerce Multiple Employer Plan (MEP) retirement program can help you avoid penalties, save money and provide for the retirement of your trusted employees. You can get information and schedule a consultation by clicking here: https://mep.pasadena-chamber.org/

More than 650 employers in the state will be sent notices that they’re not in compliance, said Katie Selenski, executive director of CalSavers. That includes 381 businesses that haven’t responded to the state at all since the first deadline on Sept. 30, 2020, as well as employers that registered for the program but have since failed to make it available for their workers.

The businesses that have not responded to the state will be the first to be penalized, with fines starting at $250 per employee. Those employers that don’t comply after another 90 days will then be fined an additional $500 per worker, according to the state.

In its announcement, California urged employers with 100 or more workers to register if they haven’t done so, before those fines are imposed.

“Our goal with this whole process is to bring employers into compliance,” Selenski said.

The money collected from fines will be used to help pay down a startup loan the program received from the state’s general fund, although that purpose for the penalties is secondary to ensuring participation, Selenski said.

CalSavers has been rolling out the program in waves, with businesses with 100 or more workers being required to sign up or provide their own retirement plans in mid-2020. The second wave started last year, with companies with at least 50 employees having to register on June 30, 2021. Penalties for noncompliance for the second group of eligible businesses will go into effect halfway through 2022.

The most significant deadline is this year, however, when businesses with five or more workers will have to register. Coverage goes into effect for that group on June 30.

“This final wave, we expect to result in very rapid growth,” both in terms of the number of businesses and covered employees, Selenski said. That wave represents about 90% of the employers that will be subject to CalSavers and the state’s coverage mandate.

The program currently represents about $175 million across 220,000 funded accounts at 23,000 employers, according to a separate notice CalSavers published Thursday. The average balance in accounts that are funded is nearly $800, although more than half of all accounts hold less than $500, as many of them are recently opened. About 9% of accounts hold between $2,000 and $5,000.

Among different industry sectors, accounts are most common in accommodation and food services, representing a quarter of all participants. The next most common sector is is administrative and support and waste management and remediation services, at 18%. Health care and social assistance workers account for 14% of accounts.

The majority of accounts, 97%, are invested in the CalSavers Target Retirement Funds, according to the state.