What is CalSavers?
In 2019, CalSavers was implemented as a mandatory retirement program for all California employers. Over the next three years, this program will become required for:
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any employer who does not offer an employee sponsored retirement plan, and
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any employer who has five or more employees.
Once an employer signs up for CalSavers, their employees are automatically enrolled into a Roth IRA and make contributions from their paycheck.
Does an Organization have to use CalSavers?
No. CalSavers is one option, but you can choose whatever retirement plan provider/option you think best. If you’re a California employer who does not offer an employee sponsored retirement plan, has five or more employees, and is not exempt, you will need to find a retirement plan that suits your organization. For example, Envoy Financial specializes in retirement plans for those in ministry.
Can Employers Contribute to Calsavers?
No. Employers are not allowed to contribute.
The Employer’s Role in CalSavers
The employers must remain neutral about the plan. This means that they should not encourage or discourage employees to join the plan. They also may not provide contribution advice, answer any questions about the plan, help with investment decisions, or process distributions.
When an employer signs up for the plan, they hand over their employee’s information to CalSavers and are not available to employees for any advice or counsel. CalSavers is the only one who provides retirement planning information, and explains all options.
With CalSaved, your Faith-Based organization has access to experts in Faith-Driven retirement planning plus advice and counsel.
The Employee’s Role in CalSavers
CalSavers is an automatic enrollment program, which means that employees must be automatically enrolled unless they choose to opt out.
The employee must choose their level of involvement in the plan.
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If they don’t decide, or don’t respond, they will be automatically enrolled in the plan within 30 days.
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They may choose to change their investment options from a secular target-dated fund to one of the 4 limited options available.
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California law requires that CalSavers invite the employee to join the plan every two years if they opt out initially.
When an employee leaves their job, they can remain in the plan.