June 2022 Benefits Monthly Newsletter

Final Deadline for California Mandated Retirement Benefits

We’ll cut straight to it: business owners with 5+ California employees are required to offer a company-sponsored retirement plan by June 30, 2022, or face fines. If your business is not currently offering a retirement plan, read on to learn your options: 

Option one: Enroll through CalSavers
CalSavers is California’s retirement savings program, and provides employers means to create an individual retirement account (IRA) for each eligible employee.

CalSavers is a Roth IRA program, meaning In 2022, contributions through post-tax deductions can be up to $6,000 (plus $1,000 more for taxpayers who are 50+). Though the program is better than nothing, there is still a heavy manual administrative load for employers. CalSavers may also lack some of the flexibility and investment fund offerings your business may need and employees desire.

CalSavers | Employer Information

Option two: Choose a private 401(k) provider
Offering a 401(k) plan through a private provider can impact the growth potential of your plan.

An employer-based 401(k) or 403(b) retirement plan reduces the amount of wages reported on your tax return, thus lowering your taxable income. For 2022, up to $20,500 is allowed for contributions. Workers who are 50 and older can make an additional $6,500 in catch-up contributions.

What happens if I do nothing?
Employers will receive fines for failure to provide a retirement savings option for their employees. Fines start $250 per eligible employee for 90 days of non-compliance and jump to $500 after 180 days.

Can we help connect you with one of our expert 401(k) partners?