Attention Employers! Required State-Based Retirement Programs Are Here

A number of states have enacted (or plan to enact) laws that require certain private employers to enroll employees in a state-based retirement savings program. Generally, these rules apply to employers that do not sponsor a qualified retirement plan like a “401(k) plan.” The state-based programs are typically automatic enrollment individual retirement arrangements for which the employer facilitates payroll deductions, but that are otherwise managed by the respective state. 

California’s program is called the CalSavers Retirement Savings Program (“CalSavers”).

If a company employed an average of one or more California-based employees who received California wages in the previous calendar year (at least one of whom is age 18) and the company does not sponsor a retirement plan such as a 401(k), SEP, or SIMPLE plan, the company is an eligible employer and is required to register for CalSavers and establish a payroll deposit retirement savings arrangement. Deadlines for registering varied depending on the number of California employees an employer had, but as of December 31, 2025, all employers with at least one such employee must register. 

Eligible employers must:

• Provide CalSavers basic identification and contact information while registering;
• Provide CalSavers with certain contact and identifying information for each eligible employee; and
• Set up a payroll deposit retirement saving arrangement to remit employees’ contributions to a trust established by CalSavers.

Under CalSavers:

• Eligible employees are automatically enrolled but may opt out.
• Employers are not required to and in fact cannot make contributions on behalf of employees or match employee contributions.
• Penalties apply to non-compliant employers, including a $250 per eligible employee penalty for initial noncompliance and an additional $500 per eligible employee penalty for continued noncompliance; other penalties may apply.

More details can be found at CalSavers | A simple, trusted way to save for retirement. 

Note that aspects of these state-based retirement programs can vary, such as in the size of the employers subject to the mandates, required deferral percentages, reporting requirements, penalties, and exemptions. If a company employs residents of multiple states, it will want to familiarize itself with the requirements and features of the applicable state-based programs. 

Your MoFo Benefits team is here to help you navigate as needed!