June 30th CalSavers Deadline Quickly Approaching
Reading time: 3 minutes
Many California small businesses have been focused on dealing with the issues created by the COVID-19 pandemic. The various state and local government regulations have directly or indirectly impacted business, making it challenging to reach strategic, operational, and financial goals. This has led many to more closely manage expenses to ensure the business is ready for the upcoming recovery. In fact, signs of a change are on the horizon as California recently announced the mask mandate would expire on June 15, 2021, allowing the economy to reopen fully. Despite the good news, it is important not to forget about the upcoming June 30th deadline to register with the CalSavers program. State law requires businesses that do not offer a retirement plan to participate in the program. To help clients, prospects, and others, JLK Rosenberger has provided a summary of the key details below.
What is CalSavers?
It is a retirement savings program for workers whose employers do not offer a retirement plan. The program is designed to make it easy for businesses to help employees save for retirement by creating a plan structure with no employer fees, no fiduciary liability, and minimal employer responsibility.
The registration process is simple and consists of four setup steps. When completed, only minimal updates will need to be submitted over time. Once access to the website has been granted, employers must complete the following steps:
- Add Delegate Information – Since the program can be managed by someone other than the business owner, it is necessary to add delegates or payroll representatives. The program’s website allows individuals to be assigned different roles and various levels of responsibility and authorization within the program.
- Create an Employee List – This is a list of eligible participants in the program. It should include starting pay date, employee name, compensation type, pay cycle and start date of employment. In addition, employers are required to set an employee contribution pay date which is at least 30 days from the date of list creation, to allow suitable time for eligible employees to opt-out.
- Add Bank Information – The next step is to add relevant bank information if the business intends to fund contributions through ACH or wants to have a specific account debited.
- Send Contributions – During payroll, employers will deduct a percentage of each employee’s pay and send it to CalSavers. The percentage amount will be displayed on the employer account page. Be sure to pay special attention to this information as it may change over time.
The ongoing responsibilities for the program are minimal. Employers are only required to submit employee contributions and add/remove employees that have joined/left the company. Since CalSavers does not have any employer fees or matching contribution responsibilities, the employer has no financial burden. In addition, routine tasks such as plan information dissemination, employee registration, investment management, processing distributions, answering questions about investment options, and account maintenance are not the employer’s responsibility. CalSavers is responsible for managing these tasks.
The June 30th registration deadline applies to small businesses that employ between 50-99 employees. Those with over 100 employees were already required to register by September 30, 2020, and the deadline for those with 5 or more employees is in June 2022.
Eligible businesses without good cause, do not register for CalSavers, or fail to allow eligible employees to participate within 90 days of receiving a service notice, will be subject to non-compliance penalties. The per-employee penalty for noncompliance after 90 days is $250 per eligible employee, and it increases to $500 when noncompliance extends beyond 180 days.
The registration deadline for California employers with 50 to 99 employees is quickly approaching. Given the penalties, it is important to register and ensure your business is set up to participate. If you have questions about the information outlined above or need assistance with a tax or audit issue, JLK Rosenberger can help. For additional information, call us at 949-860-9902 or click here to contact us. We look forward to speaking with you soon.