California Legislature Expands CalSavers, Mandatory Employer Retirement Plans

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August 30, 2022

California Governor Gavin Newsom has now signed into law SB 1126, allowing the expansion of the CalSavers Retirement Savings Program (previously Secure Choice) to employees working at the smallest of businesses, that is, businesses with at least one employee not including the owner.  CalSavers was enacted in 2016 to establish a mandate for California employers to participate in the program for those with at least five employees and who did not sponsor a retirement plan.

So what does this mean for California businesses? If you are an employer with at least one employee, you need to be aware that CalSavers has been expanded to:

1) Amend the definition of “eligible employer” to include all eligible employers that have at least 1 eligible employee instead of 5 or more.

2) Exclude from the definition of "eligible employer," sole proprietorships, self-employed individuals, or other business entities that do not employ any individuals other than the owners of the business; and

3) Require eligible employers with 5 or more employees that do not offer a retirement savings program to have a payroll deposit savings arrangement to allow employee participation in the program within 36 months after the board opens the program for enrollment. By December 31, 2025, the bill would require eligible employers with 1 or more eligible employees that do not provide a retirement savings program, to have a payroll deposit savings arrangement to allow employee participation in the program.

Of course, if you as an employer already sponsor or participate in a retirement plan for your employees, such as a 401(k) or pension plan, you are exempt from the requirement to participate in CalSavers.  In addition, even if your employees elect not to enroll in your retirement plan, the exemption from CalSavers is still available. 

For any questions regarding retirement plans for your employees and what, if anything, has changed for your workplace with the enactment of SB 1126, please contact McKague Rosasco LLP and we are happy to assist.