California law now mandates that you must offer a retirement plan.
Millions of California residents don’t have an employer-based retirement plan and have no retirement savings. So, to make sure that everyone has access to a workplace retirement plan, California passed a new law that applies to for-profit and nonprofit businesses.
It states that if you don’t offer an employer-sponsored retirement plan—and you have five or more employees—you must either offer a retirement plan or participate in in the state-run plan called CalSavers.
The state mandate has a three-year phased rollout with staggered deadlines for registration, based on your company’s size.
- If you have over 100 employees the deadline was September 30, 2020.
- If you have over 50 employees the deadline is June 30, 2021.
- If you have 5 or more employees the deadline is June 30, 2022.
What’s the CalSavers plan?
The CalSavers program is a retirement plan controlled, offered, and managed by the State of California.
If you don’t offer a qualifying company retirement plan, you’ll need to enroll in CalSavers for your employees. CalSavers is an IRA-based plan that requires all employees to be automatically enrolled. Employees can opt out of CalSavers.
How much does CalSavers cost?
Your employees will pay plan administration fees that can range from 0.85% to .95% these fees will be deducted directly from the assets in their retirement plan.
There are no fees for employers and CalSavers requires no matching contributions.
Who’s exempt from the CalSavers law?
You are exempt if your business offers a 401k or other qualified retirement plan such as a 403b, a Simple IRA, or a Payroll Deduct IRA with auto-enrollment.
If you have fewer than 5 employees, your business is also exempt.
What’s the Icon Savings Plan?
Icon is the easiest and most affordable way to offer a retirement savings plan.
Icon is a payroll-deduct IRA with auto-enrollment, and is built with modern digital technology.
Icon removes high costs, complexities, and administrative burdens from employers. Likewise, you have no federal filing requirements and no fiduciary responsibilities. There are no matching contributions, and the employee annual contribution limit is $6,000, or $7,000 for employees over 50 years old.
For employees, Icon delivers an easy-to-use plan with a browser-based interface. Savings are invested in a portfolio tailored to the needs of the individual. The Icon auto-advisor monitors and automatically rebalances a diversified portfolio of ETFs (Exchange Traded Funds) from leading asset managers like Vanguard and BlackRock.
You can enroll in about 5 minutes. And to set up your plan takes about 30 minutes. Icon integrates with your payroll and provides a streamlined dashboard for easy plan administration.
Your employees will be automatically enrolled, as required by the state mandate, and they can opt-out at any time.