If you’re a California employer with at least one employee, 2026 is the year to act on your retirement plan offerings. The final compliance deadline for California’s CalSavers program is December 31, 2025, and enforcement is now in effect.
What is CalSavers?
CalSavers is a state-sponsored retirement savings program designed to help Californians save for their future. It’s a Roth IRA program managed by the state, and it was created for private-sector workers whose employers don’t offer a retirement plan.
The latest requirements
While earlier deadlines applied to larger businesses, the final phase of the rollout includes the state’s smallest employers. If your business had at least one W-2 employee (other than the owner) in 2025, you are mandated to comply. This means you must either:
- Offer a qualified retirement plan, such as a 401(k), SEP plan, or SIMPLE IRA.
- Register with CalSavers (https://www.calsavers.com) and facilitate payroll deductions for your employees.
What if you already offer a plan?
If you already offer a qualifying retirement plan, you still have a mandatory task to complete. You must register on the CalSavers website (https://www.calsavers.com) and certify your exemption to avoid receiving penalty notices.
What happens if you don’t comply?
The state is serious about enforcement. Penalties for non-compliance are issued by the Franchise Tax Board and can be substantial.
- An initial penalty of $250 per eligible employee can be issued if non-compliance continues for 90 days after receiving notice.
- If non-compliance extends to 180 days, an additional $500 penalty per eligible employee may be levied, for a total of $750 per employee.
The path forward
CalSavers provides a straightforward, low-administration way to meet the state mandate for many small businesses. It requires no employer contributions and shifts much of the administrative burden to the state. However, employers are required to remit employee contributions through payroll.
For other businesses, offering a private retirement plan like a 401(k) may be a better option, as it can provide greater flexibility and tax benefits. The right choice depends on your business’s specific needs.
If you haven’t yet addressed your retirement plan obligations for 2026, it’s critical to act now. Visit the official CalSavers website (https://www.calsavers.com) to register or certify your exemption. If you plan on offering CalSavers to your employees, please contact Innovative support at ibssupport@ibspayroll.com to set up a CalSavers payroll deduction for employee deferrals.
Disclaimer: These materials are provided for informational purposes only and are not intended as legal or tax advice. Readers of the IBS Blog should contact their legal or tax professionals to discuss how these matters relate to their individual circumstances.