CalSavers Retirement Program

It is no surprise that a large portion of American workers are not prepared for a comfortable retirement. With the relentless rising costs in California, and fewer opportunities for employees to invest in retirement accounts through employers, California implemented the California Savers Retirement Program on September 30th 2020. CalSavers, a state mandated law, is designed to help assist the roughly 7.5 million California workers who lack access to employer-sponsored retirement plans.

The law states that all California business owners with 5 or more employees, must either provide a qualified company sponsored retirement plan, or adopt the state-run retirement program. For participating businesses, the payroll-deducted Roth IRA will auto-enroll all employees at 5% of after-tax income to the plan, unless the employees proactively opt out. The plan also will auto-escalate, increasing 1% each year, up to a max of 8%.  

For 2020, the annual contribution limit for this Roth IRA is $6,000 for those under 50 and $7,000 for those 50 or older. This limit applies to all IRA accounts in aggregate. Individuals with IRA accounts in addition to the CalSavers account will need to ensure that in combination, the contributions do not exceed the allowable federal limits for IRAs. Eligibility to participate in a Roth IRA is limited to certain annual income levels. To determine eligibility for contributions to a Roth IRA, please visit the IRS website.

Employers who are foregoing establishing their own sponsored retirement plan, are required to participate in the CalSavers program. They will need to register their business at Employers are required to create the account, manage the account, and transmit the deferrals each payroll. The implementation deadlines are as follows:

  • Sept 30, 2020 = Businesses with more than 100 employees
  • June 30, 2021 = Businesses with more than 50 employees
  • June 30, 2022 = Businesses with 5 or more employees

If your company has applied for the CalSavers program and would like some more information on how our HCM platform can assist you with your employer obligations, please send us an email at

For more detailed information on CalSavers, please visit their website at

Disclaimer: These materials are provided for informational purposes only and are not intended as legal or tax advice. Readers of the Innovative Blog should contact their legal or tax professionals to discuss how these matters relate to their individual circumstances.

Scroll to Top