On August 26, 2022, California Governor Gavin Newsom signed SB 1126 which would expand the state’s retirement savings program (CalSavers) requirement to apply to all California employers with at least one non-owner employee. Previously, the requirement to participate applied to those with five or more non-owner employees. Newly covered employers must register with the program starting on January 1, 2026.
Determining the Employee Threshold
Employers may determine whether they are covered by averaging the number of employees they reported to the California Employment Development Department (EDD) during the previous calendar year’s tax filings.
Exceptions to Participation Requirements
Employers that currently offer a qualified retirment plans as part of its benefits package, such as a 401K, SEP plan or a SIMPLE IRA are not required to participate in CalSavers; however, they must still register to request an exemption from EDD.
Next Steps for Employers
Employers who have not registered should complete the process, as soon as possible, but no later than January 1, 2026 to avoid potential penalties of up to $750 per eligible employee. Employers can obtain more information on CalSavers and its requirements by visiting the CalSavers website.