CALIFORNIA RETIREMENT PLAN MANDATE: HELP BUSINESS OWNERS BENEFIT
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It’s the law: California businesses with more than five employees must offer a retirement saving opportunity. Those who haven’t yet adopted an employer-based plan have two choices:
- Adopt their own retirement plan
- Register for CalSavers, the state-sponsored retirement savings program
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Contact a Regional Sales Consultant
Non-Compliant Employers Face Stiff Penalties
Employers who don’t comply with the California retirement plan mandate by their deadline date have to pay significant fines:
| Size of Business | Compliance Deadline Date |
|---|---|
| >100 employees | June 30, 2020 |
| >50 employees | June 30, 2021 |
| >5 employees | June 30, 2022 |
| >1 employee | December 31, 2025 |
- First penalty notice – $250 fine per employee
- Non-compliance persists more than 90 days – $750 fine per employee
You can help your clients avoid these fines and offer a retirement plan that will:
- Comply with the California mandate
- Reduce taxes
- Control costs
- Attract and retain top talent
- Maximize business value
- Enable them to work with their preferred business partners
CALSAVERS OR CUSTOMIZED PLAN?
CalSavers is a basic, one-size-fits-all retirement savings program for businesses that do not wish to sponsor a plan for their own employees. Yet there are many businesses that would be better served with a plan from TRA that’s customized to their needs.
| CalSavers | Custom 401(k) from TRA | |
|---|---|---|
| Pre- and Post-Tax Deferrals | Roth IRA w/ auto after-tax payroll deduction | Pre-tax or Roth elective deferral contributions |
| Contributions | Capped at $7,000 annually | Lesser of 100% of compensation or $23,000 |
| Catch-Up Contributions | Limited to $1,000 more — up to $7,000 in total — for those age 50 and older | Bigger catch-up contributions – $7,500 annually for those age 50 and older |
| Employer Match | Not available | Available |
| Income Limit | $135k single or $199k joint | No income limits |
| Investment Choices |
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Can provide a wide variety from top asset managers |
| Automated Payroll Integration | Not available | Available |
| Customizable for businesses | Not customizable | Yes – for example, Safe Harbor, SIMPLE, Profit-Sharing & Cash Balance |
| Tax Credit | No, since there are no start-up costs for employers | Yes – 50% of the expenses paid up to the greater of $500 or the lesser of $250 for each non-highly compensated employee, not to exceed $5,000 |
TRA Plans to Consider
For California businesses who want to sponsor a retirement plan, some plans to consider include:
• 401(k)
• Safe Harbor 401(k)
• Cross Tested Profit-Sharing Allocation
• 401(k) plus Cash Balance Plan
Other alternatives to CalSavers include SIMPLE 401(k) Plans, Group 401(k) Plans (MEPs, PEPs and Aggregation Programs), and 403(b) Plans (for non-profits).
Working closely with you, TRA will create a customized plan that meets your client’s business. We partner with top recordkeepers and investment managers around the country and deliver exceptional client service. We also offer 3(16) Plan Administration Relief Services (PARS) to relieve business owners of day-to-day plan administration responsibilities and manage their fiduciary risk.
Complete the form below and one of TRA’s Regional Sales Consultants will be in contact with you.
