Common Questions About CalSavers
How many employees trigger the California mandate?
Businesses with 5+ W-2 employees are required to comply with CalSavers. Only W-2 employees count — 1099 contractors do not.
What is the penalty for non-compliance?
California employers face fines of $250 per employee for the first year of non-compliance, escalating to $500 per employee per year for continued non-compliance. CalSavers is fully enforced by the California Franchise Tax Board.
Can I be exempt if I already have a 401(k)?
Yes. If your business already sponsors a qualified retirement plan (401k, 403b, SIMPLE IRA, SEP-IRA, or pension), you can apply for a Certificate of Exemption through the CalSavers portal at calsavers.com.
Is it better to enroll in the state plan or get a private plan?
Both options satisfy the mandate. The state plan (CalSavers) has no employer setup cost but offers limited contribution limits ($7,000/year IRA limit). A private 401(k) allows contributions up to $23,500/year plus employer match, and may qualify for up to $15,000 in SECURE 2.0 federal tax credits. Many small businesses find a private plan offers better value long-term.