CalSavers is California's state-mandated retirement savings program requiring private-sector employers with 5 or more employees to offer workers a payroll-deduction Roth IRA through the state program or a qualifying private plan.

What is the penalty for non-compliance with CalSavers?

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.

Who is exempt from CalSavers?

Employers who already offer a qualifying retirement plan such as a 401(k), SIMPLE IRA, SEP IRA, 403(b), pension, or 457(b) are exempt from CalSavers. You must file a Certificate of Exemption through the CalSavers portal.

How do I enroll in CalSavers?

Employers register through the official CalSavers portal at calsavers.com. You will need your EIN, employee count, and payroll information.

CalSavers Employer Compliance Guide (2026) | RetirementMandate.com

⚠️ Enforcement Active: CalSavers is fully enforced in California. Employers with 5+ employees who have not registered or obtained an exemption are subject to immediate fines of $250 per employee (Year 1) escalating to $500 per employee per year. The California Franchise Tax Board actively audits and fines non-compliant businesses.

What Is CalSavers?

CalSavers is California's state-mandated retirement savings program, requiring private-sector employers with 5 or more employees to either enroll workers in the state-administered Roth IRA or offer a qualifying private retirement plan. CalSavers is administered by the CalSavers Retirement Savings Board and is currently in full enforcement mode.

California leads the nation in state retirement mandate enforcement. The CalSavers program was phased in starting with larger employers and has now been extended to all employers with 5 or more employees. The California Franchise Tax Board (FTB) actively identifies and penalizes non-compliant businesses through cross-referencing EDD payroll records.

Employees enrolled in CalSavers contribute to a Roth IRA at a default rate of 5% of gross wages (increasing 1% annually up to 8%). Employees can adjust their rate or opt out within 30 days. Employers facilitate enrollment and payroll deductions but are not required to contribute.

Employee Threshold

$250–$500/yr

Penalty Per Employee

ENFORCED

Program Status

Default Contribution Rate

Who Is Covered Under CalSavers?

The mandate applies broadly to private-sector employers in California. Below is a breakdown of which employer types are covered:

Employer Type	Covered?	Notes
For-profit businesses with 5+ W-2 employees	YES	Must enroll or have qualifying plan
Non-profit organizations with 5+ employees	YES	Non-profits are included
Sole proprietors with no W-2 employees	NO	No employees = no mandate
Employers with qualifying retirement plan	EXEMPT	Must file exemption certificate
Federal government employers	NO	State mandate does not apply
Employers with 1099 contractors only	NO	Only W-2 employees count
New businesses (under 2 years)	YES	All CA employers with 5+ employees must comply regardless of age

Penalties for Non-Compliance

California has the most aggressively enforced state retirement mandate in the country. Non-compliant employers are identified through Franchise Tax Board records and face escalating fines:

$250–$500/yr

Per employee, per year for non-compliance with CalSavers

Penalty Calculator: What You Could Owe

Business Size	Year 1 Penalty	Year 2 Penalty	Year 3 Penalty
25 employees	$6,250	$12,500	$12,500
50 employees	$12,500	$25,000	$25,000
100 employees	$25,000	$50,000	$50,000

Important: These penalties are in addition to any back-registration fees. The best way to avoid penalties is to either enroll in CalSavers or establish a qualifying private retirement plan and file for exemption.

Exemptions & Qualifying Plans

If your business already offers one of the following qualifying retirement plans, you are exempt from CalSavers — but you must still file a Certificate of Exemption through the official portal at calsavers.com.

✅

401(k) Plan

✅

403(b) Plan

✅

SIMPLE IRA

✅

SEP IRA

✅

Pension Plan

✅

457(b) Plan

Having a qualifying plan exempts your business immediately. Note: you must actively maintain the plan and keep contributions current to maintain exempt status.

How to Enroll in CalSavers: 6 Steps

If your business does not have a qualifying plan, here is how to enroll in CalSavers:

Confirm your eligibility — Verify your employee count meets the 5+ threshold. Count all W-2 employees, including part-time workers.
Gather required information — Collect your Employer Identification Number (EIN), payroll schedule, and employee roster with dates of birth and hire dates.
Register on the portal — Visit calsavers.com and create your employer account. Complete the registration form.
Set up payroll deductions — Configure your payroll system to deduct the default 3% employee contribution (employees can opt out or change their rate).
Notify your employees — Send required employee notices explaining the program, contribution rates, and their 30-day opt-out window.
Submit your first enrollment — Upload your employee roster to the portal and submit. You will receive a confirmation and registration number.

Alternatively, establish a qualifying private plan (401k, SIMPLE IRA, etc.) to bypass the state program entirely and potentially provide better benefits for your team.

State Plan vs. Private Retirement Plan: Which Is Better?

Employers required to comply with CalSavers have two options: enroll in the state-administered Roth IRA, or establish a private retirement plan. Here is how they compare:

Feature	CalSavers (State Plan)	Private 401(k) / SIMPLE IRA
Employer cost	$0 setup	$500–$2,000 setup; flat-fee available
Employee contribution type	Roth IRA only	Pre-tax + Roth options
2026 contribution limit	$7,000/yr (IRA limit)	$23,500/yr (401k) or $16,500/yr (SIMPLE)
Employer matching	Not available	Optional (tax-deductible)
SECURE 2.0 tax credits	Not available	Up to $15,000 over 3 years
Recruiting advantage	Limited	Strong competitive benefit
Admin burden	Low — state manages it	Low with flat-fee TPA
Satisfies mandate	YES	YES

Bottom line: For most businesses with growth ambitions, a private 401(k) or SIMPLE IRA offers better contribution limits, tax advantages, and recruiting power — often at a similar or lower net cost once SECURE 2.0 credits are factored in.

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Frequently Asked Questions: CalSavers

Has the CalSavers deadline already passed?

Yes. All CalSavers enrollment deadlines have passed. Employers with 5+ employees who have not registered or obtained an exemption are subject to current enforcement and penalties. Register at calsavers.com immediately or establish a qualifying plan.

How does the California Franchise Tax Board enforce CalSavers?

The California FTB cross-references EDD payroll records to identify employers who should be enrolled in CalSavers but are not. They send notice letters followed by penalty assessments. Fines are $250/employee for the first 90 days, then $500/employee per year thereafter.

Does CalSavers apply to part-time employees in California?

Yes. Part-time W-2 employees who are 18 or older and worked at least 30 hours per week (or as designated) count toward your employee threshold and must be offered enrollment in CalSavers.

Can my existing SEP IRA exempt me from CalSavers?

Yes. A SEP IRA is a qualifying retirement plan under CalSavers. However, you must actively file a Certificate of Exemption through calsavers.com. Simply having the plan is not enough — you must formally register your exempt status.

What is the default CalSavers contribution rate?

The default employee contribution rate is 5% of gross wages, automatically increasing 1% each year up to a maximum of 8%. Employees can change their rate or opt out within 30 days of enrollment. Employers do not contribute.

Is a 401(k) better than CalSavers for California employers?

A 401(k) allows employees to contribute up to $23,500/year vs CalSavers' $7,000 IRA limit. It also allows employer matching (tax-deductible), pre-tax contributions, and qualifies for SECURE 2.0 credits up to $15,000. For businesses with growth ambitions, a private 401(k) offers significant advantages at comparable or lower net cost after credits.

Related Resources

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CalSavers Compliance Guide for California Employers