What is CalSavers? CalSavers is California’s state-mandated retirement savings program that requires 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. If you’re a California employer who hasn’t yet registered or obtained an exemption, you may already be facing penalties.
CalSavers launched its phased rollout starting with larger employers and has since expanded to all businesses with 5+ employees. The California Franchise Tax Board (FTB) actively enforces the mandate by cross-referencing EDD payroll records — making it one of the most aggressively enforced state retirement programs in the country.
Who Must Enroll in CalSavers?
Any California private-sector employer with 5 or more W-2 employees must either enroll in CalSavers or establish a qualifying private retirement plan and file for exemption. Key rules:
- Count includes both full-time and part-time W-2 employees
- 1099 independent contractors do NOT count toward the threshold
- Federal, state, and local government employers are exempt
- Non-profit organizations with 5+ employees ARE covered
- No business age exemption — even newer businesses must comply
CalSavers Penalties: What You Could Owe
CalSavers penalties are among the steepest of any state retirement mandate:
- Year 1: $250 per employee who should have been enrolled
- Year 2+: $500 per employee per year for continued non-compliance
For a 20-person California business, that’s $5,000 in the first year and $10,000 per year after that. The FTB actively identifies non-compliant businesses and sends penalty notices.
CalSavers Exemptions: Qualifying Plans
If your business already offers a qualifying retirement plan, you’re exempt from CalSavers — but you must proactively file a Certificate of Exemption at calsavers.com. Qualifying plans include:
- 401(k) plan
- 403(b) plan
- SIMPLE IRA
- SEP IRA
- Defined benefit pension plan
- 457(b) plan
How to Register for CalSavers
If your business doesn’t have a qualifying plan, here’s how to enroll:
- Visit calsavers.com and create your employer account
- Enter your EIN and business information
- Upload your eligible employee roster
- Configure your payroll system for the default 5% deduction
- Send required employee notices explaining the program and opt-out rights
- Submit your enrollment and save your confirmation number
CalSavers vs. a Private 401(k): Which Is Better?
CalSavers satisfies the mandate with zero employer cost, but it limits employee contributions to $7,000/year (the IRA limit). A private 401(k) allows contributions up to $23,500/year, offers pre-tax options, allows employer matching (tax-deductible), and may qualify for SECURE 2.0 federal tax credits up to $15,000.
Many California employers find that a private plan — especially a SIMPLE IRA or 401(k) — offers significantly better value for their employees while satisfying the mandate. The net cost after SECURE 2.0 credits is often comparable to or less than the administrative overhead of managing CalSavers.
📖 Read the full guide: CalSavers Compliance Guide for California Employers
🌐 View California state details: California State Mandate Overview
