CalSavers: California Employers with One to Four Employees Need to Act

CalSavers: California Employers with One to Four Employees Need to Act
Posted March 25, 2025

Do you have one to four employees? If so, do you have a qualifying retirement plan set up for those employees?

If not, as a California employer, it’s important to prepare now for the fast-approaching CalSavers compliance deadline. With the passage of Senate Bill 1126, California expanded its retirement savings mandate to cover even small employers (those with at least one employee), effective no later than December 31, 2025.

If your business does not already sponsor a qualified retirement plan (more on this below), you will be required to register with CalSavers or set up a different qualified retirement plan before year-end. This mandate is part of California’s ongoing initiative to ensure that all workers have access to retirement savings options.

Who Must Comply?

By no later than the end of 2025, registration with CalSavers is mandatory for any California employer with one or more employees (larger employers with five or more employees are already covered), unless the employer meets one of the following exemptions:

The employer already offers a qualified retirement plan (e.g., 401(k), 403(b), SIMPLE IRA, SEP IRA).
The business is closed or has been sold.
The only workers are the owner(s), with no other employees.
The employer is a government entity, religious organization, or tribal organization.

If you are unsure whether your current plan qualifies, you may review eligible plan types on the official CalSavers employer site or consult a qualified financial planner.

What is CalSavers?

CalSavers is a state-administered Roth IRA program designed for employees who do not have access to a workplace retirement plan. Once enrolled, employees contribute directly from their paychecks into an individual retirement account managed by the state. Unless they opt out, eligible employees are automatically enrolled 30 days after hire.

Who is an Eligible Employee?

An employee is considered eligible for automatic enrollment if they:

Are at least 18 years old, and
Have worked for the employer for 30 days or more

Employees retain the right to opt out or adjust their contributions at any time.

What Do Employers Need to Do?

If you do not offer a qualified plan and do not meet an exemption, you must:

Register for CalSavers at https://employer.calsavers.com/
Enroll eligible employees, and
Facilitate payroll deductions for participating employees.

The State of California enforces compliance and may impose penalties for noncompliance, making early preparation necessary.

For assistance in navigating benefit plan options, and benefit plan compliance, please contact a qualified financial planner or a benefits/ERISA attorney.

For employment law issues, contact the attorneys at LightGabler LLP..