Understanding the CalSavers Mandate: Employer’s guide to California's state-run retirement savings program
Have you heard of the CalSavers retirement plan mandate? This program was created to help private-sector employees in California begin saving for retirement—especially since many workers approach retirement age with little or no savings. For employers, it offers a straightforward way to provide employees with access to a retirement savings plan, without needing to manage a traditional 401(k).
Established in 2016, CalSavers is California’s official state-sponsored retirement savings program.
Employers that don’t offer a qualified retirement plan (such as a 401(k)) are required by state law to enroll in CalSavers.
The program is funded entirely by employee contributions—there are no employer fees or matching requirements.
Because CalSavers is mandated by state law, compliance is not optional. Employers without an existing qualified plan must participate in CalSavers.
But if you’re just now learning about the mandate, don’t worry—this guide will walk you through everything you need to know.
More and more states are implementing their own retirement programs in response to a growing concern: many private-sector employees are heading toward retirement without adequate savings. Rising living costs – like food, housing, and fuel – have made it difficult for many to prioritize long-term financial planning.
At the same time, a large portion of Americans are nearing retirement age with little or no savings. In response, states like New York, Colorado, Connecticut, Maryland, and Virginia have launched their own programs, following California’s lead with CalSavers.
In simple terms, CalSavers requires California employers to enroll in the program if they:
Don’t already offer a qualified retirement plan, and
Have one or more eligible employees on payroll.
According to the California State Treasurer’s Office, CalSavers was the first state-run retirement savings program in the U.S. created specifically for private-sector workers.
No, if your business already provides a qualified retirement plan, you are exempt from the CalSavers mandate. However, if you don’t currently offer access to a retirement savings option and have at least one employee, state law requires you to enroll in CalSavers.
If your business offers any of the following plans, you likely do not need to participate in CalSavers:
401(a) – including 401(k) plans
408(k) – Simplified Employee Pension (SEP) plan
403(a) – Qualified annuity plan
408(p) – SIMPLE IRA plan
403(b) – Tax-sheltered annuity plan
457(b) – Governmental deferred compensation plan
Good news for your bottom line: CalSavers costs employers nothing. There are no fees for participating businesses, and employers are not required (or even allowed) to contribute to employee accounts. The program is entirely employee-funded through payroll deductions.
If you’re exploring your options and trying to decide which retirement plan best fits your business, our Small Business 401(k) Guide is a great place to start. The great news? Whether you go with CalSavers or a private provider, there’s a retirement savings solution for every company—no matter the size.
CalSavers has rolled out in phases since it became law in 2016. Here’s a quick timeline of registration deadlines:
June 30, 2022: Employers with 5 or more employees were required to register or offer a qualified plan.
This deadline followed earlier phases for larger employers, starting in 2020.
Other key enforcement deadlines included: Sept 30, 2020; June 30, 2021; Dec 31, 2022.
⚠️ If you missed your deadline, enforcement is already underway. According to CalSavers, employers that are still noncompliant must register immediately or face penalties.
Next major deadline: December 31, 2025
Employers with 1 to 4 employees must either adopt a qualified plan or enroll in CalSavers by then.
Nobody likes penalties—but they’re real. Beginning in 2023, the state began enforcing fines for noncompliance. Here’s how they’re applied:
If you don’t offer a plan within 90 days of receiving a notice, you’ll face a $250 fine per eligible employee.
If you’re still not compliant after 180 days, you’ll be fined an additional $500 per employee—bringing the total to $750 per person.
📌 You can find detailed information about penalties in the official CalSavers legislation.
Nope. Participation is voluntary. But employees must meet a couple of criteria:
Be at least 18 years old
Be classified as an employee under California law (receiving a W-2 with California wages from an eligible employer)
Employees contribute through automatic payroll deductions. CalSavers is structured as a Roth IRA, and in 2025, contribution limits are:
Up to $7,000 annually
Up to $8,000 if the employee is 50 or older (per IRS rules)
If employees don’t make changes, the default contribution rate is 5% of their gross pay, deducted after taxes.
They can log into their CalSavers account anytime to adjust the rate. If they take no action, their rate will auto-escalate by 1% annually, up to a maximum of 8%.
Employees can opt out at any time, and best of all—the account is portable. So if they change jobs, the savings go with them.
