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Retirement Planning > Saving for Retirement

Federal Court Saves CalSavers, Dismisses Lawsuit

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A federal court has dismissed a lawsuit challenging the California Secure Choice Retirement Savings (CalSavers), which provides access to retirement savings to residents who aren’t offered one at work.

The U.S. District Court for the Eastern District of California found that CalSavers is not pre-empted by the Employee Retirement Income Security Act of 1974 (ERISA) which was the argument posed by the conservative tax group that brought the suite.

“The Court finds that CalSavers is neither an employee benefit plan nor does it relate to an ERISA plan. On these grounds, the Court concludes that CalSavers is not preempted by ERISA and accordingly, Defendants’ Present Motion is granted,” said U.S. District Judge Morrison C. England.

(Related: California Launches Retirement Savings Program for Employees Without One)

“We are very pleased with the Court’s ruling,” said California State Treasurer Fiona Ma, in a statement. “There is no reason to deny millions of hardworking Californians access to this savings program when the alternative is to see them work until they drop, or suffer the hardships that come with little to no savings.”  Ma’s office oversees the CalSavers program.

Executive Director Katie Selenski reported that “more than 1,500 employers have registered” for the program since it launched on July 1, 2019 and “the pace of new registrants is accelerating in the lead up to the first employer deadline on June 30, 2020.”

Employers with more than 100 employees who have not sponsored a retirement plan  must register for CalSavers by June 30, 2020. Registration for employers with more than 50 employees is required by June 30, 2021 and for employers with at least five employees by June 30, 2022.

Registration is free for employers and they have to fiduciary liability for the CalSavers program but they are responsible for providing their employee roster to CalSavers and for remitting payroll contributions each period,

The lawsuit challenging CalSavers was brought by the Howard Jarvis Taxpayers Association, named after the California taxpayer who sponsored Proposition 13, which reduced California property taxes and limited their future increases, starting in 1978.


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