California to Fine Employers Who Spurn CalSavers Auto-IRA
Employers without a retirement plan and more than 100 employees could be penalized $250 per employee.
California announced Wednesday that it will begin fining employers in January if they fail to register for the state’s auto-IRA, the CalSavers Retirement Program.
“We strongly urge employers to come into compliance now before we mail penalties this month,” said Katie Selenski, CalSavers’ executive director, in a statement. “Our service representatives are standing by to assist you and the vast majority of employers find it easy to comply.”
Employers failing to register that do not offer a private retirement plan and have more than 100 employees will be penalized $250 per employee.
“The very first notices to that group [employers with more than 100 employees] were sent out today, by paper mail,” Selenski told ThinkAdvisor in a phone interview. “We’re starting with a small group of 20 employers.”
“In about 10 days,” she continued, “we’ll send the next 200 employers their penalties.”
During the first week of February, another 161 employers will get their notices, she said.
As of Thursday, 381 employers have been “completely unresponsive,” Selenski said, while “281 have registered but have failed to complete the onboarding process.”
Employers will have 90 days to register for CalSavers after receiving their first notice; if they fail to register, an additional $500 per employee will be assessed, she said.
More than 24,000 employers have already registered, according to CalSavers.
The CalSavers Retirement Savings Board, which has sent “dozens of notifications” by letter and email since CalSavers launched three years ago, will levy the fines in partnership with the Franchise Tax Board.
Participants have saved more than $175 million for retirement through the program.
“With more than 220,000 accounts already funded, the early growth is a positive sign for improving retirement security as the program continues to roll out to employers of all sizes,” Selenski said.
Mandated employers must register for CalSavers at www.calsavers.com before their applicable deadline.
The deadline for businesses with more than 100 employees was Sept. 30, 2020, delayed from June 2020 due to COVID-19.
The deadline for businesses with more than 50 employees passed on June 30, 2021, and noncompliance penalties for this group are slated for mid-2022.
The deadline for employers with five or more employees is June 30, 2022.