CalSavers Made Simple: A Practical 2026 Guide for Employers
Beginning in 2020, CalSavers began phasing in by first requiring larger employers to register and then gradually extending the mandate to smaller employers over the following years. CalSavers has now fully phased in, and as of January 1, 2026, every California employer with at least one employee must offer either a qualified retirement plan or participate in the state’s CalSavers program. Here are the current guidelines.
California now requires employers with at least one W‑2 employee to either offer a qualified retirement plan (such as a 401(k), SEP, or SIMPLE IRA) or register for CalSavers if no plan is in place. If your business already offers a qualified plan, you are exempt from CalSavers but may need to certify that exemption through the CalSavers portal. CalSavers remains a state-sponsored Roth IRA program funded almost entirely by employee payroll deductions, and these accounts are subject to the same contribution and income limits that apply to other Roth IRAs under federal tax law.
Employer registration and deadlines
The original phase-in dates were based on total number of employees gradually phasing in from larger to smaller employers. Those dates have now passed, and guidance and enforcement now focus on employers with fewer than five employees and newly formed businesses. In practice, any employer with at least one eligible California W‑2 employee and no qualified plan is expected to register as soon as it becomes subject to the mandate, even if its phase-in date has already elapsed.
If your business is just now becoming subject to the rules – for example, because you recently hired your first California employee or terminated a prior retirement plan – you should register promptly or adopt a qualified plan and certify an exemption, rather than waiting for a state notice. Newly created employers are typically granted a brief grace period after hiring their first employee, but the state expects timely action once notices are issued.
To register in the CalSavers program or to certify an exemption for your business go to:
https://employer.calsavers.com/californiaertpl/enroll/createEmp/viewCollectEmpPreRegDetails.cs
How CalSavers works for your employees
Once registered, employers must upload an employee roster through the CalSavers website so the program can contact employees directly with enrollment information and instructions. There is no exception for short-term or part-time employees; any employee age 18 or older who receives a W-2 for California wages must either begin funding the plan or affirmatively opt out. Enrollment generally begins with the first paycheck issued at least 30 days after the employee receives the CalSavers notice, allowing time to review materials and make an election.
For employees who do not opt out, the default contribution rate is 5% of gross pay, with automatic 1% annual increases up to 8%, unless the employee elects a different rate. Employees control their investment choices within the program lineup and may opt out at any time or select a higher or lower contribution rate, subject to Roth IRA limits. Employees already participating through payroll can also make additional contributions directly from a linked bank account, either as one-time deposits or recurring transfers, subject to Roth IRA contribution limits. Individuals who are not participating through an employer (for example, self-employed individuals) can open a CalSavers IRA on their own and contribute via bank transfer, again within the usual Roth IRA dollar and income limits.
Employer responsibilities and penalties
Employers that participate in CalSavers have three core responsibilities:
- Provide accurate employee information to CalSavers and keep it up to date.
- Facilitate payroll deductions each pay period and remit contributions in a timely and accurate manner.
- Provide any required notices or disclosures that the program or state directs employers to distribute.
Employers do not have fiduciary responsibility for employees’ investment selections or account performance under CalSavers. However, failure to register or to facilitate the program when required can result in penalties: employers may be assessed $250 per eligible employee after receiving a notice of noncompliance, increasing to $500 per employee if noncompliance continues for more than 180 days after the initial notice. For small businesses, these penalties can add up quickly, making early compliance and good documentation especially important.
What you should do now
For 2026, California employers should:
- Confirm whether your business currently sponsors a qualified retirement plan that covers your California employees; if so, document plan details and consider certifying your exemption in the CalSavers system.
- If you do not offer a plan, decide whether to a) implement a private retirement plan (such as a 401(k)) or b) register for CalSavers and facilitate employee Roth IRA contributions.
- If you choose CalSavers, complete registration, upload your employee roster, and coordinate with your payroll provider to ensure contributions are calculated and remitted correctly each pay period.
- Communicate with employees so they know to expect CalSavers correspondence, understand the default 5% contribution and automatic increases, and are aware of their ability to opt out or change their rate.
If you have any questions about how these rules apply to your specific situation, including whether a current retirement plan qualifies as an exemption, please contact us so we can help you evaluate your options and ensure that you remain in full compliance.
