There is an important deadline quickly approaching for California business owners. By June 30, 2022, employers with five or more employees are REQUIRED to have a retirement plan in place for workers. Retirement plan options include a private-market option, such as a 401k or a state-run program such as The CalSavers Program.

If you are a business owner, don’t worry – Big Picture Results can help you sort through your options, as we are committed to finding cost-efficient plans for our clients and other local business owners. Although this only applies to companies with five or more California-based employees, companies of any size can register for a 401k plan now and begin helping their employees save up for retirement!

Note that CalSavers will impose penalties (starting at $250 per employee) for non-compliant employers.

- Jessica Hornbeck, CEO & The BPR Team

What is CalSavers?

CalSavers is a California state program that focuses on getting California residents and small businesses access to affordable retirement saving plan. The retirement savings program helps closes the gap with a portable, low-cost way to save and enables employers to automatically help workers save in a Roth IRA. Using the CalSavers platform, employees enrolled in the plan can choose their own contribution rate, stick with the default contribution, or opt out. In addition, employees can also select investment funds.

There are no fees or other costs for employers who enroll in CalSavers. Employees who enroll do pay a percentage of their balance as an annual fee to CalSavers.
 

Other Options...What Is Guideline?

A cost-efficient private-market option that Big Picture Results highly recommends is Guideline. Guideline focuses on providing a straightforward retirement plans for small and mid-sized businesses.

Guideline has three plans that work for businesses with various budgets: Core, Flex and Max plan. The Guideline plans include the following features: plan management, investment management, on-going support, filing/reporting and plan design features.

Guideline vs. CalSavers? Which Is The Right Fit?

CalSavers is a great place for many small businesses to start, especially for those business that are not in the place to extend their employee benefits at this time.

However, other options include offering employees with a 401k plan through a company such as Guideline. Using CalSaver, there is a maximum contribution of $6,000 for workers under the age of 50. However, using a 401 (k) plan offered by companies such as Guideline, employees have access to higher contribution limits, as 401 (k) plans allow an employee under the age of 50 to contribute up to $20,500.

Additionally, CalSavers does not offer employer matching contributions. In comparison, using Guideline, employers can offer matching contributions to their employees as an additional benefit.

Note that not all businesses will be eligible for CalSavers (due to income and other factors), refer to the CalSavers website for more information.

What is a 401(k) Plan with a TPA & Fiduciary?  (most costly option)

Should your company require more support and ongoing assistance, we recommend that you explore a 401 (k) plan with a Third-Party Administrator (TPA).

TPA are responsible for running many of the day-to-day aspects of your retirement plans and are readily available to employers and provide employees with additional investing guidance.

BPR can put you in touch with a trusted Fiduciary. If interested, email ops@bigpicresults.com.
 

Employers Next Steps

Employers should register through the CalSavers website or another qualified private-market alternative, like a 401 (k) plan through Guideline. After the registration progress is completed, the employer must add all eligible employees within 30 days of completing the registration progress.

For more information about the California State Retirement plan requirement, read the CalSavers FAQs: HERE or Contact Big Picture Results.

Big Picture Results is hosting WEBINAR and Q&A about retirement plan options, the CA deadline, and Guideline’s services. Interested in attending? Please fill out the following POLL HERE to vote on a date & time.

An additional communication, with a link to RSVP, will be sent out once the webinar date & time is confirmed. Email us if you have any further questions!