Here are the benefits of complying with the California retirement program mandate before the June 30, 2022 deadline
Life happens – people move in and out of their homes, families grow, we experience ups and downs. For Latinos in the U.S., not finding financial wellness support that they trust and that can meet their needs can cause them to lose interest in placing money in a retirement savings plan.
If you own a small or medium-sized business in the state of California, you need to know that the California Secure Choice Retirement Savings Trust Act requires all businesses with five or more employees on payroll to offer a retirement savings program to their employees.
Businesses have the option to either sign up for a qualified private retirement savings plan like the Finhabits 401k plans or register for the state-sponsored program. You must choose an option and register before the June 30, 2022 deadline.
Latinos helping Latinos
Latino employers see their workers as an extension of their families. Sadly, the high number of Latino workers in California who lack any kind of retirement savings program is so alarming that the UC Berkeley Labor Center says this disparity “indicates the need for focused policy attention on improving their retirement income prospects.” A recent study by the Labor Center shows that “twice as likely as white workers . . . to not own an IRA or 401k or participate in a pension.”
The California bill for mandatory auto-enroll retirement plans was initially passed in 2016 in order to help more people save for retirement. Businesses that qualify under the law must automatically enroll their employees in a retirement program that requires employees to save a percentage of their salary in accounts that can cover their future expenses.
You can also read: What Should You Know About the California Retirement Savings Mandate?
Is a Finhabits plan right for me and my employees?
Employers looking to establish their first retirement plan are eligible for a Finhabits 401k plan. At Finhabits, our mission is to expand access to retirement planning to business owners, particularly those in the Latino workforce, who previously may not have been able to offer their employees a plan. Our plans are affordable for any business, regardless of size.
An additional benefit of offering a Finhabits plan is that we help your employees learn smart financial habits while they save for retirement. Our app includes educational tools like videos and articles in both English and Spanish.
Finhabits also answers: Which Small Businesses Qualify for the California Retirement Program Mandate? Finhabits helps you find out.
What other benefits do businesses get from complying?
Talent retention: Offering a solid benefits package to your employees can help you keep your employees working longer for your business. This means you can spend less time hiring new employees and more time focusing on growing your revenue.
Potential tax deductions: When selecting a Finhabits 401k plan, eligible businesses could receive up to $4,500 in fiscal credits for the initial three years of providing a plan. These SECURE Act credits aim at helping businesses cover these initial costs. Eligible business owners may receive their credits at the end of the fiscal year. Additionally, in a Finhabits 401k plan, employers match a percentage of their employees’ contributions to the plan. These employer contributions could be deducted as a regular business expense. Please check with your tax advisor to determine what tax credits and tax deductions may be available for your business. Finhabits does not provide tax, legal, or accounting advice.
Up to 3 times more savings: 401k plans like the ones Finhabits offers have higher contribution limits than the IRAs offered through the state-sponsored program, CalSavers.
Looking for a simple 401k alternative that you can trust? To learn more about the Finhabits 401k plans, visit Finhabits.com/401k or call 650-265-4010. The Finhabits 401k Team offers support in both English and Spanish.