California businesses are on alert for a mandate that may apply to them starting summer 2022
A California bill for mandatory auto-enroll retirement plans was initially passed in 2016, and the final deadline to comply is June 30, 2022. This addition to retirement security is the first major change to this type of benefit since the establishment of Social Security in the 1930s, and the law is now serving as a guide for other states that are also looking into creating a similar program for their residents. We can help you understand the California mandate and which businesses are required to comply with it.
Finhabits explains: What Is the California Retirement Program Mandate?
Which employers need to comply?
Businesses that meet the following requirements are mandated to comply by June 30, 2022, or they could face penalties for non-compliance:
- Businesses that have five or more California-based employees (including interns and full-time and part-time employees) who report income via W-2
- Businesses that do not currently offer either a qualified retirement savings plan or the state option
Do you have five or more California-based employees?
If so, you will likely need to offer either a qualified retirement plan to your employees or the state-sponsored program, CalSavers. The deadline for choosing an option and registering your business is June 30, 2022.
Offering your employees the state-sponsored program, CalSavers, is not mandatory. Your business has the alternative to select a private retirement plan like the Finhabits 401k plans.
Finhabits explains: California Retirement Program Mandate: How can Latino Businesses Avoid Penalties?
What if your employees don’t have an SSN?
If your employees do not have a Social Security number but do have an ITIN (Individual Taxpayer Identification Number), they can also participate in the retirement program that you provide.
What actions do you need to take before June 30, 2022?
You need to review private plan alternatives (like Finhabits 401k) and the state-sponsored option and see which best meets your needs.
The Finhabits 401k plans are an easy retirement savings alternative that comply with the California retirement mandate. Our plans are accessible for any business regardless of size and offer a variety of advantages for you and your employees.
To learn more about the Finhabits 401k plans, please visit Finhabits.com/401k or call 650-265-4010.
