Nonprofit Need-to-Know: CalSavers Retirement Savings Program

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California implemented a new law mandating all companies with five or more employees offer a retirement plan to all workers by June 30, 2022. Organizations that do not have a retirement plan in place can register with CalSavers, the state-sponsored individual retirement account (IRA). And you guessed it, nonprofit organizations are not exempt from this new law. The good news is that CalSavers is a no-cost, low maintenance option for nonprofits and provides an additional benefit to employees.

The CalSavers Retirement Savings Program is an automatic enrollment payroll deduction IRA program. The goal of the new law is to ensure that nearly all Californians have access to a workplace retirement savings program by offering employees a completely voluntary, low cost, portable retirement savings vehicle with professionally managed investments and oversight from a public, transparent board of directors, chaired by the California State Treasurer.

Nonprofits who already have an organization sponsored 401(k), 403(b), or other retirement program do not need to enroll in CalSavers but are required to register as exempt. Employers with at least five employees and without a private market retirement plan can register at CalSavers. This is a completely voluntary retirement program for employees. Savers can participate through their employer or on their own.

While this program has no fees or costs to the nonprofit employer, it is important to remember that employee designated contributions deducted from paychecks must be remitted each payroll period. So there will be some administrative responsibilities that come with this program and nonprofits should assess internal controls surrounding those processes to ensure appropriate checks and balances are in place.

More info can be found here.

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