The CalSavers program is a big step in ensuring all California employees have the right to a retirement plan, but if you’re a business owner you may want to think twice before enrolling. It can be advantageous to both you and your employees to set up a qualified retirement program. 

If you’re a business with five or more employees in California, then you need to either have your own retirement plan or be enrolled in CalSavers. And if you have one to four employees, you have until December 31st, 2025 to meet these requirements. 

In this article, we’ll look at different retirement programs to see what the best option is for your company, why it’s worth setting up your own, and the benefits these programs provide that you won’t get from CalSavers.

Types of Qualified Retirement Plans

We’ll briefly look at what plans are available so you have a general idea of what you can offer your employees. If you want a more detailed understanding of retirement plans, check out our article here.

According to the U.S. Department of Labor, there are a few types of qualified retirement plans:

  • A Defined Benefit Plan promises a specific monthly benefit at retirement. It may state the benefit as a dollar amount or calculate the benefit through a formula that often factors in salary and service to the company. A common example of this is a Cash Balance Plan. 
  • A Defined Contribution Plan does not promise a specific benefit amount. The employee or employer, and sometimes both, contribute to a retirement account for the employee. The employee ultimately receives the balance in their account. Common examples include 401(k) plans, 403(b) plans, employee stock ownership plans, and profit-sharing plans.
  • A Simplified Employee Pension Plan (SEP) allows employees to make contributions on a tax-favored basis to their IRAs. SEPs are subject to minimal reporting and disclosure requirements. 

The plan you choose for your business will depend on factors such as the costs of the plan, the size of your business, the investments offered in the plan, and the goals and needs of your employees. Having a qualified financial planner can alleviate a lot of the headaches and burden that comes with choosing the perfect plan for your company’s needs. 

Advantages of Qualified Retirement Plans for Employers

Setting up your own retirement plan comes with a lot of advantages to help save you money and improve your business’s long-term financial health. These include…

  • Customization: With your own qualified retirement plan, you can fully customize the plan to meet the specific needs of your business. A qualified retirement plan provides you with a wide range of contribution levels, vesting schedules, and investment options. The CalSavers program doesn’t provide the same amount of range and offers more of a one-size-fits-all approach.
  • Tax Benefits: Money you contribute to your qualified plan can be tax deductible up to certain limits depending on which plan you choose. Assets that are in the plan also grow tax-free until they are distributed to employees upon retirement. 
  • Attract High-Level Employees: Having a customized qualified retirement program that is best suited to the type of employees you hire will set you apart from other businesses. You can also set up your plan to incentivize employees to stay at the company and reduce turnover. 

Advantages for Employees

As we said at the end of the last section, the right qualified retirement plan can help you attract and retain high-level employees. But how does the right plan do this?

  • Tax-Free Savings: Employees can contribute income to a plan on a pre-tax or tax-deferred basis, helping them save more for retirement and possibly lower their annual tax bill. 
  • Various Investment Options: Qualified Retirement Plans can offer options such as mutual funds and individual stocks, giving employees individual customization to their needs and tolerance for investment risk.
  • Employer Matching: Some plans, such as a 401k, allow employers to make matching contributions to the employee’s plan, potentially doubling the amount of money an employee can save for retirement.

Disadvantages of the CalSavers Program

The CalSavers program is a great concept for ensuring all workers in California have the right to a retirement program no matter the size of the company they work at. However, the best option for business owners in California is still a qualified retirement plan due to the disadvantages that come with opting into the CalSavers Program. These disadvantages include…

  • Roth IRA Income Limits: The CalSavers Program is a Roth IRA, meaning it’s subject to the income limits that come with that type of plan. If your employees make above a certain amount they can’t participate in the CalSavers program. This could potentially lose you high-level employees, due to the lack of a retirement program option. 
  • Taxes for Employees: CalSavers only allows your employees to make after-tax contributions, reducing the amount of money they save for retirement and not reducing their annual tax bill as other plans offer. 
  • Limited Options: Other plans offer a much broader range of investment options when compared to the CalSavers program, as well as additional resources to help employees make the right decisions based on their needs and risk tolerance. 
  • No Employer Matching: One of the biggest disadvantages of the program is that CalSavers does not allow employers to match their employee’s contributions, which is often a great incentive for employees to participate in the program. Employer contributions are also a great way for business owners to attract and retain employees in a tax-deductible way. 

Learn More About Qualified Retirement Plans

Finding the right retirement plan for your business can be overwhelming. If you want to learn more about how qualified retirement plans work, or need assistance in creating the perfect plan for your business needs, contact us today. We’d love to help you reach your financial goals. 

Retirement planning can be a daunting task. There are so many different investment options available, it can be hard to know where to start. One of the most common questions people ask is whether they should have both a 401k and IRA. 

The answer to this question depends on a variety of factors, including your income, your age, and how much you want to save for retirement. In this blog post, we will discuss the pros and cons of having both a 401k and IRA, so that you can make an informed decision about which option is best for you!

What is a 401k?

The 401k is a retirement savings plan that is sponsored by an employer. Employees who participate in a 401k plan can choose to have a portion of their paycheck deducted and deposited into their 401k account. The money in a 401k account grows tax-deferred, which means that you will not pay taxes on the money until you withdraw it in retirement. 401k plans also offer a variety of investment options, which can make them a good choice for people who want to have more control over their retirement savings.

What is an IRA?

The IRA is an individual retirement account that is not sponsored by an employer. Anyone can open an IRA, regardless of whether they are employed. Like a 401k, the money in an IRA grows tax-deferred, and you will not pay taxes on the money until you withdraw it in retirement. IRAs also offer a variety of investment options as well.

What’s the Difference Between a 401k and IRA? 

There are a few key differences between 401k plans and IRAs such as:

Contribution Limits

One of the biggest differences is that 401k plans have higher contribution limits than IRAs. For example, in 2019, the contribution limit for 401k plans is $19,000, while the contribution limit for IRAs is $6,000. This means that you can potentially save more money for retirement by contributing to a 401k plan.

Fees

Another difference between 401k plans and IRAs is that 401k plans are typically offered by employers, while IRAs are not. This means that you may have to pay fees to participate in an IRA, but you will not have to pay any fees to participate in a 401k plan.

Loans and Withdrawals

The final difference between 401k plans and IRAs is that 401k plans offer loans and hardship withdrawals, while IRAs do not. This means that you can borrow money from your 401k plan if you need to, but you cannot borrow money from your IRA.

So, Should You Have Both a 401k and IRA? 

The answer to this question depends on your individual circumstances. If you have a 401k plan at work, you may want to contribute to it up to the contribution limit. If you do not have a 401k plan at work, or if you max out your 401k contribution, you may want to consider opening an IRA. Ultimately, the best retirement savings plan for you is the one that you can contribute the most money to.

Is it Good to Have Both?

There are a few advantages to having both a 401k and IRA. For one, it can help you save more money for retirement. Having two accounts also gives you more flexibility in how you Invest your money. You can choose to invest more aggressively in one account and more conservatively in the other, depending on your risk tolerance.

There are a few disadvantages to having both a 401k and IRA as well. For one, it can be difficult to keep track of two accounts. You will also have to pay taxes on the money you withdraw from both accounts in retirement.

Is it Better to Have a 401k or IRA or Both?

There is no easy answer when it comes to deciding whether a 401k or IRA is better for you. It ultimately depends on your individual circumstances. For example, if you are young and have a low income, you may be better off contributing to an IRA because you can get a tax deduction for doing so. On the other hand, if you are older and have a higher income, you may be better off contributing to a 401k because you will not have to pay taxes on your withdrawals in retirement.

There are pros and cons to both types of accounts, so it’s important to weigh all of your options before making a decision. Below, we will take a closer look at the pros and cons of each account:

401k Pros:

  • Employer matching contributions: Many employers will match a percentage of your contributions, which can be a great way to boost your savings.
  • Tax breaks: Contributions to a 401k are made with pre-tax dollars, which means you get a tax break when you contribute.
  • Retirement income: With a 401k, you can choose to receive your retirement income in the form of an annuity, which can provide a steady stream of income in retirement.

401k Cons:

  • Limited investment options: With a 401k, you are limited to investing in the options offered by your employer.
  • Early withdrawal penalties: If you withdraw money from your 401k before you reach retirement age, you will be subject to a 10% penalty.
  • Required minimum distributions: Once you reach age 70 ½, you are required to take minimum distributions from your 401k, which means you will have to pay taxes on the money you withdraw.

IRA Pros:

  • Tax breaks: Contributions to an IRA are also made with pre-tax dollars, which means you get a tax break when you contribute.
  • Flexible investment options: With an IRA, you have a lot of flexibility when it comes to investing your money. You can choose from a wide variety of investment options, including stocks, bonds, and mutual funds.
  • No required minimum distributions: With an IRA, you are not required to take minimum distributions, which means you can leave your money invested for as long as you want.

IRA Cons:

  • Early withdrawal penalties: If you withdraw money from your IRA before you reach retirement age, you will be subject to a 10% penalty.
  • Contribution limits: There are limits on how much you can contribute to an IRA each year. For 2019, the limit is $6,000 ($7,000 if you are age 50 or older).

So, should you have both a 401k and IRA? As you can see, there are pros and cons to both types of accounts. The best way to decide which option is right for you is to speak with a financial advisor who can help you understand your unique circumstances and make the best decision for your future.

Can you have both an IRA and a 401k?

The answer is, yes! In fact, many people find that having both an IRA and a 401k is the best way to save for retirement. Here are some of the benefits of having both types of accounts:

  • You can save more money. If you have both a 401k and IRA, you can contribute a total of $19,500 to your retirement accounts each year (or $26,000 if you’re 50 or older). This is much more than you could save with just one account.
  • You can diversify your investments. When you have both a 401k and IRA, you can spread your money out across different types of investments, which can help you minimize risk and maximize returns.
  • You can take advantage of different tax benefits. 401k contributions are made with pre-tax dollars, which means you get a tax break now. IRA contributions are made with after-tax dollars, but they grow tax-deferred. This means you won’t have to pay taxes on your investment earnings until you withdraw the money in retirement.

There are some drawbacks to having both a 401k and IRA, however. For one thing, it can be confusing to keep track of two different accounts. Additionally, you may have to pay fees to maintain both accounts. But if you’re serious about saving for retirement, having both a 401k and IRA can be a great way to reach your financial goals.

How Much Can I Put in an IRA if I Have a 401k?

The first thing you need to know is that there are limits on how much you can contribute to each type of account. For example, in 2018, the 401k contribution limit is $18,500 for people under the age of 50. This means that if you are over the age of 50, you can contribute up to $24,500 to your 401k. On the other hand, the IRA contribution limit is $5,500 for people under the age of 50, and $6,500 for those over the age of 50.

How Much Will my IRA be Worth in 20 years?

Assuming you start with nothing in your IRA and contribute the maximum each year, you would have $1,048,000 in 20 years.

401K contribution limits for 2019:

The elective deferral (contribution) limit for employees who participate in 401(k), 403(b), most 457 plans, and the federal government Thrift Savings Plan is increased from $18,500 to $19,000.

The catch-up contribution limit for employees aged 50 and over who participate in 401(k), 403(b), most 457 plans, and the federal government Thrift Savings Plan is increased from $6,000 to $6,000. 

IRA contribution limits for 2019:

The IRA contribution limit for 2019 is $6,000. The catch-up contribution limit for those aged 50 and over is $1,000.

Final Thoughts

Retirement planning can be confusing, but if you want to make sure you’re doing everything right, consider opening both a 401k and an IRA. With these two accounts, you can take advantage of different tax benefits, save more money overall, and diversify your investments. Just keep in mind that you may have to pay fees to maintain both accounts, and it can be confusing to keep track of two different sets of investments. But if you’re serious about saving for retirement, having both a 401k and IRA is a great way to reach your financial goals.

For a better understanding of retirement savings plans read our article here.

Creating Financial Education for Tribal Communities

Financial wealth for mental health—it’s a mouthful to say and it’s something that is so important, yet often overlooked. Financial stability is one of the key ingredients in having a good mental health outlook on life. Why? Because when you’re worrying about money, you’re not worrying about anything else. 

Financial education is vital for tribal communities who have been historically marginalized and left out of mainstream financial conversations. When tribal communities have access to financial education, they see improvement in their mental health, overall wellness, and economic status. 

In this blog, we’ll explore how financial literacy is the key to unlocking financial stability and mental health for tribal communities. 

Current Financial Landscape for Tribal Communities

It’s no secret that tribal communities have been dealt a hard hand when it comes to financial stability. From being forced to move off of their ancestral lands to being shut out of mainstream financial institutions, tribal communities have had to create their own unique financial systems. This has led to higher rates of poverty and financial insecurity within these communities. 

In fact, according to a report by the Federal Reserve, American Indian and Alaska Native households have a median income that is just 60% of the national median. This financial insecurity can lead to higher levels of stress and anxiety, which can impact mental health.

According to a report by the Financial Industry Regulatory Authority (FINRA), “nearly half of American Indian and Alaska Native adults say they don’t have enough money to live comfortably, and four in 10 say they are not saving enough for retirement.” The same report found that only 40 percent of AI/AN adults feel “very” or “somewhat” confident in their ability to manage their finances.

Contributing Factors

There are many factors that contribute to financial instability and poor mental health in tribal communities. Some of these include historical trauma, systemic racism, and lack of access to resources. 

Many tribal members live in poverty and do not have access to traditional banking services. As a result, they often turn to high-interest payday loans and other forms of predatory lending. This can lead to a cycle of debt that is difficult to break free from. Financial education can help tribal members make better decisions about their money and avoid costly mistakes.

Barriers

There are several barriers to financial education in tribal communities. One barrier is a lack of accessible and culturally relevant resources. Financial education materials that are not culturally relevant or understandable can be ineffective. 

Another barrier is a lack of trust in financial institutions. Many individuals in tribal communities have had negative experiences with banks and other financial institutions. This can make it difficult to build trust and open up about finances. Finally, a lack of financial literacy among adults can make it difficult to teach children and youth about money management.

Financial education can help to mitigate some of these factors by providing tribal communities with the tools and knowledge they need to build financial stability. Financial education can also help to improve mental health by teaching people how to manage their money in a way that is beneficial for their overall wellbeing.

Steps to Creating Financial Wellness 

Establish Financial Literacy

Start with the basics. Financial literacy is key. This means having a clear understanding of money, how it works, and what it can do for you.

It’s crucial to increase financial literacy. This can be done through financial education programs that are specific to the needs of tribal communities. Financial literacy will empower individuals within these communities to make sound financial decisions and build wealth over time.

Provide Access to Financial Education

Create opportunities for financial education. This can be done through online resources, community events, or even one-on-one conversations.

Increasing access to financial institutions and products can be done by working with financial institutions to create products that are accessible and tailored to the needs of tribal communities. It’s important that these products are culturally relevant and meet the unique financial needs of these communities.

Financial education teaches people about: 

  • Money Management
  • Budgeting
  • Saving and investing

And covers topics like: 

  • Credit and debit
  • Loans
  • Interest Rates
  • Financial goal setting
  • Home ownership
  • Financial scams and fraud

Financial education can be taught in formal settings like schools or community organizations. And it can also be taught informally through conversations between family and friends.

Another solution is to provide Financial Literacy Ambassadors in each tribe. These Financial Literacy Ambassadors would be responsible for delivering financial education to adults and children in the community.

Help Make it Easy

Make sure that financial education is “user-friendly” and easy for everyone to grasp. This means breaking down complex concepts and making them understandable for everyone. Most importantly, financial education should be culturally relevant. This means that it should be tailored to the specific needs of the community.

Final Thoughts

Creating financial education and wellness for tribal communities is so important because it can have a ripple effect of positive change. When tribal communities are financially stable, they are able to invest in their mental health, overall wellness, and economic status. This creates a cycle of positive change that can lift up an entire community. Financial literacy is the key to unlocking this potential. By providing access to financial education, we can help tribal communities thrive.

We at RWM Financial Group, specialize in working with tribal communities and offering tribal services. We are committed to the independence, excellence, and pursuit of your tribe’s sovereignty and financial goals. Reach out to our team to learn more.

Retirement contributions are made and at some point if they are abandoned, what happens to them? You don’t want the government managing your money! 401k providers have stepped in and said that they’re going to offer low cost, basic options that are beneficial to employers and are much more customizable than CalSavers for users. 

There are a lot of benefits to going outside of CalSavers, like investing smarter, better returns, matching returns (tax write offs for employers). Let’s discuss the alternative options to using CalSavers. 

CalSavers

CalSavers is a retirement savings program for Californians who do not have access to an employer-sponsored retirement plan. The program is administered by the California Secure Choice Retirement Savings Investment Board, and offers a low-cost, portable retirement savings option for workers in the state.

CalSavers is open to any worker in California who does not have access to an employer-sponsored retirement plan. There is no minimum balance required to open an account, and workers can contribute as little or as much as they want. Contributions to Calsavers are made through payroll deduction, and are invested in a professionally managed, diversified portfolio of low-cost index funds.

Workers who participate in CalSavers will be able to save for retirement and take their savings with them if they change jobs. 

Why is CalSavers an Unpopular Choice?

There are a few potential reasons why employers might not be thrilled about CalSavers. First, the program requires employers to automatically deduct 5% of an employee’s wages (unless the employee opts out). This could lead to some employees feeling like they’re being forced to save, which may not be popular. 

Additionally, employers are responsible for contributing to their employees’ accounts if the employees don’t reach the 5% threshold on their own. This could be viewed as an extra cost for businesses. Finally, it’s possible that some employers feel like the program is too much of a government intrusion into the private sector.

Whatever the reason, it’s clear that not everyone is on board with CalSavers.

401k vs Roth vs IRA

The 401k, Roth IRA, and Traditional IRA are three of the most popular retirement savings plans available to workers in the United States. All three have their own unique benefits and drawbacks, so it’s important to understand the differences between them before deciding which one is right for you.

401K

401k plans are offered by many employers as a way to help their workers save for retirement. The biggest benefit of 401k plans is that they offer tax breaks on the money that you contribute. This can help you save a significant amount of money over time. However, 401k plans also have some drawbacks. One is that you are limited in how much you can contribute each year. Another is that 401k plans often come with high fees.

Roth IRAs

Roth IRAs are Individual Retirement Accounts that are funded with after-tax dollars. This means that you won’t get a tax break on the money you contribute, but you will be able to withdraw the money tax-free in retirement. Roth IRAs also have no contribution limits, so you can save as much as you want. However, Roth IRAs do have income limits, so not everyone can contribute.

IRAs

Traditional IRAs are also Individual Retirement Accounts, but they are funded with pre-tax dollars. This means that you get a tax break on the money you contribute, but you will have to pay taxes on the money when you withdraw it in retirement. Traditional IRAs also have contribution limits, but they are higher than 401k plans. Traditional IRAs also have income limits, so not everyone can contribute.

The best retirement savings plan for you will depend on your individual circumstances. If you want to get a tax break on your contributions, a 401k or Traditional IRA may be the best choice. If you’re not concerned about taxes and you want the ability to save as much as you want, a Roth IRA may be the best choice.

SafeHarbor 401k

The SafeHarbor 401k is a retirement savings plan that allows employees to contribute a portion of their salary into the plan on a tax-deferred basis. This action not only reduces your current taxable income, but it also allows your money to grow tax-free until you withdraw it at retirement. Employers may also choose to make contributions on behalf of their employees, which can further enhance the retirement savings opportunities for employees.

There are a few key features of the SafeHarbor 401k that make it an attractive option for employers and employees alike:

  • Employees can contribute up to $18,500 per year ($24,500 if age 50 or older) on a tax-deferred basis.
  • Employers can make matching or discretionary contributions on behalf of their employees.
  • There is no required minimum distribution age, so employees can keep their money invested for as long as they want.
  • Employees can access their account balance at any time, although there may be taxes and penalties assessed for early withdrawals.

The SafeHarbor 401k is just one of many retirement savings options available to employees and employers. Other popular options include the traditional 401k, 403b, and 457 plans. Each type of plan has its own unique features and benefits, so it’s important to compare all of your options before choosing the best plan for your needs.

Payroll Deduction IRA

A Payroll Deduction IRA is an individual retirement account (IRA) that is established and funded through payroll deductions from an employee’s paycheck. The funds are then invested in a variety of assets, such as stocks, bonds, and mutual funds.

The main advantage of a Payroll Deduction IRA is that it allows employees to save for retirement on a regular and consistent basis. This can be especially helpful for employees who do not have the discipline to save on their own. Additionally, some employers may offer matching contributions, which can further help to grow the account balance.

The main disadvantage of a Payroll Deduction IRA is that it may not provide enough money to cover all of an employee’s retirement expenses. Additionally, the account balance may be subject to market fluctuations, which can lead to losses.

How To Avoid CalSavers

If you’re an employer, you have a few options for avoiding CalSavers. You can:

  • Opt out of CalSavers altogether
  • Provide your own retirement savings plan that meets certain criteria
  • Do nothing and let your employees automatically enroll in CalSavers (this started July 1, 2020)

If you opt out of CalSavers, you can’t re-enroll your employees later. Employees who are already enrolled in CalSavers when you opt out will be able to continue contributing to their accounts, but no new employees will be able to enroll.

To opt out, you must submit a notice to the CalSavers program administrator within 120 days of your first payroll period. The notice must indicate that you’re opting out and must be signed by an authorized representative of your company.

If you choose to provide your own retirement savings plan, it must:

  • Be a qualified retirement plan under state or federal law
  • Cover all employees who work at least 20 hours per week and have been employed for at least 3 months
  • Allow employees to contribute at least 2% of their pay (5% for highly compensated employees)
  • Make employer contributions that are at least as generous as the CalSavers default contributions

If your company’s retirement plan meets these criteria, you don’t have to do anything else. Your employees will be automatically enrolled in your company’s plan and won’t be able to participate in CalSavers.

If you don’t opt out and you don’t provide a retirement savings plan that meets the criteria above, your employees will be automatically enrolled in CalSavers. Employees can choose to opt out of CalSavers or change their contribution amount at any time.

What Happens if Employees Don’t Want Calsavers?

In short, nothing. If your employees don’t want to participate in Calsavers, they can opt out of the program. However, if they do opt out, they will not be able to contribute to or receive benefits from the program. Additionally, if an employee opts out of Calsavers and then changes their mind, they will not be able to re-enroll in the program until the next open enrollment period. 

Let’s Address Some Common Questions

Is CalSavers mandatory in California?

Yes, CalSavers is mandatory for most employers in California. Employers with 500 or more employees in the state must offer the program to their employees by July 1, 2020. Employers with less than 500 employees must offer the program by July 1, 2021. Employees are automatically enrolled in the program unless they opt out. Employers must make contributions to the program on behalf of their employees, unless the employees elect to make their own contributions.

What Are 3 Types of Employer-Sponsored Retirement Plans?

There are three common types of employer-sponsored retirement plans: 401(k)s, 403(b)s, and 457s. Each type of plan has its own set of rules and regulations.

401(k) plans are the most common type of employer-sponsored retirement plan. They are available to employees of for-profit companies. Employees can contribute pretax dollars to their 401(k) accounts. Employers may also make matching or nonelective contributions to these accounts.

403(b) plans are available to employees of nonprofit organizations and some government agencies. Employees can contribute pretax dollars to their 403(b) accounts. Employers may also make matching or nonelective contributions to these accounts.

457 plans are available to employees of state and local governments, as well as some nonprofit organizations. Employees can contribute pretax dollars to their 457 accounts. Employers may also make matching or nonelective contributions to these accounts.

Are Owners Exempt from CalSavers?

No, owners are not exempt from CalSavers. All employers with five or more employees must offer a retirement savings plan to their employees, including owner-employees. However, there is an exception for certain sole proprietors and business partners who may be exempt from the requirements under federal law.

Is CalSavers a 401k or Roth IRA?

CalSavers is a 401k, but it also allows for Roth IRA contributions.

Can Employers or Business Owners Get Tax Write-Offs for Retirement Contribution Matching?

Yes, employers or business owners can get tax write-offs for retirement contribution matching. This can be a great way to save for retirement while also getting a tax break.

It’s Good to Know Your Options

CalSavers has quickly become one of the most popular retirement savings options for Californians. However, it is not the only option available. There are a number of other retirement savings programs available, each with its own set of benefits and drawbacks. Ultimately, it is up to each individual to decide which program is best for them. 

If you’re a business owner and want to learn more about CalSaver’s, check out our simple guide to CalSavers.  

This information was developed as a general guide to educate plan sponsors, but is not intended as authoritative guidance or tax or legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation. In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.

With circumstances such as low employment and the labor shortage, business owners are looking for new ways to attract and retain top talent. An emerging solution for these recent hiring issues is implementing a 401(k) plan for employees.

According to a recent survey, four out of five employees indicate they want benefits and perks more than a pay raise, and a 401(k) ranks in the top five requested benefits. 

Additionally, millennials and members of Generation Z find benefits even more appealing than their Gen X and Baby Boomer counterparts. In fact, 90% of employees 18 to 34 years old state they would prefer benefits over pay. 

So what does all this mean for business owners? A 401(k) plan can help business owners to attract and retain top talent as well as provide a host of other financial benefits. Let’s discuss.

How Can a 401(k) Plan Attract Top Employees?

According to Forbes, 62% of candidates seriously consider the availability of a retirement plan when deciding whether to accept or remain in a job. Further, 76% of employees are likely to be attracted to another company that cares more about their financial well-being. 

Millions of workers do not have access to an employer-based retirement plan. Therefore, by implementing such a plan at your business, you are automatically setting your business apart from its competition in the eyes of your candidates.

How Can a 401(k) Plan Help with Employee Retention?

A study done by the Society of Human Resource Management (SHRM) found that it typically costs 50%-75% of an employee’s annual salary to replace them. If your business has higher than average turnover rates, it might be time to look at the benefits of a 401(k) plan.

For instance, consider these factors when deciding whether or not to invest in a 401(k) plan for your employees: 

Appreciation

A 401(k) plan grows in value over time. When employment ends, the retirement account means the employee will leave with something of value. 

Compensation

Employees that feel that they are being compensated fairly for their work are more likely to stay in their current positions instead of searching for a new job. A 401(k) plan, or a lack thereof, is an important part of an employee’s compensation and contributes significantly to their decision to stay or leave their current organization. 

Employee Engagement and Team Morale

Leaders who invest in the well-being of their employees are often rewarded with higher employee engagement, satisfaction, productivity as well as a thriving work environment.

Remote work, in particular, can cause employees to feel disengaged from their team and organization. Employers are utilizing 401(k) plans as a method to combat these challenges. Why? Many remote employees would prefer additional benefits over a pay raise. 

What Are the Benefits of Using a 401(k) to Attract and Retain Employees? 

Tax Credits

The Setting Every Community Up for Retirement Enhancement (SECURE) Act was passed in December 2019. This act became law as of January 1st,  2020. 

The SECURE Act proposes raising the current Retirement Plans Startup Costs Tax Credit. The SECURE Act  permits an eligible small business to claim a tax credit for adopting a new 401(k) plan and a new automatic enrollment feature. 

Tax Deductions

All businesses can claim a tax credit deduction for paying 401(k) plan-related expenses. For example, these expenses can include:

  • Employer contributions
  • Administration fees

Employer contributions to employees’ 401(k) accounts may qualify as ordinary business expenses. In this case,  these contributions may be tax deductible up to the annual corporate deduction limit on all employer contributions (25% of covered payroll).

Interested in Setting Up a 401(k) Plan for Your Business?

Setting up a 401k retirement savings plan for your business is a great way to save money on taxes and provide your employees with a valuable benefit. 

Consider contacting our team for assistance. At RWM, we provide a clear path to secure retirement for employers and employees of successful businesses. Learn more about us and why we do what we do, here. 

Then, check out our blog for all the retirement savings jargon you should know, here. 

This information was developed as a general guide to educate plan sponsors, but is not intended as authoritative guidance or tax or legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation. In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.

Are you one of those people who think that they have plenty of time to start saving for retirement? If so, you’re making a huge mistake. The sooner you start saving for retirement, the more money you will have when it comes time to retire. 

In this blog post, we will discuss the importance of saving for retirement early and how compounding interest can help you reach your goals!

The Importance of Retirement Plans

When it comes to personal finance and money management, there’s a lot of misinformation out there. A study from the Financial Industry Regulatory Authority found that only 24% of Americans could pass a basic financial literacy test. This is why financial wellness programs and resources at work like retirement plans, are essential. They provide employees with the education and support they need to make sound decisions about their money.

If you’re not saving for retirement, start today. Even if you can only contribute a small amount, it’s important to get started. The earlier you start saving, the more time your money has to grow through compounding interest. 

Employees who opt out of retirement savings or put it off often don’t have the information necessary to make better decisions based on the power of compounding interest.

What is Compounding Interest?

Compounding interest is when you earn interest on your initial investment, plus any interest that has accumulated in previous periods. Reinvesting your earnings generates new earnings from the original investment – and that’s called compounding.

But it’s not just about starting early. Consistency is key when it comes to saving for retirement. The more you can save on a regular basis, the better off you’ll be down the road.

If you’re not sure how much you should be saving for retirement, a good rule of thumb is to save at least 15% of your income. But if you can save more, that’s even better.

For example, let’s say you start saving $200 per month at age 25. If you continue saving that same amount and earn a conservative return of six percent, you’ll have almost $900,000 saved by the time you retire at age 67.

What Happens if You Wait to Start Saving?

If you wait until age 35 to start saving, you’ll need to save almost $500 per month to have the same amount of money when you retire, as someone who started saving 10 years earlier than you.

The effect of compounding really adds up over time, especially if you start early. In the example above, the difference in savings between starting at 25 versus 35 is almost $600,000.

The power of compounding interest is real. And, the sooner you start saving for retirement, the more time your money has to grow. If you haven’t started saving yet, don’t wait any longer. 

What Types of Retirement Savings Programs Are There?

There are two main types of retirement savings programs – employer-sponsored plans and individual retirement accounts (IRAs). Employer-sponsored plans, such as 401(k)s, 403(b)s, and 457s, are tax-advantaged savings plans offered by many employers. These plans typically offer a matching contribution from your employer, making them a great way to save for retirement.

IRAs are another type of retirement savings account that you can open on your own. There are two main types of IRAs – traditional and Roth. With a traditional IRA, you make contributions with pre-tax dollars and pay taxes on the money when you withdraw it in retirement. With a Roth IRA, you make contributions with after-tax dollars and the money grows tax-free.

There are other types of retirement savings programs, such as annuities and pension plans. But employer-sponsored plans and IRAs are the most common.

If your employer offers a retirement savings plan, be sure to take advantage of it. If you don’t have access to an employer-sponsored plan, open an IRA and start saving on your own. It’s never too late to start saving for retirement.

How Much Would I Have to Save if I Started at 30?

A recent study found that an alarming amount of millennials and Gen-Zers have nothing saved for retirement. That’s scary considering that most people retiring today are living 20-30 years in retirement.

There are a number of reasons why millennials and Gen-Zers are so unprepared for retirement. One reason is that many of them are saddled with student loan debt. According to the study, millennials and Gen-Zers said their student loan debt was the biggest reason they weren’t saving for retirement.

Other reasons include low wages, high living costs, and a lack of financial literacy. Many young people simply don’t know how to save for retirement or don’t think they can afford to.

If you’re in your 20s or 30s and have nothing saved for retirement, don’t despair. It’s never too late to start saving. Even if you can only afford to save a little bit each month, it’s better than nothing. And the sooner you start, the more time your money has to grow.

If you started saving for retirement at age 30, assuming a six percent rate of return, you would need to save $383 per month to have the same amount of money saved as someone who started saving at 25.  

If you’re not sure where to start, try our retirement calculator. This tool can help you figure out how much you need to save and which type of retirement savings account is right for you.

Embed that calculator! 

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Final Thoughts

Saving for retirement may seem like a daunting task, but it doesn’t have to be. The earlier you start, the more time your money has to grow. And with the power of compounding interest on your side, you’ll be on your way to a bright financial future. The earlier you start saving, the more time you have to reach your retirement savings goals.

Saving early can also help you reduce your taxes in retirement. If you contribute to a traditional IRA or employer-sponsored retirement plan, you can deduct your contributions from your taxable income. 

Lastly, saving for retirement early can help you avoid running out of money in retirement. If you start saving early, you’ll have a larger nest egg that can last throughout your retirement years.

What are you waiting for? Start saving for retirement today. Talk to someone on our RWM team about the retirement savings options available to you and make saving for retirement a priority.

The SECURE Act, signed into law at the end of 2019, takes steps to address the retirement crisis and provides a host of benefits to business owners looking to sponsor retirement plans for their employees. These benefits include tax incentives, widened access for employers as well as greater inclusion for part-time employees. 

Let’s take a look at the SECURE Act, its impact on employers and what might be coming next with the SECURE Act 2.0. 

What is the SECURE Act? 

The Setting Every Community Up for Retirement Enhancement (SECURE) Act was passed in December 2019. This act became law as of January 1st,  2020. 

What Does the SECURE Act Change?

The act changed a variety of retirement account rules. These changes included adjustments to who is eligible to contribute to retirement accounts as well as when withdrawals are required. Additionally, the new legislation adds an exception to the early withdrawal penalty.

The SECURE Act and Retirement Account Changes

According to US News, the act includes changes such as:

  • “The required minimum distribution age increases to 72, up from 70 1/2.
  • The age limit for IRA contributions has been removed.
  • Inherited retirement account distributions must be taken within 10 years.
  • New parents can take penalty-free withdrawals.
  • Long-term part-time employees may now be eligible for 401(k) plans.”

How Does the SECURE Act Affect Business Owners?

The main benefits to take advantage of under this new law include: 

  • Tax credits for establishing new retirement plans
  •  Tax credits for establishing automatic enrollment plans 
  • The creation of Multiple Employer Plans (MEP) and Pooled Employer Plans (PEP)
  • Inclusion of Long-term, Part-Time Employees

Let’s take a look at each of these changes in more detail.

Increased Tax Credit For Businesses Starting a Plan

The SECURE Act proposes raising the current Retirement Plans Startup Costs Tax Credit. 

Additional Tax Credit for Automatic Enrollment

The SECURE Act develops a new tax credit of up to $500 per year to employers to defray startup costs for new 401(k) and SIMPLE IRA plans that include automatic enrollment. Why? This additional tax credit will help to encourage business owners to add an automatic enrollment feature to their plan. 

Multiple Employer Plans (MEP) and Pooled Employer Plans (PEP)

One of the biggest benefits is that multiple, unrelated employers can participate in the same retirement plans through MEPs and PEPs, beginning January 1, 2021. 

Through PEPs, companies can benefit from their pooled buying power to lower administrative and investment costs. Additionally, companies can transfer some fiduciary liabilities and administrative burdens to third-party pooled plan providers.

This change can provide employers with more options and access to new systems. 

Inclusion of Long-term, Part-Time Employees

As a result of the tight labor market, many employers may be having difficulty attracting and retaining top talent. One impactful and often successful option of mitigating these challenges is for employers to offer 401(k) to their team. 

The SECURE Act supports these efforts through providing flexibility on the hours per year requirement for long-term, part-time employees to qualify for a workplace retirement plan. 

In the past, a part-time employee had to maintain at least 1,000 hours per year to qualify for the retirement plan. Now, with the SECURE Act, employees must complete at least 500 hours every year over a three-year period to qualify. This change can be helpful to seasonal employees or those who take long absences, such as parental leave. 

How Can Business Owners Take Advantage of the SECURE Act For Their Business?

While the overall goal of the SECURE Act is to simplify the process and provide benefits to employers, the process can still become complicated quickly. 

Because of this, the US Chamber recommends business owners should consider enlisting additional help in implementing SECURE benefits and “create retirement plans in an efficient, legal way.”  

The SECURE Act 2.0 May Be Coming

A House-approved SECURE Act 2.0 is on the horizon in the United States. This act includes over 50 provisions designed to address and remove some of the barriers faced by employees trying to save for retirement. The SECURE Act 2.0 will likely be finalized in the late fall or winter of 2022, along with some other provisions introduced by the Senate.

According to Forbes Advisor, we should know if the act will pass by the end of the year. 

Here’s what to be ready for if the SECURE Act 2.0 Bill passes.

Increased Credit for Small Employers

Does your business have less than 50 employees? If you start an employer pension plan your business may be eligible for a 3-year start-up credit that is now up to 100% (50% in the 2019 SECURE Act) for your start-up costs. 

There will also be credit for 5 years of up to 1,000 dollars per employee participating in your pension plan. If the law goes through these increases in credit will be effective for tax years beginning after 2022.

Multiple Employer 403b Plans

If your company has a 403b plan, or you’re planning on starting one, it can now be established and maintained as a Pooled Employer Provider (PEP) or Multiple Employer Plan (MEP). PEPs and MEPs provide great value because they limit employer compliance responsibilities and fiduciary liability by outsourcing your plan to a provider. 

Employing Military Spouses

Do you employ any military spouses? The new act will create a nonrefundable income tax credit for small employers that employ military spouses and allow them to take part in your defined contribution plan. The credit will be $250 per employee, plus up to $250 for contributions made by the employer, and applies for up to 3 years. 

Expanded Automatic Enrollment 

Your 401k and 403b plans will now have to enroll all eligible employees at a 3% contribution rate that will tick up 1% every year and cap out at 10%. Your employees can choose to opt-out though.

You will be exempt if your company is less than 3 years old or employs less than 10 people.

Student Loan Payments

Your contributions made on behalf of your employees for qualified student loan payments will now count as matching contributions. 

This means you’ll be able to subtract any student loan payments your employees make from their salaries and treat them as an elective contribution.

Financial Incentives

Unlike the 2019 SECURE Act, the 2022 bill, if passed, will allow you to offer your employees small financial incentives to join your company’s retirement plan. This could be anything from gift cards to merchandise, as long as they are “of little importance”. 

Optional Roth Contributions

If you have a 401k or 403b plan at your company, you’ll be able to give your employees the option to elect that their matching contributions become Roth contributions, which means that contributions use after-tax dollars.

What To Do Now

The bill expects to pass because of overwhelming bipartisan support. If you’ve been considering any type of pension plan for your business, there’s never been a better time to do it. You’ll have access to huge tax benefits and will be giving your employees more options than ever. The SECURE Act was a good incentive to start a plan, the 2.0 version will make it a no-brainer.

Interested in Setting Up a 401(k) Plan for Your Business?

Setting up a 401k retirement savings plan for your business is a great way to save money on taxes and provide your employees with a valuable benefit. 

Consider contacting our team for assistance. At RWM, we provide a clear path to secure retirement for employers and employees of successful businesses. Learn more about us and why we do what we do, here
Then, check out our blog for all the retirement savings jargon you should know, here.

This information was developed as a general guide to educate plan sponsors, but is not intended as authoritative guidance or tax or legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation. In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.

If you live in California, you’ve probably heard a lot more about retirement savings in the past year than ever before.  That’s because all employers with 5 or more W-2 employees have to offer a retirement savings plan or enroll in the California State-run CalSavers retirement savings program.  For many employees, the idea of pulling money out of their paychecks right now with high inflation and soaring gas, rent, and food prices might seem like a terrible idea. So, why should you save for retirement now? The first thing is to understand your options and that starts with answering the question:  What do all of these acronyms mean? And what do they mean to you? 

A high-level overview of Retirement Savings acronyms

From 401ks to IRAs, Roth and SIMPLE, SEP, and Solo, the number of acronyms used when talking about retirement savings can get overwhelming. As if you don’t have enough to worry about already, you’re expected to be an expert in finance overnight. So, to simplify things, let’s review what the terms mean and why each of these options exists to begin with. 

The most popular retirement savings plans are called 401ks because that’s the IRS code for income that they can’t tax. 

A 401k is a retirement savings plan that is sponsored by an employer. It helps employees save and invest for their retirement. The money in a 401k investment account grows tax-deferred, meaning you don’t pay taxes on it until you withdraw it when you are retired. 

There are two types of 401k plans: Roth and traditional. Roth 401ks are funded with after-tax dollars, so you don’t get a tax break when you contribute but you also don’t pay when you take money out later. Traditional 401ks are funded with pre-tax dollars, so you get a tax break when you contribute, but you’re kicking the can down the road because you will pay taxes later when you take it out.

But wait, there’s more… there are Solo 401ks and Employer-Sponsored 401ks, Profit-sharing 401ks, Safe Harbor 401ks, and SIMPLE 401ks. 

Solo 401ks are available for people who are self-employed or own a small business. They work like employer-sponsored 401ks, but with some key differences. As a solopreneur, you are both employer and employee. So, you can contribute to your retirement in both capacities. For 2022, you can contribute up to $61,000 in a year, however, you configure it. (this limit changes but that’s the number for 2022).

Employer-sponsored 401ks are offered by companies as a benefit to employees. Sometimes, employers match a portion of employee contributions, making them an even more attractive way to save for retirement. For example, if you contribute $300/month to your employer-sponsored matching 401k every month, that money is working for you in multiple ways. First, you don’t pay income taxes on it. Second, it’s going into an investment account that is earning interest, so it’s growing for you. And Third, your employer, in this matching scenario, is contributing let’s say $150 to your 401k for you.  You’re able to save more without taking as much out of your paycheck every month.  

A profit-sharing 401k is a type of 401k that allows employees to share in the profits of their company. Like an employer-sponsored matching 401k, contributions are made by both the employer and employee, and the money is invested in the same way as a regular 401k. The main difference is that employees can receive distributions in cash or stock, depending on how the plan is set up. This can be a great way for employees to feel more invested to their company and have a stake in its success.

A safe harbor 401k  provides all eligible plan participants with an employer contribution, everybody gets the same with safe-harbor plans. The advantage to a business owner for being generous and equitable is that safe harbor plans allow businesses to avoid annual IRS nondiscrimination testing. The contributions in a safe-harbor plan are mandatory and hard to adjust later, and vesting (your 401k is 100% yours) is immediate in a safe harbor plan. In many safe harbor plans, employers can choose to “force out” small-balance (<$5,000) participants after they’ve left their jobs. For employers, the costs of maintaining all those small balance plans can be cumbersome with missing participants, uncashed distribution checks, and increased plan costs.

A SIMPLE 401k is a retirement savings plan that is similar to a Simple IRA (keep reading), but it has higher contribution limits. With a Simple 401k, you can contribute up to $56,000 per year (as of 2022), compared to $13,000 for a Simple IRA. Like a Simple IRA, the money in a Simple 401k grows tax-deferred. You don’t pay taxes on it until you withdraw it in retirement.

The main advantage of any 401k is that it offers tax-deferred growth. This means you don’t pay taxes on the money in your account until you withdraw it in retirement. This can be an advantage since your money will have more time to earn interest.  When you do withdraw that money, you will likely be in a lower tax bracket than you are in while you are working and contributing to the plan, so you’ll also pay less in taxes at that time than you would if you just earned and paid taxes on that money now. 

Speaking of IRAs, let’s review the options available

IRAs come in a lot of “flavors” Traditional IRA, Roth IRA, Simple IRA, SEP IRA

IRA stands for Individual Retirement Account. 

Traditional IRAs are tax-deferred retirement accounts in which investors can contribute pre-tax dollars. Investments grow tax-free until withdrawal during retirement, and withdrawals are taxed at the IRA owner’s current income tax rate. There is a contribution limit ($6,000 for 2021 and 2022 for those under age 50, $7,000 for those 50 and older), and required minimum distributions (RMDs) must begin at age 72. qualified withdrawals from a traditional IRA prior to the age of 59.5 years old may result in taxes plus a 10% penalty.

A Roth IRA  is set up to use after-tax dollars, which means you pay taxes and then contribute to your Roth IRA. You don’t get a tax benefit when you put the money away, but, the money grows tax-free, and you can withdraw money tax and penalty-free after age 59½ (as long as the account has been open for five years at that time). There are no contribution age restrictions as long as you have qualifying earned income. Also, there are no Required Minimum Distributions (RMDs) so if you have enough money, you can leave your Roth investment in the account into retirement. One last bonus. If you die and pass your Roth IRA to your heirs, their withdrawals will also be tax-free. You’d choose a Roth IRA if you were in a lower tax bracket (making under the limit for a Roth IRA)  but you think you’ll be in a higher tax bracket later when you withdraw the money. 

A  SIMPLE IRA plan (Savings Incentive Match Plan for Employees) Is like an employer-sponsored 401k but well, simpler. SIMPLE IRAs require employers to match employee contributions: 

  • Up to 3% of your employee’s compensation
  • At least 1% for no more than two out of five years

A SIMPLE IRA is easy to set up for an employer and allows the employee to put money away before taxes.  So it cannot be combined with a Roth IRA.  The contribution limits are lower than other retirement plan options.  It is very much like the traditional IRA but with mandatory matching contributions from the employer. 

A SEP IRA stands for a simplified employee pension individual retirement account. So you can see why the acronym was a good idea. SEP IRAs use pre-tax money and are for business owners with few to no employees or self-employed people. With a SEP IRA, if you have employees you have to contribute as much to their IRA as you do to your own. We’re all for generosity but with a large team, or even a team of 5, that could get very expensive. 

Saving for retirement is so important, your money grows in an investment account and is waiting for you when your income-earning days (mostly) are done.  While it can be hard to motivate to put money away during inflationary economic times, consider the benefit long term for you and for your loved ones.  If you have questions, please visit our resource center to learn more about financial wellness and some of the steps you can take to reduce financial stress and strain.

This material was created for educational and informational purposes only and is not intended as ERISA, tax, legal or investment advice. If you are seeking investment advice specific to your needs, such advice services must be obtained on your own separate from this educational material.

The State of California requires that all businesses with 5 or more employees offer a retirement savings program. When examining the retirement-readiness of CA residents it became clear  that many people were not saving enough for retirement. Because of this, a whole generation of retirees was facing the very real possibility of finding themselves dependent on State-funded programs… which would be very expensive for the government.  So, to solve the problem, California now requires all employers with 5 or more employees to offer retirement savings to their employees.  Employers and business owners can choose to default to the California state-run CalSavers program or, they can offer a retirement savings plan of their own. 

There are a number of reasons why business owners should consider setting up their own 401k plan rather than relying on CalSavers. In this article, we review what CalSavers offers, what a custom plan can offer, and what the benefits of a custom 401k retirement savings plan are to both employers and employees. 

What is CalSavers and what does it offer?

The CA EDD describes CalSavers as: 

“a retirement savings program for private sector workers whose employers do not offer a retirement plan. This program gives employers an easy way to help their employees save for retirement, with no employer fees, no fiduciary liability, and minimal employer responsibilities.” The details are that CalSavers offers a basic Roth IRA to help employees build their retirement savings. If you are not familiar with Roth IRAs, they allow employees to save after tax dollars. 

Roth IRAs have lower contribution limits, limited investments, and limited tax advantages. 

You can withdraw the money from a Roth IRA without having to pay any taxes on it because you paid taxes on that income before contributing it to the IRA. 

The contribution limit for a Roth IRA is $$6,000 per year, and the income limit is $144,000 for single people or $214,000 for married filing jointly per year (as of 2022). This means that if you make more than $144,000 per year, you are not eligible to contribute to a Roth IRA. 

There are also limits on what you can invest in with a Roth IRA. You are limited to investing in stocks, bonds, and mutual funds. 

While a Roth IRA can be a great way to save for your retirement, if you are looking for a retirement savings plan with more flexible investment options and higher contribution limits, you will want to consider setting up a 401k for your business instead. 

First and foremost, a custom 401k plan can be designed to specifically meet the needs of your business and your employees. This means that it can be tailored to maximize both employee retention and to encourage and reward retirement savings.

Additionally, setting up a custom 401k retirement savings plan can have tax benefits for Business Owners. CalSavers does not offer any tax breaks for businesses, meaning that you could be missing out on significant savings. 

If you are not familiar with the difference between a Roth IRA and an employer-sponsored 401k: 

A 401k plan is a retirement savings plan that allows employees to save money for their retirement with pre-tax dollars, which means that the income they choose to invest in the plan is not taxed until it is withdrawn from the plan after retirement. 

Setting up a 401k retirement savings plan for your business has a number of tax advantages that can save you money in the long run. 

One of the biggest benefits is that contributions to the plan are made with pre-tax dollars. This means that you do not have to pay taxes on the money until it is withdrawn from the account. This allows employees to save more money for their retirement. 

Another advantage of 401ks is that they offer businesses a number of tax breaks. For example, businesses can deduct their contributions to the plan from their taxable income, and they can also deduct employee contributions. This can save business owners a significant amount of money on their taxes each year. 

It’s no secret that good employees are hard to find and harder to keep. 

One of the best ways to retain key employees is by offering them a good benefits package. And one of the most valuable benefits you can offer your employees is a 401k retirement savings plan. Offering a 401k plan is a great way to show your employees that you value them and want them to stay with the company for years to come. 

If CalSavers is not the right solution for my business, what do I have to do to exempt my business from the requirement?

Business owners must have a retirement plan in place as of the mandatory participation date. This may mean a 401(k) plan, a 403(b) plan, a SEP or SIMPLE plan, or a multiple employer (union) plan. Want to know what these terms mean? Check out our blog on simplifying the retirement savings jargon here. 

Even if you set up your own 401k employers must still register with CalSavers to certify their exemption. Visit: https://employer.calsavers.com and choose  “I need to exempt my business” from the drop-down menu. You will need your federal EIN or TIN and an access code provided on the notice sent to you from CalSavers (can’t find it or didn’t get one? Call (855) 650-6916).   

Setting up a 401k retirement savings plan for your business is a great way to save money on taxes and provide your employees with a valuable benefit. If you are considering CalSavers for your retirement savings plan, be sure to weigh the pros and cons carefully before making a decision.

This information was developed as a general guide to educate plan sponsors, but is not intended as authoritative guidance or tax or legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation. In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations.