2026 is an important year for California startups and employers. The state’s retirement savings mandate will fully cover nearly every private-sector employer. With the deadline to comply around the corner, it’s important to plan for this legal requirement.

CalSavers is California’s state-facilitated retirement savings program for employees whose employers don’t offer a qualified plan. It automatically enrolls workers, collects payroll deductions into Roth IRAs, and ensures Californians gain access to retirement savings.

In this guide, you’ll learn all you need to know about CalSavers, including who is eligible, how to enroll, deadlines you shouldn’t miss, the penalties for non-compliance, how to integrate it with payroll systems, and how to switch from CalSavers to a 401(k).

What is CalSavers?

CalSavers is California’s state-run retirement savings program, designed to ensure workers in the private sector have access to a workplace-style retirement account even if their employer doesn’t otherwise offer one.

CalSavers emanated from California legislation passed in 2016 (originally as “Secure Choice”) to address the retirement coverage gap among private-sector workers. It officially launched in phases, beginning with larger employers and gradually expanding to smaller businesses.

If an employer doesn’t already sponsor a qualified retirement plan (like a 401(k)), CalSavers offers a fallback option to provide retirement savings access.

Why California Introduced CalSavers

California faced (and still faces) a significant retirement savings shortfall: many workers, especially in small businesses, had no access to employer-sponsored plans. Through CalSavers, the state aims to “close the retirement savings gap” by mandating a baseline retirement option facilitated through payroll deductions.

The hope is that more Californians will build long-term financial security, reducing future dependence on public support in old age.

How the Program Works

The employer’s role is intentionally minimal. If required, the employer registers with CalSavers, uploads their eligible employee roster, and facilitates payroll deductions. Importantly, there are no employer contributions, no fees, and no fiduciary responsibility.

Employee participation is via automatic enrollment (after 30 days) unless the employee opts out. Contributions are deposited into a Roth IRA (after-tax) account under the employee’s name, though participants may recharacterize to a traditional IRA if desired.

The account is portable; the employee keeps it even if they change employers. Employees can customize contribution levels or opt in/out at any time.

Benefits

• Low burden for employers: No fees, no fiduciary risk, simple integration.
• Universal access: Even small employers and their employees who otherwise wouldn’t have retirement options gain access.
• Portability and flexibility: Account stays with the individual across jobs; participants can adjust or opt out.

Limitations

• Lower flexibility and features compared to private 401(k)s (e.g., matching employer contributions, plan customization).
• Contribution ceiling is tied to IRA rules, which are lower than what some 401(k) plans allow.
• Participants bear investment risk; returns aren’t guaranteed.
• Since it’s a Roth IRA structure, contributions are post-tax; not everyone will prefer that until retirement.

CalSavers Eligibility Rules

Below is a breakdown of who must comply, which employees qualify, and when you can claim exemptions:

Which Employers Are Required to Offer CalSavers?

Under California law, any employer with employees must either offer a qualified retirement plan or register with CalSavers, unless exempt.

Historically, larger employers (5+ employees) had earlier deadlines. For example, companies with five or more employees needed to comply by June 30, 2022, if they didn’t already sponsor a retirement plan.

In 2025, the mandate expands: employers with 1–4 employees who do not already sponsor a qualifying plan must register by December 31, 2025. If your business has recently grown past five employees, or you terminated your prior retirement plan, you generally must register by year-end in that same calendar year.

Thus, by the end of 2025, nearly all California private employers with any workforce (barring an exemption) must comply with CalSavers or maintain a private retirement offering.

Employee Eligibility: Who Qualifies Under CalSavers?

Once an employer is subject to CalSavers, these rules define which employees must be enrolled (unless they opt out):

• An employee must be at least 18 years old and have employee status under California law (i.e., W-2 status)
• There is no minimum hours-worked requirement and no minimum tenure requirement. In other words, part-time employees and new hires are eligible immediately (with the 30-day automatic enrollment window)
• Contractors or independent workers are generally not eligible through the employer, but they may self-enroll in CalSavers individually (outside the employer program), provided they meet Roth IRA rules.

Exemptions: When You May Not Need to Comply

Not every business must enroll; you may qualify for an exemption if:

• You already sponsor a qualified retirement plan, such as a 401(k), SEP IRA, SIMPLE IRA, or other eligible employer-sponsored plan
• Your business has no employees apart from the owner(s) (i.e., you’re a sole proprietor with no staff)
• The business is closed or has been sold (i.e., ceases operations)
• The entity is a government body, religious organization, or tribal organization; certain public, non-profit, or faith-based organizations may be exempt.

To claim an exemption, you must certify that your business meets one of the allowed categories, usually via the CalSavers employer portal.

Case Study: Startup with 6 Employees vs 60 Employees

Scenario A: 6-employee startup

Suppose your company has hired six W-2 employees but does not yet offer any retirement plan. In that case, you were already required to register by June 30, 2022 (under the older mandate).

If you delayed compliance and remained noncompliant, you are now subject to penalties. Going forward, you must maintain CalSavers (or a qualified plan) and enroll every eligible employee automatically.

Scenario B: 60-employee company

For a 60-employee firm without a retirement plan, the deadline has long passed (e.g., 2021 or 2022, depending on bracket).

In practice, this means all 60 employees who are 18+ and classified as employees must be offered enrollment (unless they opt out). Part-time or seasonal staff also fall under eligibility.

These case studies show that your compliance responsibility arises immediately upon having one or more eligible employees and lacking a qualifying plan.

CalSavers 2025 Deadlines You Can’t Miss

2025 Deadlines for Small Businesses (5+ Employees)

For employers already covered (i.e., those with 5 or more employees), the original compliance deadline has passed: June 30, 2022. For businesses that grow into that bracket mid-year (e.g., you go from 4 to 5 employees), you must register or offer a qualified retirement option by December 31 of that same year.

As of 2025, all larger employers are expected to be in compliance. The focus now shifts to smaller employers.

Ongoing Deadlines for New or Small Employers (1 to 4 Employees)

Thanks to recent legislation (e.g., SB 1126), the mandate now expands to employers with as few as one employee. If your business has 1 to 4 employees (and does not sponsor a qualified retirement plan), your registration or exemption certification deadline is December 31, 2025.

To encourage early adoption, there’s an incentive campaign: register and begin facilitating CalSavers by July 31, 2025, and you could be eligible for a cash award lottery.

The table below gives a quick glance at the timelines:

How to Enroll in CalSavers

Prepare Payroll and Employee Data

Before you begin the formal registration process, clean up your payroll and employee records. Ensure you have the following for every eligible employee (18+ with a valid SSN or ITIN):

• Full legal name
• Date of birth
• Address
• Email, and
• Phone

CalSavers requires a roster upload within 30 days of registration, so having an accurate, complete dataset avoids rework.

Also, flag any new hires, contractors, or employees turning 18 (they must also be added within 30 days later) so you can maintain compliance.

If you use a payroll provider or software (e.g., Gusto, ADP, Paychex), confirm that it supports the kind of deductions required and whether it can sync with CalSavers via API or file export. Many employers designate their payroll vendor as a delegate in the CalSavers portal to simplify ongoing processes.

Set Up Your CalSavers Employer Account

Once your data is in order, you’ll register your business via the CalSavers employer portal. You’ll need your Federal Employer Identification Number (EIN) or Tax Identification Number (TIN), your California payroll tax ID, and the CalSavers access code (sent via mail/email from the state). If you don’t have a code, you can request one through the portal.

If your business qualifies for an exemption (for instance, if you already sponsor a qualified retirement plan), you can submit an exemption form during this stage. After registration, you must upload or input your employee roster within 30 days; this triggers the enrollment window. Most employers complete registration in 15 to 30 minutes.

Invite Employees to Enroll

Once the roster is loaded, CalSavers contacts employees directly (via mail or email) with a welcome packet, instructions, and the option to opt out or customize their account.

Employees have a 30-day window to review, opt out, or set their contribution or investment preferences. If they take no action, they’re automatically enrolled using the default settings (e.g., a default rate, automatic escalation).

Employers may share neutral communications or sample flyers (provided in the employer resources kit) to help employees understand the program, just be careful not to unduly influence their choices.

Manage Contributions

Once employees are enrolled, your ongoing obligation is to deduct contributions from each pay period and remit them to CalSavers within seven business days of the payroll date. You’ll need to maintain the deduction line item in your payroll system, ensure correct rates are used, and keep your roster updated (add new hires, remove terminated employees).

If you’ve added your payroll provider as a delegate, they may handle much of the transmission for you. You should periodically audit reports for accuracy.

Penalties for Non-Compliance

California takes CalSavers compliance seriously, and the penalties for non-compliance are severe, especially for startups that delay taking action.

Breakdown of Fines

Under Government Code § 100033(b), once the CalSavers Board serves a final notice of penalty application, an employer that still fails to allow eligible employees to participate may incur:

• $250 per eligible employee if non-compliance continues 90 days after the notice
• An additional $500 per eligible employee if non-compliance extends 180 days or more beyond that notice, bringing total exposure to $750 per employee for prolonged non-compliance

Penalties can recur: any calendar year beyond the initial penalty that the employer remains non-compliant may trigger the $500 assessment again, even if non-compliance is not consecutive.

Enforcement Process by the State

The CalSavers Board (or its staff) issues the notice of non-compliance via email or letter, detailing specific deficiencies and offering a path to compliance before penalties become binding.

If no remedial action is taken, the Board informs the Franchise Tax Board (FTB), which then issues the penalty notice and handles collections. Employers in receipt of such notices may appeal in writing to the FTB within 90 days.

The FTB mails the penalty notices, collects payments, and can waive or abate fines if the employer corrects compliance before assessment is finalized.

How to Avoid Penalties

• Register and certify. Even if you plan to move to a 401(k) later, register by the deadline or claim an exemption so you won’t be penalized.
• Upload employee info and run payroll deductions on schedule; failure to do either is a basis for penalties.
• Respond promptly to notices. If you receive a non-compliance notice, act immediately to register, remit contributions, and communicate with CalSavers or FTB about your compliance status.
• Document compliance steps. Keep records showing registration date, data uploads, proof of deductions, and any correspondence. These may help in appeals or penalty mitigation.
• Request abatement when eligible: The state has allowed fine abatement when an employer corrects non-compliance before the final penalty is imposed.

Payroll Integration with CalSavers

Founders and HR leaders must ensure a smooth connection between CalSavers and their payroll systems. Mistakes here can lead to late remittances, mismatches in contributions, or compliance issues.

Below is a breakdown of how CalSavers works with payroll, which providers support integration, the difference between manual upload vs. automation, and practical tips for startups.

How CalSavers Works with Payroll Systems

CalSavers supports API-based integration, thereby allowing your payroll provider to transmit employee rosters and contribution data directly and securely to the CalSavers system. Many payroll vendors and software platforms have built that interface so that data flows easily from payroll to the state-run retirement program.

If your payroll provider does not offer a direct integration, you can grant them delegate access to your CalSavers employer portal. In that model, the provider can log in, upload files (via templates such as CSV or Excel), and manage contribution submissions.

There’s also support for FTP (file transfer protocol) upload in some cases, for periodical batch file exchange.

Supported Payroll Providers and Integrations

CalSavers partners with over 100 payroll providers via a third-party middleware labeled “Payroll Integrations.”

This service bridges the gap between your payroll vendor and the CalSavers system, thus handling secure data transfer, mapping deduction codes, and reconciliation. The pricing is tiered based on the number of active participants.

Some payroll providers offer native integration (i.e., direct API link). For example, Paychex and TJH Payroll have direct integrations with CalSavers, so employers using them can skip the middleware step.

Also, platforms like ProLiant claim to support automated data exchange with CalSavers to simplify implementation. Many major payroll/HR systems (e.g., ADP, Gusto, QuickBooks, Zenefits) are often mentioned in provider lists for “payroll integration” with CalSavers.

Manual Upload vs. Automated Payroll Deductions

Manual upload is viable when you have a small team or infrequent payroll changes. You or your payroll vendor can export a template (CSV / Excel) and upload it via the CalSavers Employer Portal.

This gives you control and visibility, but it also introduces human error risk (mismatched data, late uploads) and a higher administrative burden.

On the other hand, automated payroll deductions via API or Payroll Integrations reduce friction. Once set up, contributions are routed each payroll period without manual intervention. The system can flag discrepancies automatically and handle updates.

Before switching to an automated route, ensure your deduction codes are standardized (e.g., “Retirement Savings Deduction”) and test that payroll deductions match previous manual submissions exactly. After you switch to automation, manual corrections generally aren't allowed.

How to Switch from CalSavers to a 401(k)

Why Many Startups Outgrow CalSavers

CalSavers was designed as a compliance-safe, low-touch retirement solution for employers who don’t yet offer their own plan. But as a startup scales, it often begins to expose the limitations inherent in a state-run Roth IRA model.

For one, you cannot offer an employer match or discretionary contributions in CalSavers; the employer’s role is to facilitate payroll deductions.

Moreover, as your workforce grows and compensation levels rise, your employees will naturally seek more flexibility; higher contribution limits, tax-advantaged pretax deferrals, plan loans, etc. The “one-size-fits-all” design of CalSavers (fixed defaults, limited investment choices, and limited customization) becomes insufficient.

In a nutshell, CalSavers is great for minimal compliance and ease of setup, but it’s not ideal as a long-term, competitive benefit, especially once you’re hiring aggressively or competing for senior talent.

Benefits of Offering a 401(k) over CalSavers

When you upgrade to a 401(k), you get access to several benefits over CalSavers, including:

• Higher contribution limits: Unlike a Roth IRA’s upper bounds, a 401(k) allows much larger annual contributions (including catch-up contributions for employees over 50).
• Employer matching/contributions: You can incentivize employee savings by providing matching or profit-sharing contributions (a powerful retention and recruitment tool).
• Tax advantages: Employer contributions to a 401(k) are generally tax-deductible as a business expense. Employees also benefit from the option of pre-tax or Roth (post-tax) contributions, depending on plan design.
• Plan flexibility and control: You gain flexibility in plan design; eligibility rules, vesting schedules, plan loans or hardship distributions, and a choice among many investment options.
• Stronger benefit for employees: Many employees prefer 401(k)s over state-mandated IRAs. Building a solid retirement benefit can differentiate your startup in a competitive hiring environment.

Hence, switching from CalSavers to a 401(k) often makes sense once your company is ready to invest in a higher tier of benefits.

Step-by-Step Process to Switch from CalSavers to a 401(k)

Here’s a roadmap you can follow to switch from CalSavers to a 401(k):

• Assess readiness and business size: Determine if your business has reached a scale (number of employees, payroll complexity, higher salaries) where a 401(k) becomes viable.
• Choose a 401(k) provider/administrator: Evaluate vendors (e.g., Guideline, ForUsAll, Human Interest) based on fees, integration with payroll, investment menu, fiduciary support, and scalability.
• Design your plan’s features: Decide matching formula, vesting schedule, eligibility requirements, and whether to include Roth option, loans, or safe-harbor features.
• Adopt plan documents and file as required: Your provider will supply the plan document, summary plan description, and assist with IRS filings (e.g., Form 5500 when applicable).
• Communicate change and enroll employees: Notify employees in writing about the new 401(k), how it replaces or supersedes CalSavers, and guide them through enrollment.
• Coordinate rollout and crossover: Decide whether to grandfather existing CalSavers balances (letting them remain or offering rollover) and sync payroll so contributions now flow into the 401(k) exclusively.
• Terminate your CalSavers facilitation: Once your qualified plan is active, formally close or exempt from CalSavers on the employer side. Confirm you are no longer required to act as a facilitator.

Cost Considerations for Founders

Switching isn’t free. Here’s what to budget and plan for:

• Administrative and platform fees: Depending on the provider, you may pay a base fee plus per-employee charges.
• Setup/onboarding costs: Vendors may charge one-time setup or plan adoption fees.
• Fiduciary responsibilities: As plan sponsor, you’ll assume fiduciary duties, although many administrators include support to mitigate this.
• Employee education and communication: You’ll want to invest in communications, Q&A sessions, and possibly financial advice for employees.
• Potential tax credits: The SECURE Act and related rules allow eligible small employers to claim tax credits for startup costs of new retirement plans (often up to $5,000 per year for 3 years).

The cost is often worth it when weighed against the value you gain: stronger recruiting, better benefit differentiation, tax savings, and scalability.

CalSavers vs. Other State-Mandated Retirement Plans

When comparing CalSavers to other state-mandated retirement plans like OregonSaves and Illinois Secure Choice, it helps to look at structure, employer burden, flexibility, and multistate employer complexity.

OregonSaves operates as a Roth IRA auto-enrollment program. Employers with no qualified retirement plan must facilitate payroll deductions into individual Roth IRAs for employees.

Illinois Secure Choice similarly requires employers (usually with 5 or more employees) to offer the Secure Choice program or an alternative qualified plan. The model is a Roth IRA with automatic enrollment unless workers opt out.

Many of these state programs are designed to reduce employer responsibility: no fiduciary liability, minimal administrative costs, and simplified enrollment processes.

Why California’s Program Stands Out

Here’s why CalSaver is preferable:

• California is extending its mandate to even very small employers; by December 31, 2025, businesses with 1 to 4 employees must comply or offer an alternative plan.
• CalSavers offers both Roth and traditional IRA recharacterization, giving participants more tax flexibility.
• The state explicitly relieves employers of fiduciary responsibility, and there are no employer fees.
• Its scale and oversight also allow more robust enforcement and coordination across payroll systems in California than many smaller states can manage.

What Multistate Employers Need to Know

If your business operates across states with different retirement mandates, you’ll need to track multiple compliance programs simultaneously (e.g., CalSavers in CA, OregonSaves in OR). Standardizing your retirement benefit (e.g., offering your own 401(k) that qualifies in all your states) is often simpler than juggling dozens of state-auto IRAs.

Large employers sometimes negotiate exemptions in states where they already offer qualified retirement plans. For instance, ERIC (the employers’ association) has secured exemptions in California, Oregon, and Illinois for its members.

Watch for changes in deadlines and rules. These state plans are relatively new and subject to legislative change.

Founder’s Best Practices for CalSavers Compliance

Implementing your CalSavers compliance checklist with consistency and transparency can help your startup avoid fines and build trust. Here are expert best practices for founders:

CalSavers Compliance Checklist for Small Business Owners

Compliance begins with structure. A reliable CalSavers compliance checklist should include marking important registration deadlines, maintaining an updated employee roster, and making sure payroll deductions are processed accurately and remitted on time.

Treat these steps as part of your ongoing operations (not just as a one-time requirement) to reduce the risk of penalties. Conduct regular audits of your records and document every communication to ensure your startup stays aligned with California’s retirement rules while building a strong operational foundation.

How to Communicate CalSavers to Employees

Communication is where compliance either succeeds or falters. Employees need to understand what CalSavers is, how auto-enrollment affects them, and what choices they have to contribute or opt out.

Frame the program as a benefit rather than a burden, and introduce it through clear company-wide announcements while reinforcing the message in follow-up conversations. Make resources such as FAQs and official CalSavers guides easily accessible to give employees confidence and minimize confusion.

Integrating Retirement Benefits into Startup Culture

Compliance becomes more valuable when it is embedded in culture. Startups can treat CalSavers not just as a legal obligation but as a sign of commitment to their team’s financial well-being.

Hosting short sessions on financial literacy, sharing insights on the importance of early retirement savings, or simply acknowledging employee participation all help turn the program into a positive workplace feature. Over time, this integration promotes a culture that values security, responsibility, and long-term planning.

Maximizing Compliance as a Recruiting Tool

CalSavers for startups can double as a competitive recruiting advantage. Candidates today look for employers who prioritize benefits and stability, even at the early stages of growth.

By highlighting California retirement compliance in job postings and during interviews, you can signal maturity and foresight. Positioning CalSavers as the first step toward eventually upgrading to a 401(k) plan also shows ambition to scale employee benefits in line with company growth, making your startup more attractive to top talent.

10-Day Implementation Plan

To get your startup fully compliant with CalSavers quickly, here’s a 10-day implementation plan you can follow. This timeline assumes you’ve already determined you need to comply (i.e., you don’t already offer a qualified retirement plan).

Day 1: Register or File Exemption; Request Access Code

Kick off by registering your business in the CalSavers employer portal, or, if your company qualifies, submitting an exemption. You’ll need your EIN/TIN, your California payroll tax ID (from EDD), and, if you’ve not received it, request your Access Code, which is required to complete registration.

Days 2 to 3: Upload Employee Roster and Prepare Payroll Deduction Code

Gather your eligible employee data (name, SSN or ITIN, hire date, contact information) and upload it to the CalSavers portal. Simultaneously, configure a payroll deduction line item within your payroll system that will be used for CalSavers contributions. (Having a dedicated code like “CSAV” helps with reconciliations.)

Days 4 to 5: Employee 30-Day Decision Window Begins

Once the roster upload is complete, CalSavers begins the 30-day window during which employees can opt out or set preferences. If they take no action, they’re auto-enrolled under default settings. The system handles notices to employees.

Day 6 to 7: Build Remittance Workflow (File Upload or API)

While the opt-out window runs, build your remittance process: choose whether to submit contributions via file upload or API integration, test your flow, and ensure banking details are in place.

Days 8 to 10: First Funding, Remit Within 7 Days, and Add New Hires

After the 30-day period ends, your first payroll that includes participating employees will occur. You must remit those contributions within seven days of the payroll date. Also, commit to adding any new hires (or newly eligible employees) to CalSavers within 30 days of their hire date.

Pair this 10-day plan with a compliance tool (like an HR ops automation service) to track tasks and deadlines across your team.

Simplify CalSavers Compliance with Expert Operational Support

Startups struggling with CalSavers registration, payroll integration, and ongoing compliance can partner with fractional operational teams that specialize in HR and compliance management.

Rather than drowning in state mandates, registration portals, and penalty notices, you can delegate the entire CalSavers workflow, from initial eligibility assessment to employee roster uploads and contribution tracking, to experienced operations professionals.

By using Chore (a platform that provides HR, finance, compliance, and equity operations), you gain immediate access to experts who understand California's retirement mandate inside and out.

We handle deadline tracking, payroll system coordination, employee communications, and documentation, ensuring your business stays compliant while you focus on product development and growth.

Ready to offload your CalSavers compliance burden? Schedule a free consultation with Chore to discover how our fractional operational support can transform your back-office struggles into hassle-free execution.

FAQs

Is CalSavers mandatory in 2025?

Yes, CalSavers is mandatory in 2025 for most California employers that don’t offer a qualified retirement plan.

• Deadline: Employers with 1+ employees (without their own plan) must register or offer a qualified plan by December 31, 2025.
• Exemptions: Businesses with an existing retirement plan, sole proprietors with no employees, government, religious, and tribal organizations.
• Employer requirement: Must register or certify exemption in the CalSavers system.
• Employees: Automatically enrolled, but participation is voluntary (they can opt out).

What if my employees don’t want to participate?

Employees are not required to participate in CalSavers. They’re automatically enrolled, but they can opt out anytime without penalty to you as the employer. Your role is simply to facilitate access and provide enrollment communications.

What’s the minimum number of employees for CalSavers?

Under the 2025 rules, having a single non-owner employee is enough to require CalSavers compliance (unless you already offer a qualified retirement plan or qualify for another exemption).

How do I opt out of CalSavers?

Employees who don’t want to participate can opt out using one of these methods:

• Online: Log in to your CalSavers account (or use the “opt out” option via saver.calsavers.com) and disable contributions.
• Phone: Call CalSavers’ automated phone line at 1-855-650-6918 and follow prompts to opt out.
• Paper Opt-Out Form: Download, complete, and mail the CalSavers Employee Opt Out Form.

Even if contributions have already started, you can still end your participation; the program will stop deductions no later than 30 days after your request.

Can I contribute as an employer?

Under CalSavers, employers cannot make contributions to employee accounts. The program was designed to be employee-funded only, meaning all contributions come directly from participating employees’ paychecks through payroll deductions.

However, here are a few things to keep in mind:

• Employers’ role is to facilitate the program by registering, adding employees, and ensuring payroll deductions are set up correctly and remitted on time.
• No fees for employers. You don’t pay administrative costs to participate in CalSavers.
• If you want to contribute as an employer (e.g., matching or profit-sharing), you’ll need to switch to a qualified retirement plan like a 401(k). A 401(k) not only allows employer contributions but also comes with additional tax advantages and can be a stronger recruiting tool.

Does CalSavers affect recruiting and retention?

Yes. While CalSavers gives employees a simple way to save for retirement, it’s seen as a minimum compliance benefit. Offering only CalSavers may not have a strong influence on recruiting or retention, since employees know contributions are limited and employers can’t match. For startups that want to stand out in hiring, upgrading to a 401(k) with employer contributions is far more attractive. It signals long-term investment in your team, strengthens employee loyalty, and can reduce turnover.