Did you know that by June 2022, if you’re a California business owner with more than 5 employees, you’ll be required to offer some sort of retirement solution to all of your employees? That might sound like it’s going to seriously affect your budget, but there are cost-effective and even free options available to you in order to meet those requirements!
Not only that, but investing in your employees’ retirement is a great way to show them that you care about their financial health and wellbeing now and long after they’ve left your company. In fact, 89% of younger employees between 18 and 34 would prefer benefits to more money in their paycheck. And, 31% of that group ranks retirement plans as one of the top benefits.
Ready to invest in your employees but don’t think the state-run Cal Savers Retirement Program is right for you? Let’s dig into your options, and, if you find one that’s better for you, talk about how to opt out of Cal Savers.
What is Cal Savers?
The Cal Savers Retirement Program is a new state-based retirement plan for small businesses in California and their employees. This plan allows employers to offer automatic enrollment and payroll deduction to employees with no administrative costs or hidden fees.
In fact, if you’re a small business owner in California with five or more employees, you’ll actually be required to offer a retirement plan option to your employees by the end of June 2022.
How does it work? It’s actually quite easy for small business owners, and there are no employer fees. Unlike a regular 401(k) that most businesses opt for, employers do not make contributions to employee accounts with the retirement accounts that are set up with the CalSavers program.
In fact, the accounts aren’t even 401(k)s at all; they’re personal IRA retirement accounts overseen by the CalSavers Retirement Savings Investment Board.
What Are the Benefits of Participating in CalSavers?
As a business owner, what are the benefits of participating in Cal Savers? Well, the biggest benefit is that you’ll ensure you’re compliant with state rules and regulations! This means you won’t get penalized for not offering retirement options to your employees.
As a business owner, offering these types of retirement options can help you attract and retain top talent. Workers are interested in these types of perks now more than ever. 40% of employees working for small businesses say that they would leave their current company for another that offers a 401(k) plan.
On top of that, a survey by Willis Tower Watson showed that 75% of new hires at a company offering a 401(k) say that a retirement plan provides a compelling reason to stay. However, just because Cal Savers seems like a simple option doesn’t mean it’s the best. While you do have to offer retirement options to your employees, they don’t have to be from Cal Savers.
Cal Savers Opt Out: What Are the Other Options?
If opting out of Cal Savers seems like a good option for you, then you might be wondering what other choices you have when it comes to finding high-quality managed retirement plans for small businesses.
First, you’ve got Wealth Stack (that’s us!), one of the best options for small business owners looking for affordable, easy retirement solutions.
We offer SIMPLE IRA plans for small businesses. And, before you say anything, we know…this probably sounds like a hassle for a small business owner like yourself. However, we make it as simple as possible. Setup for this is done in three simple steps:
- We collect some basic information about your business.
- We set up your accounts.
- We invest for you.
After the setup process is complete, our team of investment professionals works to ensure that your employees' IRA accounts are optimized for maximum wealth. Think of us as your personal investors, working behind the scenes to help your employees build their wealth.
How to Opt Out of Cal Savers
As an employer, opting out of Cal Savers is simple. You just don’t sign up in the first place! Note that you’ll still be required to meet the deadline of June 30th, 2022 (be sure to check the state website to confirm the deadline). However, you don’t need to officially opt out of the Cal Savers program unless you’ve already signed up for it and decide to switch.
Now, as an employee, how do you opt out of the Cal Savers program that your employer enrolled you in? Fortunately, Cal Savers makes it easy.
You can opt out online by clicking this link or emailing Client Services at firstname.lastname@example.org. Or, you can call 855-650-6918 and speak with Client Services directly on the phone.
Be sure to have your date of birth, zip code, and the last four digits of your Social Security number on hand (likewise, if you registered with an ITIN, you can use that as well to confirm your identity).
Cal Savers vs. Wealth Stack
The CalSavers Retirement Program allows employers to offer automatic enrollment and payroll deduction to employees. Sounds a lot like Wealth Stack, right? Sort of. Where do they differ and which one is better? Let’s break it down.
Similar to Wealth Stack, employers don’t make contributions to employee accounts with the retirement accounts that are set up with the CalSavers program. These accounts are personal IRA retirement accounts overseen by the CalSavers Retirement Savings Investment Board.
Just who is on the CalSavers Retirement Savings Investment Board? Mostly government employees, really. While they do have experience in finance, there isn’t currently one person on the board with expert experience in managing large portfolios in a way that can help them grow exponentially over time.
What’s the better option? Offering your employees a managed IRA plan that is being personally managed by an expert investment professional.
The Wealth Stack IRA Pack offers just that, along with:
- High-quality investment education for your employees
- Investment recommendations from a seasoned Wall Street professional
- A free financial assessment and review of your business
Ready to get started? Take the guesswork out of setting up company retirement solutions with our managed IRA plans and digital financial advisory services. You sit back and build your business; we’ll take care of everything else, from filing forms to onboarding new users and helping you access the capital you need to grow your business.
Click here to learn more about the Wealth Stack Growth Pack.
Own a small business but not in California? The offer still stands! Get in touch via this link and we’ll be in touch for a free consultation and business assessment.