Key Points
- Most California businesses must register for CalSavers or file an exemption if they don’t offer a qualified retirement plan, with deadlines based on size.
- There are no employer costs, no required matching, and no fiduciary liability, just a simple payroll deduction process for employees.
- Penalties for noncompliance can reach $750 per employee, so it’s important to register, stay current on employee lists, and transmit payroll deductions on time.
CalSavers is California's state-sponsored retirement savings program designed to help employees save for the future. It was created by state law to ensure that every working Californian has access to a payroll deduction retirement savings account, even if their employer doesn’t offer a traditional plan like a 401(k).
Employers who do not sponsor a qualified retirement plan and have at least one employee are required to register for CalSavers or file an exemption. The final deadline for employers with fewer than five employees is December 31, 2025.
CalSavers uses Roth IRAs, which means employee contributions are made with after-tax dollars. The program is portable, and accounts follow the worker even if they change jobs.
In March 2025, thousands of small businesses received an email that said to register for CalSavers, but most businesses had never heard of it and wondered if this was even real. So here's what you need to know!
Related: Best IRA Account Providers In 2025
Example notice email. Screenshot by The College Investor.
Who Must Register And Who Is Exempt?
Any California business with at least one employee and no qualified retirement plan must register for CalSavers or apply for an exemption. This includes part-time, seasonal, and temporary employees who are at least 18 years old. There are no minimum hours worked or tenure requirements.
Businesses are exempt if they:
- Offer a qualified retirement plan (such as a SEP IRA or Solo 401k)
- Are classified as religious, tribal, or government organizations
- Have no employees other than the owner(s) or owner’s spouse
- Only pay independent contractors
To claim an exemption, businesses must use their FEIN, California payroll tax ID, and a CalSavers access code provided by the program. You must still take action to claim an exemption!
What Employers Need To Do
If you received an email notification (or mail), you need to take action. You must either take action to claim an exemption or you need to register.
If a business is required to register, they must:
- Register the Business: Use your FEIN, payroll tax number, and access code to register on the CalSavers website (the access code is located in the email and letter you received).
- Add Employees: Upload employee information within 30 days of their hire date or 18th birthday. Employees will receive a notice and have 30 days to opt out.
- Send Payroll Deductions: Submit employee contributions within seven days of payday through the CalSavers portal or via payroll software integration.
Many payroll providers offer full or partial integration with CalSavers, making it easier to automate deductions. Employers can also grant access to third-party payroll representatives to manage the process.
Employers do not pay any fees, are not required to match contributions, and have no fiduciary responsibility for the program.
What Happens If You Fail To Register (Or File An Exemption)
The deadline to register and start facilitating CalSavers is December 31, 2025.
There are penalties for noncompliance! If a business fails to comply within 90 days, they will be fined $250 per eligible employee. If noncompliance continues past 180 days, the fine increases by another $500 per employee.
That's a potential fine of $750 per employee.
Employers must keep their employee lists current and ensure that payroll contributions are submitted on time. Even if all employees opt out, the employer must maintain access to the portal and add new eligible workers as they are hired.
⚠ This will require ongoing work on the part of an employer!
What Employees Need To Know
CalSavers automatically enrolls workers who don’t opt out within the 30-day window. Contributions begin at 5% of pay, with an automatic annual increase of 1% up to 8%. Employees can change their contribution rate or investment options at any time.
Funds are first held in a money market account and then moved into a target retirement fund. Other investment options include a bond fund, equity fund, and an ESG-focused fund.
Employees can withdraw their contributions at any time without penalty, though earnings may be subject to taxes and penalties if not qualified.
Participation is voluntary, and workers can opt in or out as their financial needs change.
Final Thoughts
Many Californians do not have access to employer-sponsored retirement plans. CalSavers was designed to bridge this gap, helping workers start saving through automatic payroll deductions. Studies show that people are far more likely to save when they have access to a plan through their employer.
By setting up a simple, low-cost way to save for retirement, CalSavers aims to improve financial security for millions of workers across the state. And for businesses, it offers a low-hassle way to comply with state law and support their employees.
However, CalSavers is not optional for most small businesses in California. And it does require businesses to take action - whether claiming an exemption or signing up. And if businesses do sign up, it will require an ongoing commitment to maintain the program.
With deadlines approaching at the end of 2025, now is the time to get registered or file for exemption.
Don't Miss These Other Stories:
Editor: Colin Graves
Robert Farrington is the founder of The College Investor and is widely recognized as one of the nation’s leading voices on student loan debt and saving for college. He holds an MBA from UC San Diego Rady School of Management and has spent over 15 years researching, writing, and advising on student loans, 529 plans, financial aid programs, and saving and investing for young professionals.
Robert has been featured in the The New York Times, The Wall Street Journal, The Washington Post, NBC News, and Forbes, where he has been a regular personal finance contributor for over a decade. His work combines both professional expertise and personal experience – he successfully navigated his own student loan repayment journey and has helped thousands of readers do the same.
He is committed to making the intersection of personal finance and education transparent and accessible. You can learn more about Robert on the About Page or on his personal site RobertFarrington.com.