Golden State, Golden Years: How CalSavers Is Reshaping Retirement in California

California has long been a trailblazer in progressive policy and its approach to retirement savings is no exception. As the first state in the U.S. to pass legislation establishing a state-run retirement savings program for private-sector workers, California launched CalSavers—formerly known as Secure Choice—after a decade-long effort to address the retirement savings gap among its workforces.

What Is CalSavers and How Does It Work?

CalSavers is a retirement savings program designed for California workers who do not have access to a retirement plan through their employer. It offers employees the option to contribute to either a Roth IRA or a Traditional IRA, helping millions of Californians prepare for a financially secure future. Importantly, the CalSavers Program applies to both non-profit and for-profit employers and is structured to minimize administrative burdens and costs for businesses.

How the Program Works

Eligible employees are automatically enrolled at a default contribution rate of 5% of their pay, unless they opt out within 30 days. If they opt out, they will be automatically re-enrolled the following year at 6%, with the contribution rate increasing annually until it caps at 8%.

Employers are responsible for:

This is an employee-only plan—employers cannot contribute. If they wish to do so, they must establish a separate qualified retirement plan.

What Is the Cost of the CalSavers Program to the Employer?

There is no direct fee for employers to participate in CalSavers. However, many businesses report that the administrative burden—including tracking employee eligibility, managing opt-outs and onboarding new hires—can be significant. In some cases, this has led to the need for additional HR support or staff to ensure compliance.

As an alternative, some businesses are exploring the option of offering their own retirement plans to take advantage of SECURE Act tax credits, which can help offset the cost of setting up and maintaining a qualified retirement plan.

Who Must Participate?

Participation is mandatory for businesses that do not offer a qualified retirement plan. The deadlines vary by business size:

Employee counts are based on the previous year’s DE9C filings. If a business grows to five or more employees or discontinues its retirement plan, it must register by year-end.

Qualified Plans That Exempt Employers From CalSavers

Employee Eligibility and Responsibilities

To participate, employees must:

Employees are responsible for:

The 2025 IRS contribution limits are:

CalSavers will notify participants nearing the annual limit, but it is ultimately the employee’s responsibility to ensure compliance.

Penalties for Non-Compliance

Employers who fail to comply may face significant penalties:

What This Means for Employees

The CalSavers Program empowers employees to save for retirement directly from their paychecks—even if their employer doesn’t offer a retirement plan. Workers with multiple jobs can contribute through each employer but must monitor their total contributions to avoid exceeding IRS limits. CalSavers is making great strides in closing the gap between retirement needs and current savings, and many working California citizens stand to benefit greatly from this program.