With many Americans having saved almost nothing for retirement, it is more essential than ever for businesses and employers to help their employees stay ahead of the curve. Employees are much more likely to save for retirement when their company offers a retirement plan, but many employers still do not offer these plans, leaving many workers without access to a dependable plan.
To help encourage more people to save for the future, California recently introduced a new program last year called the CalSavers Retirement Savings Program, or CalSavers for short. This program enables eligible employees to automatically contribute a part of their paycheck into a Roth IRA, helping them save up to $6,000 a year ($7,000 a year if they are age 50 and over).
All California employers with 5 or more employees are required to adopt the new program and give their employees the option of using CalSavers UNLESS they offer a company sponsored retirement plan. This year might be a great year to start the 401k you have been talking about due to increased tax credits for business owners for plan start up costs which often are the hurdle to implementing
The most common option is a 401(k) plan which has high contribution limits, allow for matching and profit sharing, and has a Roth & traditional pretax option. With CalSavers, employees are only eligible to contribute to a ROTH IRA with a few investment options. Employees can choose from target-date funds, money market funds, and a few mutual funds.
Whether you choose CalSavers or a 401(k) plan, the most important factor is that you or your employees have access to retirement benefits and have a solid foundational plan for a better retirement. If you would like to see what a 401k for your company would save you and what it could do for your benefits package, please contact us today. Act now before the tax incentives go away.