The CalSavers Retirement Savings Board has issued a Notification of Proposed Emergency Regulation Action to readopt regulations that took effect earlier in 2021.
The Board adopted those emergency regulations to:
- amend the default investment option;
- reduce the minimum contribution amounts for non-payroll contributions;
- clarify the frequency during which non-payroll contributions can be made;
- clarify the tax-qualified retirement plans that, if offered by an employer, would render them exempt; and
- add a section clarifying how enforcement of employer compliance shall be made by the Board.
More specifically, the amendments the regulations made state the following.
Default Investment Option
Beginning April 8, 2021, a participating employee who has not made an alternative election shall have all contributions invested in a capital preservation investment for 30 days. After those 30 days, unless the participating employee makes an alternative election, that person’s contributions shall be invested in a target date fund based on the participating employee’s age. This applies to all participating employees who enrolled before, on or after April 8, 2021.
Minimum Contribution Amounts for Non-Payroll Contributions
A participating employee may elect to make recurring non-payroll contributions of at least $10 each to their account. Beginning April 8, 2021, non-recurring non-payroll contributions must be at least $10 and must be made through electronic fund transfer or by personal check.
Frequency of Non-Payroll Contributions
Recurring non-payroll contributions may be made at least as frequently as weekly, once every two weeks, twice monthly, or monthly and must be made through electronic fund transfer.
Retirement Plans that Make an Employer Exempt from Participating
If an employer offers a retirement plan that qualifies for favorable federal income tax treatment under Internal Revenue Code Sections 401(a), 401(k), 403(a), 403(b), 408(k) or 408(p), they are exempt from participating in CalSavers. Plans under Internal Revenue Code Sections 413(c), or 413(e) are no longer among those that provide such exemption; similarly, offering a payroll deduction IRA that does not provide for automatic enrollment is not considered to be a tax-qualified retirement plan for purposes of CalSavers exemption.
Enforcement of Employer Compliance
Enforcement efforts by CalSavers Retirement Savings Board staff shall include email and letter notifications of penalty application to the employers that are not in compliance. Those notifications will identify the cause of the noncompliance and the methods those employers can use to comply.
What Happens Now
The readoption file will be submitted to the Office of Administrative Law (OAL) after a period of at least five working days.
It will be possible to submit public comments after the readoption file is delivered to the OAL. Comments will be incorporated in the public record, if they are submitted to both the OAL and the CalSavers Retirement Savings Board within the five-day period. The name of the emergency rulemaking “CalSavers Retirement Savings Program” must be included in comments.
Comments to the OAL may be emailed to [email protected] or mailed to:
Office of Administrative Law
??Re: Emergency Rulemaking Readoption for the CalSavers Retirement Savings Program
??OAL Reference Attorney
??300 Capitol Mall, Suite 1250
Sacramento, CA 95814
Comments to the CalSavers Retirement Savings Board may be emailed to [email protected] or delivered to:
CalSavers Retirement Savings Board
Emergency Rulemaking for the CalSavers Retirement Savings Program
915 Capitol Mall, Room 105
Sacramento, CA 95814
Comments to the Board may also be sent by regular mail to:
CalSavers Retirement Savings Board
Emergency Rulemaking for the CalSavers Retirement Savings Program
P.O. Box 942809
Sacramento, CA 95815
Additional information about this rulemaking, including the text of the regulations and the finding of emergency, can be found at: https://www.treasurer.ca.gov/calsavers/regulations/index.asp
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