On August 26, 2022, California Senate Bill 1126 (SB 1126) was signed into law, amending government code relating to retirement. The legislation expands the definition under the CalSavers program for “eligible employers,” entities required to provide retirement savings arrangements for their employees.
The CalSavers Retirement Savings Trust Act, launched in 2019, established the savings program and savings trust. The trust contains a program fund and an administrative fund with trust money that is continuously administered by the CalSavers Retirement Savings Board to promote greater retirement savings for California employees.
“Eligible employers” who did not sponsor employee retirement plans are required to participate in the state-run retirement program, CalSavers. The program offered a payroll deposit retirement savings arrangement so that eligible employees may contribute a portion of salary or wages to a retirement plan.
SB 1126 shifts the definition of “eligible employer,” expanding to include smaller businesses. Previously, a person or entity engaged in business with five or more employees would be categorized as an “eligible employer.” With SB 1126, a person or entity with at least one employee is now considered an “eligible employer” (not including sole proprietorships, self-employed individuals, other businesses who only employ owners of the business) and would be required to provide retirement plans or participate in the CalSavers program.
The bill requires that by December 31, 2025, eligible employers with one or more eligible employees provide a retirement savings program; if not, these eligible employers must have a payroll deposit savings arrangement to allow employee participation in the CalSavers program.
If you have any questions regarding SB 1126, or its potential impacts or help with, please contact your HCVT advisor for personalized assistance.
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