Update on 401k Requirement for Brewers with 100+ Employees
If you have 100 or more employees it’s time to look at your retirement plan options. The State of California is mandating that employers with an average of five or more part-time or full-time employees to either have an ERISA retirement plan, such as a 401(k), or to auto enroll those employees in a payroll-deduction IRA run at the state level, called “CalSavers.” This will roll out over the next few year, but employers with 100 or more employees are mandated to comply within 2019 – the deadline is Janaury 1, 2020.
The CalSavers account would be governed by the same rules that govern all IRAs, including income limitations and annual contribution limits. If employers chose to go with a traditional 401(k) plan, there are no income limitations and contribution limits are much higher than what is being offered through CalSavers. Additionally, employers could select to offer matching contributions, which is not an option through the CalSavers plans.
The best thing for all employers to do is look at your options as soon as possible. As we get closer to the deadlines, thousands of employers will be looking into retirement plans at the same time. It is much better to make these types of decisions while you still have time.
According to the San Francisco Chronicle, when it comes to CalSavers one big question is fees. By law, participants have to bear all costs including administration and funding fees. For the first six years of the program, there is no cap in place on these fees. After those six years, the goal is to cap them at 1 percent.
This is just a glimpse into the many differences that you should understand and consider before this program goes into full effect. With all of these changes, the CCBA is happy to offer an industry specific 401(k) option for CA employers. For more information on the CCBA’s retirement benefits option, please visit http://californiacraftbrewery.tagresources.com or contact Michael.Faircloth@RaymondJames for more details.