CalSavers: Mandatory Retirement Savings Plans in California
CalSavers is a mandatory retirement savings program (formerly called Secure Choice) that phases in beginning in July of 2020 and entitles all eligible California employees to register for a retirement program.
Employers with five or more employees have two choices. 1) They are required to provide a retirement plan for their workers, or 2) They have to register for the CalSavers plan and facilitate the employees’ contributions to Individual Retirement Accounts (IRAs). Deadlines for compliance vary according to the number of employees in the company.
How do you know if your company's 401(k) plan needs an audit?
Did you know the federal government mandates ERISA employee benefit plan audits? Under the requirements of ERISA (Employment Retirement Income Security Act) Section 103, employee benefit plans with 100 or more participants are considered ‘large’ plans. These large plans must have an employee benefit plan audit performed by an independent certified public accountant. They also must file a Form 5500 annual report, a government form jointly developed by the Department of Labor (DOL) and the Internal Revenue Service (IRS).
Plans with fewer than 100 participants at the beginning of the year are considered ‘small’ plans and are eligible for the Small Pension Plan Audit Waiver. The Department of Labor (DOL) however has identified the range of 80 – 120 participants (this number is determined at the start of the plan year) as a grey area. In this grey area, a company has the option to continue as a ‘small’ plan or elect ‘large’ plan status. The choices for a plan falling into the 80 – 120 participant range are as follows:
|Number of Participants at Beginning of Current Year||Requirements Followed for the Previous Year Form 5500||Requirements to Be Followed for the Current Year Form 5500|
|80 – 99 (inclusive)||Small plan||Small plan|
|80 – 99 (inclusive)||Large plan||May elect to file Form 5500 again as a large plan or switch to a small plan|
|100 – 120 (inclusive)||Small plan||May elect to file Form 5500 again as a small plan or switch to a large plan|
|100 – 120 (inclusive)||Large plan||Large plan|
|More than 120||Large plan||Large plan|
|More than 120||Small plan||Large plan|
As a manager or executive, YOU are a fiduciary
Are you meeting the responsibilities to your plan and employees?
Our guide outlines what you need to do to meet your obligations such as:
- Reviewing plan documents
- What can happen with incorrect contributions
- Understanding the plan fees
What should you expect to pay for a 401(k) plan audit?
Great question. It depends on the complexity of your plan. What makes your plan complex?
- Is this your first year that you need an audit?
- Do you need a Limited Scope or Full Scope Audit?
- Are you changing 401(k) plan providers?
- Has your company incurred a lot of turnover this year?
LSL are proud be members of the American Institute of Certified Public Accountant (AICPA) and the Employee Benefit Audit Quality Center.
Related 401(k) Pension Audit reading:
- How to Select the Right 401(k) Plan Auditor for Your Company … and why you need oneWhat is the purpose of a 401(k) plan? A 401(k) plan is designed to guard and protect your employees’ retirement benefits. You, as the employer/sponsor must make sure funds are available to pay the retirement and other promised benefit obligations to your employees. Choosing the right CPA to audit and monitor the plan is a good first step toward safeguarding yours and your employees’ financial future. What ...
- CalSavers: Mandatory Retirement Savings Plans in CaliforniaStarts June 2020 for Companies with > 100 Employees CalSavers is a mandatory retirement savings program (formerly called Secure Choice) that phases in beginning in July of 2020 and entitles all eligible California employees to register for a retirement program. Employers with five or more employees have two choices. 1) They are required to provide a retirement plan for their workers, or 2) They have to register for ...
- What are My Tax Consequences if I Take a Hardship Distribution from My 401(k) Plan?Need to take a hardship distribution? In the Bipartisan Budget Act (“Act”) passed in February 2018, Congress softened provisions on hardship distributions from 401(k) plans. Effective for plan years beginning after December 31, 2018, if a participant takes a hardship distribution from a 401(k), the participant will be able to continue to make elective deferrals or other contributions to the plan immediately after the hardship distribution. The Act also ...