In accordance with the newly implemented California state law, all companies with five or more employees will be required to offer a retirement plan to their employees by June 30, 2022.
That’s right around the corner! And reports say, if you do have at least one retirement plan option for employees by the deadline, you will be required to enroll in CalSavers or face possible fines.
What is CalSavers?
CalSavers is a state-sponsored individual retirement account (IRA). It’s available to all California workers whose employer does not offer a workplace retirement plan, those who are self-employed, and others who just want to save a little extra! CalSavers was established to help the roughly 7.5 million California employees without an employer retirement plan.
For more information on the impact of CalSavers, you can reach out to our trusted advisors or visit the state site to learn more.
What is the new law on California’s mandatory retirement plan?
In California, the average count of employees based on the filed Form DE 9 you reported from last year.
According to the new law, eligible companies, those with five or more employees providing a retirement option through the company will need to file an exemption on the official CalSavers website.
Companies who do not have an approved retirement plan will be required to register for CalSavers in order to avoid fines. According to the website, penalties can range from $250 – $500 per employee. So it’s important to be on top of this one ahead of time to avoid accruing penalties and fees!
What other options do employers have?
Employers can opt for other options including 401(k) Plans, Simple IRA Plans, and Simplified Employee Pension Plan (SEP). For more information on how they compare to CalSavers, check out the graph below:
What if I’m not operating out of California? Does it still impact me?
And even if you’re not a California cannabis operator you could still be impacted by these changing regulations down the road.
According to reports, nine other states have similar or new laws currently being implemented and many others are actively exploring the idea of a state-sponsored retirement option.
Get started today before the state starts issuing penalties and fees for non-compliant businesses. To learn more about retirement plans, government filings, taxes and more contact our team of financial experts at GreenGrowth CPAs. We are here to help your cannabis venture through any level of the accounting, tax filing, or business cycle.
We employ several financial programs to assist the company with its fiscal responsibilities, including tax planning and compliance, outsourced CFO support, audit preparation, tax controversy support, and much more.
For recommendations and assistance with tax planning and accounting services, schedule a free consultation or contact us at 1-800-674-9050.