CA SAVE PROGRAM

[KATHERINE]

Dear Friends,

I have CA question again:   Can anyone explain to me how the CA SAVE works?  Client received letter from CA said employer with at least 5 employees and does not have retirement plan, then are required to register in CA state CASAve program.  It say there is no additional cost nor administrative work on the employer side.   I checked their web, it is didnot see is that mandatory to put people in, how about no employees want to participate?  While if someone wants to, how to take money out from their pay, how can we forward the money to the program?  Is that mean, money employee put will be deferred from income tax?   

 

Thank you!

 

Kate Golias

 

[Max W]

This should help.  It seems like there are just a few simple steps to take.

https://www.guideline.com/blog/what-you-need-to-know-about-calsavers-june-30-deadline/

[KATHERINE]

Thank you, Max!  That is very thorough.  I use ADP. I will ask ADP to see if they can help to calculate, withhold and forward the money to the CALSAVERS.   Thank you!

[Medlin Software, Dennis]

The cost for the employer is compliance, reporting, and the inevitable employee wanting you to explain it to them. 

[KATHERINE]

Thank you, Medlin.  When down to details on the compliance, I am still uncertain.  I just signed up with CALSAVERS website, that is not hard.  Then, download  an excel template to collect EE information.   I dont know yet what next untill I add those EE in the CALSAVERS program.  Thank you!

[Medlin Software, Dennis]

At present, there are three states using the same back end provider. It is likely the company managing the process lays out the ease of use for the politicians, and the bites to out in their campaign process. I expect more states will follow this turn key setup. If the company ever goes public, it may be a good investment as these things are likely not to go broke.

As you can infer, I am not fond of forcing these things on employers. Employees can already do the same on their own if they wish so this seems like a money grab for those selling the service and managing the funds.  

[Abby Normal]

Maryland is finally getting its program up and running. Not sure if it's the same company as the others.

http://www.marylandsaves.org/

[Medlin Software, Dennis]

Looks like MD selected a different management group (which likely means a different reporting and deposit method, increasing payroll costs). Each state seems to have a “board” who manages the management firm…

With the management firm taking their cut, and the state folks likely getting something, logically, there may be more fees taken, reducing income for the participant. Unless the profit for the managers comes from “volume”.

[Medlin Software, Dennis]

"Fee waiver – If you facilitate the MarylandSaves program for your employees or offer another qualified plan, your annual report filing fee ($300 for most businesses), is waived each year you participate."

MD realizes there is a cost to employers, and/or they want to encourage more employers to use the state sponsored plan...

I saw a blurb that OR, being the first to implement a similar plan in 2017, has an average employee balance of $750 after 4+ years.

 

[KATHERINE]

On 5/12/2022 at 12:11 PM, Medlin Software said:

At present, there are three states using the same back end provider. It is likely the company managing the process lays out the ease of use for the politicians, and the bites to out in their campaign process. I expect more states will follow this turn key setup. If the company ever goes public, it may be a good investment as these things are likely not to go broke.

As you can infer, I am not fond of forcing these things on employers. Employees can already do the same on their own if they wish so this seems like a money grab for those selling the service and managing the funds.  

That is what I thought.  The CALSAVER has cap of $6K, so why not let employees doing by themselves.  Personally, I wish no one wants to participate, but if even one person wants, I have to do the whole compliance procedures.  Will see later how the steps to follow.  Thank you!