The CalSavers Deadline: Why Every California Employer with 1+ Employee Needs a Retirement Plan

So here’s the thing. If you run a California business with even one employee—coffee shop, dental practice, consulting firm, doesn’t matter—there’s a deadline coming. December 31, 2025.

That’s when California’s CalSavers program officially expands to include the smallest businesses: anyone with 1-4 employees. If you don’t already offer a retirement plan, you need to either (a) register with CalSavers or (b) prove you’re exempt because you have your own qualified plan.

This isn’t optional. And honestly? It’s probably good that it’s not.

What Is CalSavers, Actually?

CalSavers is California’s state-run retirement savings program. Think of it like this: if your employees don’t have a way to save for retirement through work, the state steps in and provides a Roth IRA for them.

Here’s how it works for you as an employer:

Register once. That’s it—one-time setup.
Add employee info. Upload your roster of eligible employees (age 18+).
Payroll deductions. Deduct contributions from employee paychecks and send to CalSavers.
That’s it. You’re done.

No employer fees. No employer contributions. No fiduciary responsibility. The state handles everything else.

The Automatic Enrollment Part

Here’s where people get confused. CalSavers uses automatic enrollment.

After you add an employee to CalSavers, that employee gets a 30-day window to opt out or customize their savings rate. If they don’t take action within 30 days? They’re automatically enrolled at the default rate (starts at 3-5% of pay, can increase annually up to 8%).

Employees can still opt out later. They can change their contribution amount. It’s their account. But you have to facilitate the initial enrollment—you don’t get to decide who participates.

Why this matters: automatic enrollment dramatically increases retirement plan participation. Without it, people tend to put off decisions and don’t save. With it, they’re enrolled by default and have to actively opt out. That’s better for retirement outcomes.

Employee on a conveyor belt moving through automatic enrollment - you're enrolled unless you opt out

So You Have Until December 31, 2025

Here’s the timeline breakdown, because deadlines in California have been phased based on business size:

100+ employees: Deadline was September 30, 2020.
50+ employees: Deadline was June 30, 2021.
5+ employees: Deadline was June 30, 2022.
1-4 employees: Deadline is December 31, 2025.

If you had five or more employees in 2023, you should have already registered by December 31, 2024. If you didn’t? You’re out of compliance. Fix that now.

What Happens If You Don’t Comply?

Let’s be direct about this. Non-compliance triggers enforcement action. The state can assess financial penalties against your business.

Here’s the rough framework: you get a notice of non-compliance, followed by a window to fix it. If you don’t, penalties kick in. Exact amounts are in the California Government Code, but multiple sources cite $250 per eligible employee for initial non-compliance, with potential increases to $500 per employee if continued.

Penalties are enforced through the Franchise Tax Board, so they can be collected alongside other state taxes.

Don’t panic if you’re out of compliance. But don’t ignore it either. Fix it now, and penalties can be avoided.

Enforcement officer blocking path showing compliance penalties - you can't hide from them

Your Other Option: Offer Your Own Plan

Here’s something most people miss. You’re not required to use CalSavers. You can bypass it entirely by offering your own qualified retirement plan.

What counts as a qualified plan? A 401(k), SEP IRA, SIMPLE IRA, or other plan that meets IRS requirements. If you have one of these, you can request an exemption from CalSavers and keep your existing setup.

Why would you do this instead of CalSavers? A few reasons:

Customization. Your own plan can be tailored to your business and employee needs.
Employer contributions. You can choose to match employee contributions, which helps with retention.
Investment options. More control over where money is invested.

There’s a catch: running your own plan costs more—administrative fees, potential contributions from you, fiduciary responsibilities. But for many businesses, the tradeoff is worth it.

According to an EBRI survey of small business owners, 68% said they would continue offering their own plan if a state auto-enrollment policy like CalSavers was adopted, versus only 21% who would stop. So state programs aren’t actually threatening most existing retirement plans—businesses keep what works for them.

Scale balance comparing CalSavers simplicity vs custom plan features - which do you choose?

What Most Small Businesses Are Doing (or Not Doing)

Here’s the reality: most small businesses don’t offer retirement plans at all. Only 24% of small businesses with plans use automatic enrollment, compared to 61% of large businesses.

What this means: most small business employees who have access to a retirement plan have to actively opt in. If they don’t take action? They don’t participate. Even when they want to save.

That’s where CalSavers is different—it flips the default. Employees are enrolled automatically unless they opt out, which means higher participation rates. That’s the point. Automatic enrollment works.

The Hidden Opportunity: Tax Credits

Here’s something that gets missed. If you want to start your own retirement plan instead of using CalSavers, there are tax credits available to help offset the costs.

The EBRI survey found that 72% of small business owners not offering a plan were unaware of tax credits up to $5,000 for starting a retirement plan. And 78% said those credits would make it at least somewhat more attractive to offer a plan.

These aren’t complicated—startup cost credits, contributions credits, matching contributions. If you’re considering your own plan, talk to a CPA or benefits advisor. The credits might make the difference.

Small business owner discovering hidden tax credits like a treasure - free money for starting a retirement plan

Practical Steps: What to Do Now

There are a few things you should handle before December 31:

Check your status. Have you received official registration information from CalSavers? If you employed eligible workers in 2024, you should have. Check your mail, search your email, visit employer.calsavers.com.
Decide: CalSavers or your own plan. Compare the options. CalSavers is zero-cost and simple. Your own plan offers customization and potential employer contributions. What’s better for your business and employees?
If CalSavers: Register. The process takes about 30 minutes. Have your EDD employer account number ready, your basic business info, and your employee roster.
If your own plan: Document it. You’ll need to request an exemption from CalSavers. Have proof of your qualified plan ready—summary plan description, plan documents, adoption date.
Set up payroll deductions. Whether CalSavers or your own plan, you need to coordinate with your payroll provider to handle deductions.

What This Means for Local Businesses

For SLO County small businesses—coffee shops in Arroyo Grande, dental practices in San Luis Obispo, retail stores in Morro Bay—this affects you. If you have employees, you have to make a decision.

The good news: CalSavers registration is straightforward. The state provides support, multilingual outreach teams, and resources to help your employees understand the program.

The reality check: if you do nothing, the state will eventually sign you up anyway—and that’s not always the smoothest process. Being proactive means you control the timeline and the setup.

Check the deadline. Decide what works for your business. Get compliant. Your employees will thank you—even if they don’t say it out loud. Got questions about this or other compliance stuff that’s eating at you? Give me a call—happy to point you in the right direction.