California has a new way to save for retirement. Already, people are enrolled in CalSavers, a program designed to help millions of workers start saving for the future.
"If you work for an employer who doesn't have a retirement plan, and that employer has at least five employees, they will be required to make CalSavers available to you," said Katie Selenski, Executive Director at CalSavers.
Who is this program for? CalSavers says it is for anyone who works for a company that does not offer a retirement plan, is self-employed, or is just looking for other ways to save for retirement.
Companies with more than 50 employees have already had to submit the names of their employees, but smaller companies with more than five employees have until June 30th. That's when everyone who has a job without a retirement plan will be automatically enrolled.
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Your employer is required to give the state of California a list of who is on their payroll so that CalSavers knows who to reach out to. Selenski says there is already a 70% compliance rate among those larger employers.
"We contact all the employees that are on the roster," said Selenski. "We say this is what CalSavers is, you have 30 days to decide if you want to opt-out or go in and change your settings like your investment allocation."
The default plan would put 5% of your paycheck into an individual retirement account, specifically a Roth IRA.
"Nearly half of all Californians don't have access to a workplace retirement plan," said Selenski. "These funds would be available to our savers for withdrawal, tax and penalty-free."