Pension Obligations for California Employers
The California legislature is mandating that all employers with 5 or more employees set up some type of pension plan or use the CalSavers (state plan) to allow their workers to contribute to an IRA type pension plan. While the plan does not require any contribution from the employer, it does impose penalties of $100 per employer per year (maximum $5000) for employers who do not set up a plan. Here are the deadlines for companies:
More than 100 employees September 30, 2020
50-99 employees June 30, 2021
5-49 employees June 30, 2022
For union signatory contractors performing work on public works projects, they will receive an exemption because of their existing pension program. Open shop employers who have a prevailing wage pension plan will also qualify for an exemption. So in that way, the worker's get a great pension plan which meets prevailing wage requirements and the employers receives the benefit of using pretax dollars to fund this obligations, saving payroll taxes, and reducing items such as worker's compensation premiums (based on payroll).
If you want more information on this topic Deborah is speaking at a webinar on July 15th 12-1:15 p.m. (PST) on an Associated Builders and Contractors sponsored program. Use this link to register for the event.