Deadline 12/31/25: What California Employers Need to Know About CalSavers

Dusk at a Mirador representing planning for retirement and 550 reporting's role

In 2025, California’s state-run retirement program, CalSavers, expands its reach to cover all employers with at least one employee. The final registration deadline is December 31, 2025.

While the law itself does not change in 2026, California will begin enforcing penalties for non-compliance, making 2025 a critical year for employers to take action.

Employer Requirements for 2025

By December 31, 2025, every California employer with one or more employees must comply with the CalSavers mandate, unless exempt. Employers have three options:

  • Offer a private-market plan. Employers can sponsor their own qualified retirement plan, such as a 401(k), 403(b), or SIMPLE IRA.
  • Register with CalSavers. Employers that do not offer a private plan must register for the state-run CalSavers program.
  • Certify exemption. Even if an employer already offers a qualified retirement plan, they must still register with CalSavers to formally certify their exemption.

Exemptions to the Mandate

Certain employers are not required to register with CalSavers, including:

  • Employers with no employees other than the business owners
  • Government entities
  • Religious organizations
  • Tribal organizations
  • Businesses that have closed or been sold

Penalties for Non-Compliance

Employers who fail to comply face escalating penalties:

  • First penalty: $250 per eligible employee if non-compliance continues 90 days after receiving notice
  • Second penalty: An additional $500 per eligible employee if non-compliance extends beyond 180 days

How the CalSavers Program Works

For employers that register with CalSavers, the program functions as follows:

  • Automatic enrollment: Employees are automatically enrolled in a Roth IRA with an initial contribution rate of 5% of their paycheck
  • Opt-out flexibility: Participation is voluntary for employees, they may opt out at any time
  • Employer role: Employers only facilitate payroll deductions; they do not contribute to employee accounts
  • Contribution limits: In 2025, Roth IRA contribution limits are $7,000 per year, plus an additional $1,000 for employees aged 50 and older

Why Many Employers Choose Private Retirement Plans Instead

While CalSavers offers a compliance pathway, it provides no employer tax benefits, no contributions, and limited employee savings opportunities. For many business owners, a private retirement plan is not only about compliance, it’s a tool for growth, retention, and tax efficiency.

Employee Benefits: Attract and Retain Top Talent

  • Competitive benefits packages, including 401(k) and Cash Balance plans, help employers stand out in a competitive labor market.
  • Retirement plans demonstrate a long-term investment in employees, increasing loyalty and reducing turnover.
  • Plan features such as employer matching, profit-sharing, or higher contribution limits make a meaningful difference to employees.

Employer Benefits: Tax Efficiency and Flexibility

  • Contributions to qualified retirement plans are generally tax-deductible to the business, reducing taxable income.
  • Employers can design plans that maximize their own retirement savings while still providing benefits to their employees.
  • By layering strategies like Cash Balance + 401(k) plans, owners and highly compensated employees can contribute well beyond traditional 401(k) limits while also funding employee accounts in a tax-advantaged way.

At Mirador, we specialize in custom retirement plan design that balances compliance with CalSavers while unlocking far greater advantages for both owners and employees.

Federal SECURE 2.0 Act Updates Affecting California Employers

Beyond CalSavers, employers must also pay attention to federal changes under the SECURE 2.0 Act, which impose new retirement plan requirements:

Effective in 2025

  • Automatic enrollment in new plans: Most new 401(k) and 403(b) plans must include automatic enrollment
  • Part-time employee eligibility: Employees working at least 500 hours per year for two consecutive years must be given access to the company’s retirement plan

Effective in 2026

  • Required Roth catch-up contributions: For employees aged 50 and older earning more than $145,000 in the previous year, all catch-up contributions must be made on a Roth (after-tax) basis

Key Takeaway for Employers

2025 is the year all California employers with at least one employee must make a decision: sponsor a private retirement plan, or register with CalSavers.

While CalSavers satisfies the legal requirement, it stops short of delivering the strategic advantages of a well-designed retirement plan. Employers who want to retain top talent, maximize their own retirement savings, and reduce taxes should consider private-market plan design, including Cash Balance and 401(k) combinations, as a stronger long-term solution.

Mirador helps business owners create retirement plans that do more than check a box, they build value for the business, the owner, and their employees.