Are Churches Exempt From CalSavers Registration

Are Churches Exempt From CalSavers Participation and Registration

The topic of retirement can often be challenging to navigate, especially with the range of options available to individuals and employers. In 2021, California established the CalSavers program to help individuals save for retirement through payroll deductions.


However, there may be some confusion about who is eligible to participate in the program, including whether or not religious organizations are exempt.


This article will explore what CalSavers is, who can participate, how to enroll, and the program’s benefits. We’ll also discuss the requirements for employers and the potential impact of CalSavers on future retirement savings.

What Is The CalSavers Program?

CalSavers is a state-managed retirement savings program geared toward employees who may not have access to an employer-sponsored retirement plan. This program is a response to the retirement savings crisis in California, where millions of workers lack access to a retirement plan.


CalSavers offers a simple, convenient, and cost-effective way for eligible employees to save for retirement by creating a retirement account managed by a professional investment firm. Participation in the CalSavers program is voluntary and will not require employers to make any financial contributions.


Employees can contribute a percentage of their paycheck to their investment account, which will be automatically deducted from their paychecks. They can enroll in a traditional IRA, which provides pre-taxed benefits, or a Roth IRA, which allows for tax-free growth.


The investment options are pre-selected and diversified to minimize risk and maximize returns. The program is also well-regulated to ensure transparency and compliance with state and federal laws.


CalSavers aims to help Californians build a secure financial future by providing a simple and accessible retirement savings option. 

How Does The CalSavers Program Work?

State law establishing CalSavers requires employers to offer a retirement plan to their eligible employees. Once enrolled, participants contribute to their CalSavers IRA through automatic payroll deductions.


The program offers traditional and Roth IRAs, and individuals can choose their preferred option. Traditional IRS contributions made through CalSavers are tax deductible, and the program is designed to be easy to use, with participants able to manage their accounts through the CalSavers website.

Who Can Participate In CalSavers Retirement Plan?

Who Can Participate In CalSavers Retirement Plan?

Are nonprofit religious organizations exempt from CalSavers?


In California, one of the state’s initiatives is CalSavers, which requires employers with more than five employees to offer a retirement savings program to their workers. However, one of the doubts is whether religious organizations are exempt from complying with this requirement.


According to the law, religious organizations are exempt if they meet the following criteria:


  1. Firstly, the organization must qualify as a church or a church-controlled entity;
  2. Secondly, it must primarily exist to carry out religious purposes;
  3. Lastly, it must be tax-exempt under Internal Revenue Service (IRS) code section 501(c)(3).


If a religious organization satisfies these criteria, it is not obligated to participate in CalSavers. It is important to note that in addition to religious organizations, government entities and certain types of employers with retirement plans are also eligible for exemption under the CalSavers program. 


What is an eligible employer for CalSavers?


CalSavers, offered by the state of California, is a state-sponsored retirement savings plan to offer California residents a way to save for retirement. CalSavers is available to eligible employers, defined as those who do not offer a workplace retirement plan such as a 401(k), 403(b), or pension plan.


Additionally, eligible employers must have at least five employees, and their operations must be based in California. The CalSavers program is designed to make retirement savings accessible and convenient for employees and provide an easy-to-use and cost-effective option for eligible employers.


Eligible employers are required by law to offer the CalSavers program to their employees, but they are not required to contribute to their accounts. Ultimately, CalSavers enables California residents to plan for a financially secure retirement while providing an opportunity for eligible employers to impact their employees’ financial futures positively. 


An eligible employer for CalSavers is any employer with five or more employees and is not currently offering a retirement plan to their employees. Employers who are currently offering a retirement plan are still able to participate in CalSavers.


Employers must offer the program to employees who are not eligible to participate in their current plan.


What if my employer does not offer a retirement plan?


If your employer does not offer a retirement plan and they maintain a minimum amount of employees, they are required by California law to participate in CalSavers. However, employees can opt out of the program if they choose.

What are the Requirements For Employers to be Exempted From Registration Under CalSavers?

What are the Requirements For Employers to be Exempted From Registration Under CalSavers?:


  1. To be exempt from registration, employers must meet specific criteria. The CalSavers website details exemptions for religious organizations, employees under 18, and more.
  2. Companies with five or fewer California-based employees are currently considered exempt employers. However, employers must review their records to determine if they have five or fewer employees, including seasonal employees, for most of the calendar year.
  3. Starting in January 2023, small businesses with one to four employees will be eligible to register but won’t be required for another two years. The registration deadline for these small companies is December 31, 2025.
  4. Self-employed individuals who are the only ones working in their company are exempt.
  5. Religious organizations are exempt.
  6. Employers who already offer a qualified retirement plan, such as a 401(a), 401(k), 403(a), 403(b), 408(k), 408(p), or a payroll deduction IRA with automatic enrollment, are exempt. They must inform the employer portal of their exemption.
  7. Tribal and government organizations are exempt.

What are the Benefits of CalSavers?

CalSavers is a state-administered retirement savings program that offers employees of small businesses in California the opportunity to invest in a retirement plan. The program provides significant benefits to both employers and employees.


These benefits include the following:


  1. The CalSavers program offers a simple and easy way for employees to save for retirement. It eliminates the need for employees to research and select their retirement plans, as the program offers a pre-selected plan with no fees or costs to join.
  2. The program offers tax advantages to both employers and employees. Employers who enroll in CalSavers are not required to offer their own retirement plan, freeing up resources and lowering administration costs.
  3. Employees can receive a tax credit for contributing to the program and benefit from interest earned on their savings.
FAQ frequently asked questions

Is my church eligible for an exemption from the CalSavers program?


Yes, churches may be exempt from the CalSavers program, depending on their size and classification. A church with fewer than five employees could be eligible for an exemption. Religious organizations, tribal entities, or government agencies are exempt from the program and its registration requirements.


How do I register for CalSavers program for my church?


Registering your church for the CalSavers retirement savings program is simple and straightforward. Here are the steps you need to take:


  1. Visit the CalSavers homepage and choose “I need to register my business” from the dropdown menu.
  2. Enter your EIN or TIN and Access Code into the employer portal.
  3. Provide contact information for your company’s Account Manager and any administrators who will help manage the program.
  4. Add your employees to the system, including their social security numbers, birthdate, and contact information.
  5. Let your employees know they’ll be enrolled in the program and can opt out within 30 days.
  6. Submit employee contributions each month, either manually or through a payroll provider like Hourly.
  7. Communicate basic program information to your employees.
  8. Submit your application to the State of California.
  9. Wait to see if your request was approved or denied.


What is the deadline for registering for the CalSavers program?


The CalSavers program’s registration deadline is June 30, 2022, for employers with five or more workers. Employers with one or more employees must register by December 31, 2025.


Newly mandated businesses with five or more employees must register by the end of the calendar year they became subject to the mandate. Financial penalties may be imposed on employers who fail to register promptly.


How does my church make payroll deductions for the CalSavers program?


To set up payroll deductions for the CalSavers program, the following steps should be taken:


  1. Register your church with CalSavers. Depending on your church’s size and other factors, there may be exemptions to this requirement.
  2. Set up a payroll deduction plan. This can be done through your existing payroll provider.
  3. Set up deductions for employees. Once the plan is set up, your payroll provider can help you set up deductions for each employee.
  4. Monitor the deductions. Ensure the deductions are accurate and that all the information is current.
  5. Submit regular contributions. Regular contributions will need to be sent to the CalSavers program.


Are there any fees associated with the CalSavers program?


Yes, there are fees associated with the CalSavers program. The only fee is 0.825-0.99% of your account balance, depending on your investment choice, which is automatically taken out of your CalSavers balance regularly to help pay for the program’s administration. After 30 days, the Target Retirement Fund fee is 0.89% or $0.89 per year for every $100 in your account.


Are Employees required to participate in an individual retirement plan through Calsavers?


Employees are not required to participate in the participate in Calsaver. Calsavers was created to provide employees with a way to save for retirement for those employers who do not sponsor a retirement plan.

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