CalSavers or Your Own Plan? What California Owners Need to Decide
Since January 1, 2026, every California employer with at least one W-2 employee must either offer a qualified retirement plan or register with CalSavers, the state-run program. The final group — businesses with one to four employees — faced a December 31, 2025 deadline. Doing nothing is no longer an option.
What happens if you ignore it
CalSavers notifies employers that appear to be out of compliance. If a business still hasn't registered or certified an exemption 90 days after a notice, the penalty is $250 per eligible employee; after 180 days, an additional $500 per eligible employee can apply.
Path 1: Register with CalSavers
- It is a Roth IRA for each employee, funded only by payroll deductions (default 5% of pay; employees can change or opt out).
- The employer cannot contribute. There is no match and no profit sharing.
- 2026 savings limit: $7,500 per employee ($8,600 at age 50+) — the IRA limit.
- It is not zero work: you register, upload an employee roster, and remit deductions every payroll.
Path 2: Sponsor your own plan
- A 401(k), SIMPLE IRA, SEP IRA or profit-sharing plan satisfies the mandate — you then certify your exemption on the CalSavers employer portal.
- Owners can save far more: a 401(k) allows $24,500 in 2026 deferrals (plus $8,000 catch-up at 50+, or $11,250 at ages 60–63), with total annual additions up to $72,000.
- You can add an employer match or profit sharing that employees see as part of their pay.
- Eligible small employers may qualify for federal tax credits that offset much of the first years' cost.
The quick comparison
| CalSavers | Your own plan | |
|---|---|---|
| Employee limit (2026) | $7,500 IRA limit | Up to $24,500 in a 401(k) |
| Employer contributions | Not allowed | Match or profit sharing, your design |
| Owner savings potential | IRA-level | Up to $72,000 total additions |
| Federal startup tax credits | No | May qualify |
| Recruiting value | Minimal | A visible benefit |
Questions to answer before you choose
- How much do you, as the owner, want to save each year?
- Would a match help you hire or keep good people?
- What can the business comfortably contribute in a slow year?
- Who will handle the paperwork — you, your office manager, or a provider?
CalSavers is a compliance tool. Your own plan is a business tool. For many owners, the tax credits narrow the cost difference more than they expect.
Want to see what this means for your business?
Tell us a little about your team and goals and Samah will reply within one business day.
Request a complimentary plan reviewGeneral educational information as of September 22, 2026; limits and rules change. Not individualized investment, tax or legal advice. Consult your tax adviser about your situation.