Taking action to boost financial security for Californians, Governor Brown recently signed legislation to create the California Secure Choice Retirement Savings Trust.
The legislation requires all employers with 5 or more employees to automatically enroll their employees into a state-sponsor Secure Choice IRA at an initial deferral rate of 3% with automatic escalation up to 8%.The default investment initially will be a low-risk, fixed-income option (e.g. U.S. Treasuries), but will convert to a diversified portfolio after a couple of years. Employees will always have the ability to opt-out of the program. Employers required to participate in the program will be exempt from ERISA. Any employer who otherwise offers a qualified retirement plan (e.g. Profit Sharing Plan, 401(k), SIMPLE IRA, SEP IRA, etc.) would be exempt from participating in the program.
If you have any questions about this new program, or any other topics related to retirement plans, please contact Jenise Gaskin, Employee Benefit Plan Audit Group Leader, at firstname.lastname@example.org or (925) 296-1016.