What state retirement plan rules mean for ag employers

California employers with at least five employees are currently required to register with California’s CalSavers Retirement Savings program if they do not provide a qualified retirement plan.

The sweeping state law applies to all professions. And under Senate Bill 1126, which was signed by Gov. Gavin Newsom in August and will take effect Jan.1, employers with even a single worker will have to offer some type of retirement plan by Dec. 31, 2025.

CalSavers—the state-offered program that took effect July 1, 2019 for employers with 101 or more employees—does not require employer contributions. It also allows employees to opt out of participating in the CalSavers program. However, if employees don’t opt out, they are automatically enrolled at a 5% contribution level with the ability to modify their contribution rate at any time.

For agriculture, the California law means that farmers, ranchers, farm labor contractors and other agricultural businesses without retirement savings plans must set one up. One of the rules for having a plan requires the employer to send payroll deferrals in a timely manner for employees participating in the CalSavers program.

Many agricultural employers already offer retirement savings plans. And, as a special member benefit, Nationwide partners with California Farm Bureau members, offering a retirement program they can make available to their employees. The Farm Bureau’s multiple employer plan allows different farm employers to come together to consolidate oversight responsibilities and get better pricing.

“The benefit of the multiple employer plan is increased fiduciary oversight from third parties, reducing the overall liability for the adopting employers,” said Paul Yossem, Nationwide’s regional vice president. “The program allows each employer to have their own plan-design features to meet the needs of their company and their employees.”

Bilingual specialists from Nationwide can help educate farm and ranch workers by explaining different fund options and benefits of retirement savings planning.

For employers choosing not to offer retirement savings plans, the CalSavers program had a three-year phased rollout, under which employers with an average of five or more eligible employees had to register with the state by Sept. 30, 2020 or be deemed out of compliance. Employers with 51 or more eligible employees had until June 30, 2021, and employers with five or more eligible employees had until June 30, 2022.

Failure to comply may result in penalties of up to $750 per employee per year for noncompliance.

According to CalSavers, more than 105,000 employers are now registered with the CalSavers program, with 370,000 employees as plan participants. For more information on CalSavers, visit www.calsavers.com.

For more information on the Farm Bureau’s multiple employer plan, contact Paul Yossem at yossem@nationwide.com or 858-997-8863.