A comparison of state-managed IRA plans and a private 401(k) retirement plan.
On July 1, 2019, California’s new CalSavers 401(k) program began to fulfill its mission of offering workers in the state a new way to save for their retirements even if their employers do not offer a retirement plan.
CalSavers effectively addresses a crisis that is looming for a large number of employees by making it easier for them to save for their retirements. In many cases, however, a custom 401(k) plan may be a better alternative for small businesses and their employees’ futures. Compare the advantages of CalSavers to a private 401(K) such as those offered by Ubiquity and determine which choice is right for your company’s needs, culture, and bottom line.
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How Will CalSavers Help to Increase Retirement Savings for California Workers?
Studies from similar legislative incentives in other states show that programs like CalSavers will:
- reduce employee costs for participating in retirement plans and
- increase overall participation in those plans by employees of small businesses.
In Oregon, retirement legislation went into effect in 2018. Between its rollout and 2021, total retirement assets held in the state-sponsored program increased from $3.5 million to more than $113 million.
The CalSavers program gives California businesses that have as few as five employees a state-sponsored option for a payroll deduction retirement plan. Employees that participate in the California plan can contribute up to $6,000 per year into a state managed Roth IRA.
Contributions can be directed into a variety of vehicles, all of which are selected by CalSavers administrators:Read full article