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SB-1126 CalSavers: retirement savings.(2021-2022)



Current Version: 08/26/22 - Chaptered

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SB1126:v95#DOCUMENT

Senate Bill No. 1126
CHAPTER 192

An act to amend Sections 100000 and 100032 of the Government Code, relating to retirement, and making an appropriation therefor.

[ Approved by Governor  August 26, 2022. Filed with Secretary of State  August 26, 2022. ]

LEGISLATIVE COUNSEL'S DIGEST


SB 1126, Cortese. CalSavers: retirement savings.
(1) Existing law, the CalSavers Retirement Savings Trust Act, administered by the CalSavers Retirement Savings Board, establishes the CalSavers Retirement Savings Program and the CalSavers Retirement Savings Trust. Under existing law, the trust consists of a program fund and an administrative fund with trust moneys that are continuously appropriated and administered by the CalSavers Retirement Savings Board for the purpose of promoting greater retirement savings for California private employees. Existing law requires eligible employers to offer a payroll deposit retirement savings arrangement so that eligible employees may contribute a portion of their salary or wages to a retirement savings program account in the program, as specified.
Existing law defines “eligible employer” for purposes of the act to mean a person or entity engaged in a business, industry, profession, trade, or other enterprise in the state, excluding specified federal, state, and local governmental entities, with 5 or more employees and that satisfies certain requirements to establish or participate in a payroll deposit retirement savings arrangement.
This bill would expand that definition of “eligible employer” to include a person or entity, as described above, that has at least one eligible employee and that satisfies the requirements to establish or participate in a payroll deposit retirement savings arrangement, and would additionally exclude from the definition of “eligible employer” sole proprietorships, self-employed individuals, or other business entities that do not employ any individuals other than the owners of the business. By expanding eligibility under the act, the bill would remove a restriction limiting expenditure of funds and authorize the expenditure of continuously appropriated moneys for a new purpose, thereby making an appropriation.
(2) Existing law authorizes an employer to choose to have a payroll deposit retirement savings arrangement to allow employee participation in the program under the terms and conditions prescribed by the board. Existing law requires eligible employers with more than 100 eligible employees and those with more than 50 eligible employees, that do not offer a retirement savings program, to have a payroll deposit retirement savings arrangement to allow employee participation in the program within 12 or 24 months, respectively, as prescribed. Existing law requires all other eligible employers that do not offer a retirement savings program, within 36 months after the board opens the program for enrollment, to have a payroll deposit retirement savings arrangement to allow employee participation in the program.
This bill would instead require eligible employers with 5 or more employees and that do not offer a retirement savings program to have a payroll deposit savings arrangement to allow employee participation in the program within 36 months after the board opens the program for enrollment. By December 31, 2025, the bill would require eligible employers with one or more eligible employees and that do not provide a retirement savings program, to have a payroll deposit savings arrangement to allow employee participation in the program.
Vote: MAJORITY   Appropriation: YES   Fiscal Committee: YES   Local Program: NO  

The people of the State of California do enact as follows:


SECTION 1.

 Section 100000 of the Government Code is amended to read:

100000.
 For purposes of this title, the following definitions apply:
(a) “Board” means the CalSavers Retirement Savings Board.
(b) “CalSavers Retirement Savings Program” or “program” means a retirement savings program offered pursuant to the CalSavers Retirement Savings Trust Act.
(c) (1) “Eligible employee” means a person who is employed by an eligible employer.
(2) “Eligible employee” does not include:
(A) Any employee covered under the federal Railway Labor Act (45 U.S.C. Sec. 151), or any employee engaged in interstate commerce so as not to be subject to the legislative powers of the state, except insofar as application of this title is authorized under the United States Constitution or laws of the United States.
(B) Any employee on whose behalf an employer makes contributions to a Taft-Hartley pension trust fund.
(d) (1) “Eligible employer” means a person or entity engaged in a business, industry, profession, trade, or other enterprise in the state, whether for profit or not for profit, excluding sole proprietorships, self-employed individuals, or other business entities that do not employ any individuals other than the owners of the business, the federal government, the state, any county, any municipal corporation, or any of the state’s units or instrumentalities, that has at least one eligible employee and that satisfies the requirements to establish or participate in a payroll deposit retirement savings arrangement.
(2) Upon a positive determination pursuant to subdivision (a) of Section 100046, eligible employer means an employer of a provider of in-home supportive services, as regulated by Article 7 (commencing with Section 12300) of Chapter 3 of Part 3 of Division 9 of the Welfare and Institutions Code.
(3) “Eligible employer” does not include an employer that provides a retirement savings program as described in subdivision (g) of Section 100032.
(e) “IRA” means an individual retirement account or individual retirement annuity under Section 408(a), 408(b), or 408A of Title 26 of the United States Code.
(f) “myRA” means the federal myRA retirement savings program, including any successor program, offered by the United States Department of the Treasury or an IRA offered under that program.
(g) “Participating employer” means an eligible employer that provides a payroll deposit retirement savings arrangement provided for by this title for eligible employees.
(h) “Payroll deposit retirement savings arrangement” means an arrangement by which an employer allows employees to remit payroll deduction contributions to a retirement savings program, which may include an IRA, and in the case of a payroll deduction IRA arrangement, to remit specifically to an IRA.
(i) “Trust” means the CalSavers Retirement Savings Trust established by this title.
(j) “Vendor” means a registered investment company or admitted life insurance company qualified to do business in California that provides retirement investment products. “Vendor” also includes a company that is registered to do business in California that provides payroll services or recordkeeping services and offers retirement plans or payroll deduction IRA arrangements using products of regulated investment companies and insurance companies qualified to do business in California. “Vendor” does not include individual registered representatives, brokers, financial planners, or agents.

SEC. 2.

 Section 100032 of the Government Code is amended to read:

100032.
 (a) Any employer may choose to have a payroll deposit retirement savings arrangement to allow employee participation in the program under the terms and conditions prescribed by the board.
(b) Within 12 months after the board opens the program for enrollment, eligible employers with more than 100 eligible employees and that do not offer a retirement savings program pursuant to subdivision (h) shall have a payroll deposit retirement savings arrangement to allow employee participation in the program.
(c) Within 24 months after the board opens the program for enrollment, eligible employers with more than 50 eligible employees and that do not offer a retirement savings program pursuant to subdivision (h) shall have a payroll deposit retirement savings arrangement to allow employee participation in the program.
(d) Within 36 months after the board opens the program for enrollment, eligible employers with five or more employees and that do not offer a retirement savings program pursuant to subdivision (h) shall have a payroll deposit retirement savings arrangement to allow employee participation in the program.
(e) By December 31, 2025, eligible employers with one or more eligible employees and that do not offer a retirement savings program pursuant to subdivision (h) shall have a payroll deposit retirement savings arrangement to allow employee participation in the program.
(f) The board, in its discretion, may extend the time limits defined in subdivisions (b) to (e), inclusive.
(g) (1) Each eligible employee shall be enrolled in the program unless the employee elects not to participate in the program. An eligible employee may elect to opt out of the program by making a notation on the opt-out form or by contacting the program by telephone.
(2) Following initial implementation of the program pursuant to this section, at least once every two years, the board may designate an open enrollment period during which eligible employees that previously opted out of the program shall be given the employee information packet with the disclosure and opt-out forms, for the employee to enroll in the program or opt out of the program by making a notation on the opt-out form.
(3) An employee who elects to opt out of the program who subsequently wants to participate through the employer’s payroll deposit retirement savings arrangement may enroll during the board’s designated open enrollment period or at any other time.
(h) (1) An employer that provides an employer-sponsored retirement plan, such as a defined benefit plan or a 401(k), Simplified Employee Pension (SEP) plan, or Savings Incentive Match Plan for Employees (SIMPLE) plan, or that offers an automatic enrollment payroll deduction IRA, shall be exempt from the requirements of the CalSavers Retirement Savings Program, if the plan or IRA qualifies for favorable federal income tax treatment under the federal Internal Revenue Code.
(2) An employer shall retain the option at all times to set up and offer a tax-qualified retirement plan, as described in paragraph (1), instead of having a payroll deposit retirement savings arrangement to allow employee participation in the CalSavers Retirement Savings Program.
(i) An eligible employee may also terminate their participation in the program at any time in a manner prescribed by the board and thereafter by making a notation on the opt-out form or by telephone.
(j) Unless otherwise specified by the employee, a participating employee shall contribute 3 percent of the employee’s annual salary or wages to the program.
(k) By regulation, the board may adjust the contribution amount set in subdivision (j) to no less than 2 percent and no more than 5 percent and may vary that amount within that 2 percent to 5 percent range.
(l) The board may implement annual automatic escalation of employee contributions.
(1) Employee contributions subject to automatic escalation shall not exceed 8 percent of salary.
(2) Automatic escalation shall result in no more than a 1-percent-of-salary increase in employee contributions per calendar year.
(3) A participating employee may elect to opt out of automatic escalation and may set their contribution percentage rate at a level determined by the participating employee.