Name: jeff kuzmich - Migrate_FA_CA_Retirement_Mandate_09242025_5047879
Uploaded: 2026-02-26T05:53:58.959Z
Duration: 30 min 20 s
Description: jeff kuzmich - Migrate_FA_CA_Retirement_Mandate_09242025_5047879

Transcript for "jeff kuzmich - Migrate_FA_CA_Retirement_Mandate_09242025_5047879": And thanks for joining today's presentation for financial advisors, California Retirement Man Mandate Action Plan for Advisors. My name is Daniella, and I'll be moderating today's session. First, please note that the primary audio connection for today's session is streaming via your computer, and there is no dial in option. Be sure to check your volume to ensure your computer audio is turned on and set at an audible level. To refresh or reload your webinar browser session, for a PC press the F5 key, or Mac, press Command R. To download and print a copy of today's deck for future reference and to access additional resources, refer to the files and resources window at the top right of your console available at any time during the event. If you have questions during today's webinar, you can submit them via the ask us a question window. To submit a question, simply write in your question and click Submit. We have specialists on the backside responding to your questions today, and if we don't have time to answer all of your questions directly, we do want you to know that all your questions are received and we will continuously improve our resources to better meet your business needs. Please note this presentation does not constitute legal advice and is for informational purposes only. And now I'd like to introduce today's speaker, Ellie Pandina. Ellie is the Regional Retirement Wholesaler Manager for Paychex Retirement Services. She is cross trained in several HR products and has had experience in retirement plan implementation, relationship management, training, wholesaling, and sales leadership. In her current role, she manages a team responsible for building relationships with financial advisors and educating them on Paychex Retirement Services as they develop retirement plan strategies to meet their clients' needs. Before I turn it over to Ellie, we do just have a quick poll question you should see come up on your screen. Please mark your response and click the Submit button. Are you familiar with CalSavers? Yes, no, or I am somewhat familiar. And I'll just give everyone a few minutes to respond here. Okay, I see the answers coming in. All right. Okay, Ellie, it looks like about 75% of our attendees today are unfamiliar with the CalSavers retirement program. Does that line up with what you have been seeing in the marketplace? Actually, it does. Thanks so much, Daniella. There still are several, lots of financial advisors that are not familiar with the CalSavers program and the California state mandate, so today is a great opportunity for us to dive into that. So we're going to discuss today the California retirement mandate, the coming deadline, and how to prepare your clients. Before we get started, I'd like to take a moment to talk about how to use this action plan for your practice. Educating your clients on the California retirement mandate can position you to really help your clients navigate complex compliance requirements. Especially around state mandate retirement plans, you position yourself as someone who's not just selling a service, but solving a real business challenge. Second, this will open the door to create deeper engagement. When you are seen as a trusted resource, clients are more likely to turn to you for guidance, which strengthens your relationship over time. So third, there's revenue opportunity here. So by supporting clients in the retirement space, you can uncover new business and wealth opportunities, whether that's through plan rollovers, new plan startups, or even expanding more private wealth business. And finally, this strategy helps differentiate your firm. Not everyone is leaning into this space with confidence. So becoming an expert on this legislation, you can carve out a unique position in the marketplace. So today, we're going to give you a five step action plan that is going to help educate your clients on the California state mandate, make them aware of the pending deadline, help them avoid state penalties, and recommend the right retirement strategies for their business. So to get into these steps, I'll start with step one, understand the law. California requires businesses with five plus employees to offer a retirement plan or enroll in CalSavers. Noncompliance means penalties. So know the options. CalSavers isn't the only choice. Clients can also consider four zero one ks or safe harbor plans. Step three, compare CalSavers IRA versus four zero one ks. CalSavers is simple but limited, and a four zero one offers higher contributions, employer match, and more flexibility. Step four, we'll discover four zero one benefits. 401s help with tax savings, employee retention, and attracting top talent, making it a smart business tool. And finally, step five, find the right plan for your client's business. Every business is different, and your job as a trusted advisor is to help match them with a plan that fits their goals and budget. So let's start with step one, understand the law. So as we've said, California mandates that all non exempt businesses, even those with just one employee, must offer a retirement plan or enroll in CalSavers. This final group, businesses with one to four employees, must comply by 12/31/2025. So this is a prime opportunity to engage with small business owners. You can help them evaluate whether to enroll in CalSavers or to implement a qualified private plan, like a simple IRA or four zero one. And it's an opportunity to position yourself as a strategic partner, as we've discussed before, in navigating compliance and optimizing retirement benefits. It's a national trend. California is just one of many. Over half of United States states have adopted or are developing similar mandatory retirement programs. So the trend is expanding, and advisors who stay ahead of it can provide proactive guidance across multiple areas. So this is important, right? These mandates are reshaping the retirement landscape, especially for underserved employees in small businesses. And as advisors, you can help clients turn compliance into a competitive advantage by offering better retirement solutions to help them retain and attract talent. So why has California enacted this law? Across America, many states are experiencing a retirement crisis. Millions of Americans have no retirement savings, and many don't have access to a retirement plan through their employer. So many Americans expect to fund their retirement through Social Security. However, there's a lot of uncertainty surrounding the future of Social Security. According to the Social Security Administration, these funds may be depleted by just the year 2034. More than half of U. S. States are establishing retirement programs like HealthSavers, and that trend is expected to continue. So your small business clients in particular may feel that they can't afford a plan because of the cost or complexity of administration, but that is not the case. And we'll get more into that in a little bit. So let's talk about what if your clients don't make the state deadline? So employers with one employee or more can face financial penalties if they fail to comply with the California mandate. The penalty fine ranges from $250 per eligible employee for ninety days or more of noncompliance up to $500 per eligible employee if noncompliance extends one hundred and eighty days or more. So for small businesses operating with limited cash flow and tight margins, penalties like these can really have a huge impact. So let's go more into step two. Second step is to see what options your clients have for complying with the law. They have three choices. So to comply, they can either sign up for CalSavers, which is the state's retirement savings program. This is a basic auto IRA plan. They can register for an exemption, or they can establish a qualified retirement plan, like a four zero one. We'll go a little bit further into this. So let's talk about step one. That would be to have clients sign up with CalSavers. So this is the retirement savings program that is offered and managed by the state. It's an auto IRA, which is a basic retirement plan type. Contributions are made via payroll deduction into a Roth IRA by default. Eligible businesses that have had one to four employees for more than one continuous year are required to register by 12/31/2025, and newly eligible businesses must also meet this deadline. So these are businesses that have had at least one employee in the preceding calendar year. So option two is to register for an exemption where your clients are not required to comply with the law. Only a few types of businesses can get these exemptions, though. They already offer a qualified retirement plan. So an example of this would be a SEP IRA, simple IRA, four zero three, of course, four zero one plan. Also, if the business closed or had been sold, and then if sole proprietors are self employed individuals. These are typically single member LLCs, independent contractors with no employees. So government entities, religious organizations, tribal organizations, that's also something that would be exempt. Important to note that exemptions are not automatic. They must be filed through the CalSavers portal. So let's talk about option three, which is establishing a four zero one plan. So administered by a professional provider, these plans are managed by retirement specialists who handle compliance, reporting, and plan operations. This really frees up business owners to focus on running the business, which is what they want to spend their time on. This will satisfy the requirements of California state law. Qualified four zero one plan meets the mandate requirements and allows businesses to file for an exemption from CalSavers. And of course, tax credits and other advantages. So compared to CalSavers, four zero one plans offer higher contribution limits, employer match options, and valuable tax credits that can really offset startup costs. So let's dig a little deeper and look at the differences between CalSavers IRA and four zero one ks plan. Okay, so a four zero one plan has three main advantages over an IRA. So for one, higher contribution limits. Four zero one allows employees to contribute over three times more to it than an IRA annually, helping them build retirement savings faster. Employer match and profit sharing, unlike IRAs, four zero one ks plans support employer contributions, which can enhance employee benefits and create tax advantages for the business. Secure Act tax credits. This is a huge advantage. Businesses starting a new four zero one may qualify for up to $15,000 in tax credits over three years, helping offset plan excuse me, set up an administration cost. And talent attraction and retention. Offering a four zero one can make small business more competitive in the job market by providing more robust retirement benefit than CalSavers can. So let's compare CalSavers IRA with a paycheck's four zero one. So looking at contribution limits, four zero one ks plans allow employees to contribute over three times more than CalSavers, 23,000 versus 7,000, making them far more effective for long term retirement savings. Catch up contributions. For employees over age 50, four zero one plans offer a $7,500 catch up limit compared to just $1,000 with CalSavers. So certainly, zero one plans would be much more ideal for late stage savers. Start up tax credits. Eligible businesses can receive up to $16,500 in tax credits over three years when starting a four zero one plan. CalSavers offers no tax incentives. And employer matching. A four zero one supports employer matching and profit sharing, which can boost engagement and retention. CalSavers does not allow that. Tax deductible employer contributions. Contributions made by employers to four zero one plans are tax deductible, offering a financial benefit to the business. CalSavers does not permit employer contributions, so no deduction is available. And employer opt out and auto enrollment, both plans auto enroll employees and allow them to opt out, ensuring participation while respecting individual choice. In investment choice, most four zero one record keepers, and certainly here at Paychex, we offer a wide range of investment options, allowing for customization based on employee goals. CalSavers has limited state selected investments. And cost to employer, right? While any four zero one plan involves fees, they're flexible and scalable based on plan design. CalSavers is technically free in terms of cost, but may come with administrative burdens and limited flexibility. So one thing your clients need to consider is whether they want to take on plan administration. Because with CalSavers, they are responsible for monthly administrative duties. So here's what's involved. In the initial setup, employers receive an access code and must register using their EIN and payroll tax account number. Then they get an account employee roster. Within thirty days of registering, employees must upload their employee roster to the CalSavers portal. From there, employees are auto enrolled but can choose to customize their account or opt out. Employers must then initiate payroll deductions starting with the first eligible paycheck. Even though it's a state run program, employers are responsible for managing the set up and ongoing processing of these. Doing administration can be a big burden for small businesses that don't have the staff or time to keep up with these ongoing administrative duties, They don't want to focus on their business, or that want to focus on their business. They don't want to focus on the administrative duties. And they don't want to incur the risk of making administrative errors, which can put the plan out of compliance. So with a professionally managed four zero one plan, the provider takes on those duties. Your clients can focus on their business, not on time consuming plan administration. So as we said, with a four zero one plan, your clients don't have to worry about plan administration, which is a huge benefit. There are many other benefits to a four zero one that with CalSavers, that CalSavers IRA can't offer. So let's talk about tax credits. A major benefit that four zero one ks plans offer is tax credits. The Secure Act and Secure two point zero provide tax advantages for qualified employers and participants both. Employers can take advantage of start up tax credit of up to $5,000 per year for three years to help cover the cost of launching a retirement plan. If they include auto enrollment, there's an additional $500 per year available in the same period. Together, these credits can make the plan virtually free for the first three years. Plus, for businesses that match employee contributions or offer profit sharing, a new credit of up to $1,000 per employee per year is available for five years, a strong incentive to support employee savings. Employers can receive a credit based on how much they contribute. This credit is fully available to businesses with 50 or fewer employees and gradually reduced for those with 51 to 100. Offering a retirement plan like a four zero one ks is a powerful tool for your small business clients to attract and keep top talent. It's essential for business growth, especially when turnover can be so costly. Employees value retirement benefits. In fact, 401s are consistently ranked among the most desired workplace perks. From a financial standpoint, retirement plans offer solid tax advantages. Employer contributions are tax deductible, which helps reduce business taxable income. Plus, business owners can leverage pretax or Roth contributions for personal planning. Four zero plans allow for much higher contribution limits than IRAs, more than three times higher. That means both employees and business owners can save more and do it faster, helping everyone prepare for a more secure financial future. Today's four zero one plans are no longer just for big companies. Within the family of four zero one plans, your small businesses have many options. There are many plan designs that fit budget needs of small businesses. One of these is a pooled employer four zero one plan. So this plan is tailor made for clients who don't have a lot of time or staff to handle paperwork or administration. Here's how it works. Employers collectively participate in a four zero one ks plan that's professionally administered by a pooled plan provider. This is a great solution for businesses that need to be compliant with the California state legislation, want to offer more than what CalSavers brings to the table, don't have time to or staff to manage a plan or do administration. Within the pooled employer plan, your clients also have options for payroll integration, safe harbor, auto enrollment, Roth. Still lots of great things to choose from. So getting into more of the benefits of a Paychex PEP, less administration work, plan setup and management are streamlined. Lower fiduciary risk, liability is reduced for plan sponsors. Potential cost savings, administration expenses could be lower for a PEP, and then trustee service, certainly, professional oversight of this. So both the traditional four zero one ks and the PEP are great options. It all depends on the individual needs of your clients. The PEP has less work, lower cost, and no auditing. But traditional four zero one gives business owners more control in the ability to choose investments. So if we break this down a little bit more from a cost standpoint, PEPs may offer lower administration fees through economies of scale. And traditional four zero one plans may have higher costs but offer more control and customization. When we're talking about plan setup, PEPs simplifies setup. It provides and handles vendor and investment coordination, where traditional plans allow employers to tailor plan design and investment choices based on their needs. And then plan sponsor and fiduciary role, PEP's shift fiduciary responsibility to the pooled and plan provider, where traditional plans give employers direct oversight, which some prefer for control or flexibility. Annual audits, PEPs will cover all Form 5,500 audits, potentially saving over $10,000 $20,000 in savings. Traditional plans do require employers to manage audits if they're required. Tax credits, both plan types may qualify for up to $16,500 in start up credits over three years, plus up to $1,000 per employee annually for five years in contribution credits. Another option for your clients is a four zero one plan with a safe harbor provision. There are many benefits to this type of plan. Let's explore some of them. So the IRS mandates annual testing to confirm that four zero one plans are not being used as a tax shelter for owners and higher earning employees. So with a safe harbor plan, this testing is waived. This is a big benefit for owners of very small businesses because testing can be time consuming and create anxiety. A safe harbor eliminates the cost and complexity of testing. The employer must pay for out of pocket for testing, which can be a big burden on small businesses. Safe harbors also promote high levels of engagement in the plan among non highly compensated employees. And finally, businesses still get the same advantages as any other standard four zero one plan. So I'd like to take a quick moment just to dispel some common misconceptions your small business clients may have about their four zero one plans. In fact, small businesses are adopting four zero one plans today because of tax credits and the emergence of affordable plans tailored for small businesses. So I want to go through some of these. Have you ever heard some of these objections? Let's start off with myth. 401s are too expensive. So with the Secure Act offering up to $16,000 in tax credits spread over three years, PEPs can reduce costs through economies of scale. Here's another myth. My company's too small. 401s work for all business sizes, even sole proprietors. Owner only plans, solo k's, absolutely. PEPs are ideal for small to midsize businesses. Myth, employees can afford it. Pretax deductions have minimal impact on take home pay. Auto enrollment helps employees start saving easily. Another myth, a simple IRA is enough. 401s allow for much higher contributions, to up 31,000 for those over the age of 50, and much more flexibility and savings potential. Another myth, it's too complicated. Many providers offer streamlined, affordable solutions, specifically PEPs, payroll integration, simplify administration, and reduce fiduciary burden. So as the number of four zero one ks record as the number one four zero one ks record keeper in the country, Paychex is uniquely positioned to help you elevate your practice with fast setup, powerful technology, strategic support designed to help you and your business grow. So we can do fast setup. Plans can be launched in as little as forty eight hours. Great for clients that need to move quickly. If you need to set up a plan very quickly, you can do it in forty eight hours. Growth opportunities, reciprocal referrals help expand your book of business. Technology and service excellence, Paychex Flex, Advisor Console offers real time data and analytics, flexible plan design, and ongoing regulatory guidance. At Payable Integration, we have seamless connectivity with over 70 providers, including Paychex and Paycor, and strategic advisor support help with book reviews, proposal development, and sales strategy. We are here for you. Investment flexibility, thousands of investment options to meet diverse clients, all your diverse clients' needs. Thank you, Ellie. A quick poll question will pop up separately on your screen here. Please mark your response and click the submit button. Would you like to speak to a paychecks retirement wholesaler about how to help your clients meet the California retirement deadline and help you grow your practice? Just a yes or a no, and our team will get in touch with One final reminder here that California's deadline is approaching quickly. Non exempt businesses with one to four employees must comply by 12/31/2025. A great opportunity for you to reach out to small business clients who haven't yet adopted a retirement plan, and to help meet this mandate, we encourage you to connect with your California wholesaler to explore the benefits. Thank you again, everyone, for joining us today. As a reminder, you can find a printable version of today's deck in the Files and Resources area on the upper right side of your console. It should be the first resource that's listed there. You'll also find a wealth of multimedia tools and information specifically for financial advisors linked within the resource hub, also listed in that same window. If you'd like to take advantage of our special offer for financial advisor referred clients, go ahead and click on the blue card at the lower right corner of your webinar console, and you can see the details there. As we close out today's session, you'll see a short survey up, and we invite you to contribute feedback to help us ensure that our resources continue to meet your needs. If you can spare a few extra moments, please let us know what you think. Thank you again, everyone, and have a wonderful day.