California New Law – Payroll Deduction Savings Program

Gov. Jerry Brown signs legislation that will automatically enroll millions of private-sector workers in retirement saving accounts, as lawmakers and supporters look on, at the Capitol Thursday, Sept. 29, 2016, in Sacramento, Calif. The bill, SB-1234, by Senate President Pro Tem Kevin de Leon, D-Los Angeles, third from right, creates a state-run retirement program for nearly 7 million who don't have an employer-sponsored plan. (AP Photo/Rich Pedroncelli)

Michael Lodge –

For those small businesses with 5 or more employees, please be aware of the new payroll deduction savings program required by the State of California.

State-specific updates

California: In September 2016, Gov. Jerry Brown signed a bill that will go into effect Jan. 1, 2017 and require a business with five or more workers and no retirement plan to participate in a new payroll-deduction savings program run by the state. The money will go into individual retirement accounts (IRAs) managed by a state-selected financial company. Larger companies with 100 or more workers will have to comply first. They will have one year from the time enrollment opens to sign up their workers or set up their own plan. Businesses with 50 to 99 employees will have two years after enrollment opens and small businesses with 5 to 59 workers will have three years to comply.