Posted by Lisa Hagen
Check 2020 contributions and 2021 limits, and in CA, know your new CalSavers requirements.
It’s that time of year again — time to look ahead to your year-end retirement plan tasks as well as upcoming changes for retirement plans.
Make sure all 2020 contributions are made by December 31, including employee deferrals, employer match contributions and safe harbor non-elective contributions.
Update your payroll account to make sure the correct contribution limits are reflected. Most retirement plan contribution limits remain unchanged for 2021:
401(k): $19,500; $6,500 catch-up* amount if you’re 50 or older
SIMPLE: $13,500; $3,000 catch-up* amount if you’re 50 or older
SEP IRA: $58,000; the compensation limit for 2021 is $290,000
Solo 401(k): $58,000; the compensation limit for 2021 is $290,000
IRA: $6,000; $1,000 catch-up* amount if you’re 50 or older
*Even if you don’t turn 50 until December 31, you can make the additional catch-up contribution for the year.
CalSavers Retirement Savings Program
California employers also need to be aware of an upcoming change in legislation: the CalSavers Retirement Savings Program.
This new law was enacted to encourage and give employees a way to save for retirement. To achieve this goal, California lawmakers are mandating that employers with five or more employees offer a retirement savings option to their employees, with registration deadlines based on employee headcount.
If you already have an employer-sponsored retirement plan, that’s excellent! You do not have to enroll in the CalSavers Retirement Savings Program, but you do need to register online and indicate you have a plan. Your business may have already been identified as exempt if you file Form 5500. We recommend confirming your exempt status online to avoid non-compliance status.
If you do not already have a retirement plan in place, this law requires you to either provide an employer-sponsored retirement plan or use the CalSavers plan. Here’s who this affects and when:
- September 30, 2020 – employers with more than 100 employees
- June 30, 2021 – employers with more than 50 employees
- June 30, 2022 – employers with 5 or more employees
Have questions? Armanino’s experts are here to help you interpret these laws, mitigate your risk, and set up and manage the appropriate retirement plan.
Contact us to learn more: [email protected] LLP.com
Lisa Hagen is a manager in the HR Solutions group at Armanino. She has more than 15 years of experience in outsourced human resources and payroll, working with clients in a variety of industries. She has a B.S. in biochemistry from the University of Colorado, Boulder.
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