©2023 Seyfarth Shaw LLP www.seyfarth.com 2023 Cal-Peculiarities | 323 employees notification of all continuation, disability extension, and conversion options under any employersponsored coverage for which the employee may remain eligible after employment terminates.40 8.5.3 Disclosures for deferred compensation plans California employers who offer employer-managed deferred compensation plans must provide each employee, before the employee’s enrollment in the plan, written notice of the reasonably foreseeable financial risks concerning participation in the plan, together with historical information to date as to the performance of plan investments and documents showing the employers’ financial condition through at least the immediately preceding year. Employers that directly manage investments of such a plan must also provide quarterly reports for each plan investment fund and the actual performance of the employee’s investment.41 8.6 CalSavers Retirement Savings Program CalSavers is a state-run program governed by the California Code of Regulations and overseen by the California Secure Choice Retirement Savings Investment Board.42 Participation is mandatory for any private California employer with five or more employees at least one of whom is age 18 or older, that does not sponsor a taxqualified retirement plan.43 Employers were permitted to voluntarily register as of July 1, 2019, but mandatory registration deadlines are as follows: Employers with more than 100 employees had to register by September 30, 2020. Employers with more than 50 employees must register by June 30, 2021. Employers with five or more employees must register by June 30, 2022.44 Under CalSavers, employees make after-tax contributions to Roth IRAs that are created on their behalf. CalSavers also has an automatic enrollment feature, meaning that unless an employee opts out (or elects a different contribution rate) within 30 days of receiving enrollment materials, the employee is automatically enrolled at a contribution rate equal to 5% of compensation. Thereafter, a 1% automatic escalation applies each January 1, up to maximum of 8%.45 Absent an affirmative investment election, an employee’s first $1,000 of contributions is invested in a capital preservation investment (CalSavers Money Market Fund) and later contributions are invested in the applicable target date funds based on age.46 Employers pay no fees; instead, participants pay aggregate administration and investment fees of about 0.825% to 0.95% (depending on the investment choice) of assets invested, which are automatically deducted at the investment level).47 A challenge to the program as being preempted by ERISA was rejected by the Ninth Circuit.48 8.7 Large Group Health Insurance On October 8, 2021, Governor Newsom approved SB 255 authorizing an association of employers to offer a large group health care service plan contract or large group health insurance policy consistent with ERISA if certain requirements are met, including: (1) that the association is headquartered in California; (2) has continuously been a Multi-Employer Welfare Arrangement under ERISA (MEWA) since before March 23, 2010; and (3) that the large group health care service plan contract or large group health insurance policy have provided a specified level of coverage since January 1, 2019.49 1 SB 30, 2019 bill amending Fam. Code § 297.
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