The California 401(k) Plan, a pooled employer plan (PEP) sponsored by the 401(k) Plan Co., launched this week.
The announcement of the launch notes that the PEP allows for higher contributions from employees, allows employer contributions, has a higher returning default investment and is a better option for highly compensated employees than the automatic-enrollment, state-run retirement plan CalSavers. “The employer controls age, term of service and entry requirements, and exempts themselves from work associated with the state plan and enabling Roth [contributions] for highly compensated and owners,” the 401(k) Co. says in its announcement.
“It’s a complete solution, instead of the expensive half measure of a state plan so that employers can opt out of CalSavers like many of their employees do,” said a spokesperson for The 401(k) Plan Co. in the announcement. The spokesperson stated that, “The opt-out rate by employees from CalSavers is about three times what it is for a 401(k).”
The California 401(k) Plan comes in two separate options:
- A solution for employers with five to 100 employees that wish to gain size and scale; and
- Enterprise, for employers with more than 100 employees that want to outsource administrative services such as audits, Form 5500 and notice filings.
More information is here.