CalSavers vs 401k
| CalSavers | 401k | |
|---|---|---|
| Contribution Types | Roth IRA | Pre-Tax and Roth 401(k) |
| Annual Contribution Limits (2022) | $6,000 ($7,000 if age 50 or over) | $20,500 ($27,000 if age 50 or over) |
| Income Restrictions? | Employees are unable to participate if: Single with Modified Adjusted Gross Income (MAGI) over $144,000 Married Filing Jointly with MAGI over $214,000 |
No income restrictions on employee contributions |
| Who Can Contribute? | Limited—High Earners above the income restrictions are excluded | All Employees* *Employer can custom design the plan to include/exclude certain classes |
| Employer Contributions | None Allowed | Allowed, Not Required |
| Investment Flexibility | None – Limited to the State Street Target Retirement Fund Series and 5 investment options selected by CalSavers Investment Committee | Yes – employers can decide which investment options and target date-series they would like to offer employees, or can utilize a 3(38) Fiduciary |
| Plan Design | Inflexible | Flexible—eligibility, automatic features, matching contributions, and loans among others. |
| Employer Costs | None | Flexible—Administrative costs can be passed to participants or paid by the company |
| Employee Costs | Investment and Administrative Costs | Flexible—Investments and Administrative Costs |
| Employer Tax Benefits | None | Matching Contributions (Optional) are Tax Deductible Federal tax credit for startup costs of a new plan* |
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