---
title: "CalSavers vs 401(k)s: What is the difference?"
url: "https://mcclurewealth.com/calsavers-vs-401ks-what-is-the-difference/"
post_type: "post"
date_published: "2020-04-07T21:16:20-07:00"
date_modified: "2026-08-13T00:09:12-07:00"
categories: ["Business 401Ks", "Retirement Plans"]
---

# CalSavers vs 401(k)s: What is the difference?

With the looming June deadline for the CalSavers program, we have many companies reaching out to financial planners and advisors, including ourselves, and asking us what to do. Should you sign up for CalSavers? What are your alternatives? We’ll walk you through the choices in front of you.

What is CalSavers?

For those unfamiliar, CalSavers is a state-run and mandated program launched by the State of California for employers that have more than 5 employees. It stipulates that any company with over 5 employees has to offer a qualified retirement plan. If you do not currently offer a retirement plan, and you have more than 5 employees, you must register with CalSavers or offer a retirement plan of your choice.

What Are the Differences Between the Two Plan Options?

So, what is the difference between the CalSavers program and a D.I.Y.-style retirement plan? How do you choose which option is the right fit? Here is a comparison of the two plans:

CalSavers Program
Customized Retirement Plan

Employer contributions
Employers can not offer contributions to employees retirement plan as an incentive
Employers can contribute to employees retirement plans

Investment options
Employers have no say over investment options or fund line-up
Employers have control over investment options and eligibility

First $1,000
The first $1,000 in savings is kept in a money market fund
The first $1,000 can be invested right away

Comparison of the CalSavers program with a customized retirement plan.

CalSavers Program

Eligible employees are auto-enrolled in the CalSavers program and would need to opt-out or else the default contribution is 5%

Employees contribute after-tax money to a ROTH IRA

The default contribute rate is 5% for those who do not opt-out, and contributions increase by 1% each year, up to 8%

Customized Retirement Plan

Employers choose their qualified retirement plan

Retirement plan designs can be customized to secure maximum tax advantages

Employees receive education in the form of one-on-one, in person, and virtual meetings, webinars, thought leadership articles

Employees and employers have more control

Take Control Over Your Retirement Plan Choices

You have more choice in the customization of your retirement plan than you may realize. We’re here to help. If you want to set up a personalized retirement plan for your employees, contact us now at 760.607.0611 or set up a Zoom call below. Set up your consultation call to learn how you can meet the requirement — and how you can offer more while paying less.

Set up a Zoom call