Thread by @Coyoteblog

The State of California has created a state-run Roth IRA called CalSavers that all employers must offer to their employees in the state if they do not otherwise have a 401k or similar plan.

It is an opt-out program, meaning that the employee will automatically have 5-8% of their pay deducted and sent to the state for safe-keeping unless they explicitly call or write to the state to opt out.

I'm not going to comment on whether it's a good idea for workers to entrust their savings to an entity that can't stop itself from grabbing everyone's wealth, in part because once I'm an employer in the program it's illegal for me to opine on whether employees should participate

Yes, that's right, the first rule for employers that are required by law to join CalSavers is that you can't talk about CalSavers. So I am writing this just ahead of joining.

The part that really tickled me as an employer is how the state advertises that this program has no cost to the employer. LOL, I knew this would be a fairy tale even before I looked into the detail. As it turns out, here is just some of what employers have to do:

1. Provide the CalSavers program administrator with personal information for each eligible employee, within 30 days of registering in the program. The program administrator will then use the supplied data to contact eligible employees and inform them about CalSavers

2. Make sure each eligible employee gets an information packet from CalSavers
3. Determine the correct payroll deduction rate for each eligible employee
4. Deduct each employee’s Roth IRA contributions from their gross wages

5. Send employees’ deducted contributions to the program administrator within 7 days of making the deductions
6. Add new employees as they become eligible and remove employees who no longer work for your business

I called our payroll company. They have a module that will manage this, and it will only cost me $6 each for my 1000 employees per month, or $72,000 a year. Or I can hire a clerk to manage this all internally.

LOL, no cost

This is typical of most State actors, where any regulation or requirement that does not actually charge the citizen money directly is called "free," regardless of administrative costs

The real irony is that our employees in CA are mostly all over 55 years old. Because our labor model is to hire retired people. So I am faced with spending tens of thousands of dollars to offer a retirement savings program to retired people.

As is legally required under CA state law, the following is presented without any recommendation.

The CA Public Employees' Retirement System earned a net annualized return of 6.3% for the five years ended June 30, 8.5% over 10 years and 5.5% in the 20-year period. The pension fund produced an average annual return of 8% over the 30 year-time frame pionline.com/pension-funds/…

State of CA earned 8.5% over 10 years and 6.3% over five years.

Vanguard S&P index fund (VFINX) earned 13.6% over 10 years and 14% over 5 years.

Vanguard 60-40 stock-bond index fund (VBIAX) up 9.73% over 10 years and 10.1% for the last 5 years.