If you employ a nanny, caregiver, or other domestic employee in California, there is a new state requirement you need to be aware of.
CalSavers is a retirement savings program designed to give workers access to a retirement plan when they do not already have one available through their employer. While participation is optional for nannies, families are required to register for the program, even if their nanny doesn’t plan to contribute.
Here’s a high-level look at what families need to know.
What Is CalSavers?
CalSavers is a state-sponsored Roth IRA program that helps employees save for retirement through payroll deductions when a retirement plan isn’t already offered.
Each nanny who participates owns their account directly, and the savings stay with them, even if they change jobs. The program is funded solely by the nanny’s contributions – families do not contribute, and they won’t see any program fees.
Nannies in California who are at least 18 years of age and work for a registered employer are eligible to participate as long as their household income does not exceed the income cap of $165,000 for single filers and $246,000 for joint filers. There is no minimum length of employment required to participate.
What Are Families Responsible For?
While the program is employee-funded, employers do play a role in facilitating it. Responsibilities include:
• Registering once their access code is received from the state.
• Adding their current nanny to the CalSavers upon registration and within 30 days of hire for any new eligible employees.
• Submitting payroll deductions within 7 days of each payday for participating nannies.
• Ongoing management, including updating their account if their nanny is terminated or quits.
Families are not responsible for managing the Roth IRA, answering financial questions, or providing tax or investment advice. Nannies will contact CalSavers directly for any questions or changes to their account.
What Happens After Registration?
Once you register, you’ll provide basic information for your nanny. That starts a 30-day window where they can:
• Opt in or out of the program;
• Adjust their contribution rate if they decide to participate.
If no action is taken, your nanny will be automatically enrolled at a 5% contribution rate, which increases by 1% each year until it reaches 8%. Nannies can opt out or change their contribution rates at any time.
Why It Matters
California has stated that it will enforce this requirement. Families who don’t register within 90 days of being notified or fail to meet deadlines may face financial penalties.
That’s why it’s important to understand your role, stay alert for your registration notice, and take timely action when needed.
What’s Next?
At this time, no action is needed unless you are already employing a nanny and have received a notice and access code from the state. For step-by-step support, we recommend consulting with a household payroll firm like HomePay. If your nanny opts in, they can also provide a streamlined solution for managing contributions.
