State Auto-IRA Mandates Now Reach Every California Employer, but Not One 1099 Contractor: The 2026 Coverage Map

The mandate map in one paragraph

By the start of 2026 roughly twenty states had enacted a retirement program for private-sector workers whose employer does not offer a plan, and most of the large ones are live. California, Oregon, Illinois, Connecticut, Maryland, Colorado, Virginia, New Jersey, Maine, Delaware, Vermont and Minnesota are operating auto-IRA programs; New York's Secure Choice is launching after years of delay (https://www.whitefordlaw.com/news-events/client-alert-new-yorks-mandatory-retirement-savings-program). Every one of these programs shares a design feature that matters enormously to payroll providers: the trigger is the W-2 employee. Independent contractors are not counted, not enrolled, and not covered.

For a payroll platform that processes contractor payments, that is the whole story. Your W-2 customers are being pushed into a plan by state law. Your 1099 payees are being left out by the same law. The Gigaverse payroll partner program exists to fill that second gap without asking the platform to sponsor a plan or reclassify anyone.

California, January 1, 2026: one W-2 employee is enough

CalSavers began with employers of 100 or more in 2020 and stepped down over several years. The final threshold took effect January 1, 2026: any California employer with at least one W-2 employee that does not sponsor a qualified retirement plan must register with CalSavers and facilitate payroll deductions (https://gusto.com/resources/states/retirementmandates). Sole proprietors with no employees remain exempt, and businesses whose only workers are 1099 contractors are not employers for this purpose (https://onpay.com/insights/what-is-calsavers-mandate).

The program itself is a Roth IRA. Default deferral is 5 percent of pay with automatic annual escalation, the employee can opt out, and the employer may not contribute. Because it is an IRA, the 2026 contribution ceiling is $7,500, the same as any Roth IRA. Penalties for non-compliant employers run $250 per eligible employee after notice and $500 per employee for sustained non-compliance.

Notice what the mandate does and does not do for a small business with mixed labor. A landscaping company with two W-2 crew members and eight 1099 subcontractors must register, enroll the two employees, and remit their deferrals. The eight subcontractors receive nothing from the program through that employer. If they want a CalSavers account, they must open one on their own as self-employed individuals and fund it from their own bank account.

New York and the rest of the second wave

New York's Secure Choice Savings Program was signed in 2018, made mandatory in 2021, and is now moving toward launch for employers with ten or more employees that have been in business two years and do not offer a plan. The mechanics mirror California: Roth IRA, automatic enrollment at a default rate, employee opt-out, no employer contribution. As with every other state program, the ten-employee count is a count of employees, and contractors are excluded from both the threshold and the enrollment.

Other 2026 developments follow the same pattern. Programs in Minnesota, Nevada, Hawaii and Rhode Island are in various stages of rollout. Several states have signed interstate agreements to share a program administrator. None has extended coverage to independent contractors, and the structural reason is simple: auto-IRA programs work through payroll deduction, and there is no payroll to deduct from when a business pays a contractor an invoice.

Why contractors are excluded by design, not oversight

Three structural constraints keep 1099 workers out of state programs.

• •The employer facilitates; it does not sponsor. State auto-IRAs are deliberately built so the employer is a conduit, not a fiduciary. A contractor has no employer in that sense, so there is no conduit.
• •Worker classification risk. If a state required a hiring business to enroll contractors, the business would be performing an employer-like function, and both the business and the state would be handing plaintiffs' lawyers an exhibit in misclassification cases.
• •Contribution math is different. A W-2 employee's IRA contribution is capped at $7,500 and can be withheld from a known gross wage. A contractor's retirement contribution depends on net Schedule C earnings, may be routed through a SEP or Solo 401(k) with a 2026 ceiling of $72,000, and cannot be computed until expenses are known.

The result is that the roughly 72.9 million Americans doing independent work in 2025, according to MBO Partners (https://www.mbopartners.com/blog/press/2025-state-of-independence-reveals-growing-talent-strategy-for-business), are outside every mandate. Only 15 to 18 percent of self-employed people use a Solo 401(k) at all (https://www.solo401k.com/blog/solo401k-adoption-growth-statistics-usa).

What a payroll platform can and cannot offer contractors

A contractor-payments platform sits in the best position to close the gap, but it must do so without recreating the problems the states avoided.

What works: offering an optional, contractor-chosen retirement app that the worker funds from their own account after receiving payment. The platform can surface it in the payee portal, pre-fill nothing that implies employment, and let the worker decide. Contributions come from the worker's own bank account, not from a deduction the platform imposes.

What does not work: mandatory enrollment, default deferral percentages, employer contributions labeled as such, or any language describing the offering as a "benefit we provide our contractors." Each of those is a factor in misclassification analyses under the IRS common-law test and state ABC tests.

What the compensation must look like. A payroll provider that introduces its payees to a retirement product will ask how it is paid. Gigaverse pays partners in only two ways: a share of revenue from paid app subscriptions, or a flat per-seat licence fee when the platform buys seats. It never pays per enrollee, per deposit, per account opened, or as a percentage of assets. Payment tied to account openings or deposits would look like transaction-based compensation under Exchange Act Section 15(a) and FINRA Rule 2040, and an SEC-registered adviser cannot share advisory fees with an unregistered party. Where the platform is compensated for referring users, SEC Marketing Rule 206(4)-1 requires a written agreement and a promoter disclosure to the user above $1,000 in a twelve-month period, and some states require paid solicitors to register as investment adviser representatives. The structure and reasoning are set out on the how we make money page.

What the contractor actually gets

Because the contractor is outside CalSavers or Secure Choice, the two questions that matter are how much they can put away and where the Saver's Match lands when it begins on January 1, 2027.

On the first question, a contractor with net self-employment earnings of $60,000 can fund a Roth IRA at $7,500 and, if they adopt a Solo 401(k), defer up to $24,500 plus an employer contribution of roughly 20 percent of net earnings after the self-employment tax adjustment, subject to the $72,000 total. Gigaverse's free contribution tools compute that from a Schedule C estimate.

On the second, the federal Saver's Match replaces the old Saver's Credit with a Treasury payment of up to $1,000 on $2,000 of contributions. Roth contributions count toward earning it, but the match itself must be deposited into a non-Roth IRA under §6433(e)(2)(A)(ii). The 2027 MAGI phase-outs run $20,500 to $35,500 for single filers, $30,750 to $53,250 for heads of household, and $41,000 to $71,000 for joint filers. IRS Notice 2026-48, issued August 7, 2026, requested comments by October 5, 2026 on the mechanics. A plain-English summary is on the Saver's Match Roth rule page.

Where Gigaverse fits

Gigaverse is a subscription retirement app for 1099 workers, and the payroll partnership is a white-label or referral integration rather than a plan the platform sponsors. Today the app offers a Roth IRA through a FINRA/SIPC-member broker-dealer; it opens Solo 401(k) and SEP IRA plans through its custodian partner, with applications open now, and provides the contribution math, tracking, and a year-end CPA hand-off alongside them. Gigaverse is pursuing SEC RIA registration, does not guarantee returns, and pays payroll partners only through subscription revenue share or flat per-seat licences. The integration details are on the payroll partner page.