Why Your Self-Employed Client Is Not Covered by CalSavers or NY Secure Choice

The question a client asks after reading the news

A self-employed client in California or New York reads that their state now requires retirement coverage for every worker and asks whether they are enrolled. They are not, and they are not going to be, and the reason is worth explaining clearly because it leads directly to what they should do instead.

State auto-IRA programs are built for W-2 employees whose employer does not offer a plan. A self-employed person has no employer to facilitate enrollment, and the programs are designed so that no business is required to enroll a contractor. The Gigaverse adviser partner program is one referral option for the client left outside; this article explains the exclusion first.

How CalSavers works, and who it reaches

CalSavers phased in from 2020 and reached its final threshold on January 1, 2026: every California employer with one or more W-2 employees that does not sponsor a qualified plan must register and facilitate payroll deductions into a Roth IRA (https://gusto.com/resources/states/retirementmandates). Default deferral is 5 percent with automatic escalation; the employee may opt out; the employer may not contribute.

The mandate has two carve-outs relevant to your client:

• •Sole proprietors with no employees are not employers under the program.
• •Independent contractors are not employees and are not counted toward the threshold or enrolled (https://onpay.com/insights/what-is-calsavers-mandate).

A self-employed person may open a CalSavers account voluntarily, but it is simply a Roth IRA with a $7,500 limit for 2026, funded by the individual from their own bank account. Nothing about it is automatic, and nothing about it is sized for self-employment income.

How NY Secure Choice works, and who it reaches

New York's Secure Choice Savings Program, enacted in 2018 and made mandatory in 2021, is launching for employers with ten or more employees that have operated for at least two years and do not offer a plan (https://www.whitefordlaw.com/news-events/client-alert-new-yorks-mandatory-retirement-savings-program). The design mirrors California: Roth IRA, auto-enrollment at a default rate, employee opt-out, no employer contribution.

The ten-employee threshold counts employees. A New York business with three W-2 staff and twenty contractors is below the threshold. A business with twelve W-2 staff and twenty contractors is above it and must enroll the twelve. The twenty are outside the program in both cases.

Why the exclusion is deliberate

The states did not overlook the self-employed. Three constraints make contractor coverage unworkable inside an auto-IRA design.

• •No conduit. Auto-IRAs work by payroll deduction from a known wage. A contractor is paid on invoices, and the hiring business is not their employer.
• •Classification risk. Requiring a business to enroll contractors would make the business perform an employer function, which is evidence of employment under the IRS test and the state ABC tests. California, with the strictest ABC test in the country, was not going to build that into a state program.
• •Wrong account size. A W-2 employee's contribution is capped at $7,500 and withheld from wages. A self-employed person's retirement room depends on net Schedule C earnings and, through a SEP or Solo 401(k), can reach $72,000 in 2026 ($80,000 at 50 and older). An IRA-only program cannot deliver that.

What the excluded client should do instead

The self-employed client has better options than the state program would have given them, and the adviser's job is to make sure they use them.

Roth IRA. Same $7,500 limit as CalSavers, without the state wrapper. Useful as a first account and for liquidity, since contributions can be withdrawn.

Solo 401(k). For a sole proprietor, a $24,500 employee deferral plus roughly 20 percent of net self-employment earnings after half of SE tax as an employer contribution, up to $72,000. The deferral must be elected in writing by December 31. A client netting $100,000 can shelter about $43,000, nearly six times the state program's ceiling. Only 15 to 18 percent of self-employed people have one (https://www.solo401k.com/blog/solo401k-adoption-growth-statistics-usa).

SEP IRA. The fallback for a prior year when the December 31 election was missed, since it can be adopted and funded up to the extended due date.

Saver's Match. Starting January 1, 2027, a lower-income self-employed client earns up to $1,000 from the Treasury on qualifying contributions, including Roth contributions, under MAGI phase-outs of $20,500 to $35,500 single, $30,750 to $53,250 head of household, and $41,000 to $71,000 joint. The payment must land in a non-Roth IRA. This is a federal incentive the state programs cannot deliver to contractors, and the Saver's Match Roth rule page explains the mechanics.

The referral, and how it is paid

For a client below your minimum whose primary need is a contribution plan rather than portfolio management, a subscription retirement app built for 1099 income is a reasonable referral. Gigaverse computes the limits from a running Schedule C estimate, tracks the December 31 election, holds a Roth IRA at a FINRA/SIPC-member broker-dealer, and hands the numbers to the client's CPA. It plans Solo 401(k) and SEP rails and provides the math and tracking for those now.

If you are compensated for the referral, three things follow. Under SEC Marketing Rule 206(4)-1 you are a promoter, and above $1,000 in twelve months there must be a written agreement and the client must receive a disclosure of the compensation and the conflict; your own fiduciary duty and Form ADV Item 14 independently require conflict disclosure; and some states require paid solicitors of advisory clients to register as investment adviser representatives. Gigaverse pays advisers only a share of revenue on paid app subscriptions or a flat per-seat licence, never per account, per deposit, or on assets, because payments tied to accounts or deposits resemble transaction-based compensation under Exchange Act Section 15(a) and FINRA Rule 2040, and an SEC-registered adviser cannot share advisory fees with unregistered parties. The client-facing statement is the how we make money page.

The client can confirm their own contribution room, and their Saver's Match eligibility, with the free Gigaverse tools before subscribing.

Where Gigaverse fits

Gigaverse is a subscription retirement app for 1099 workers, the population every state auto-IRA excludes. Today it offers a Roth IRA through a FINRA/SIPC-member broker-dealer, and Solo 401(k) and SEP IRA applications are open, with the math, tracking and CPA hand-off provided throughout. It is pursuing SEC RIA registration and does not guarantee returns. Adviser partners are paid only a share of subscription revenue or a flat per-seat licence, sign a Marketing Rule agreement, and disclose the conflict to every referred client. The program terms are on the adviser partner page.