Every CalSavers account is a Roth IRA, so federal Roth IRA income limits apply. For 2026, the ability to contribute phases out between $153,000 and $168,000 of MAGI for single filers and between $242,000 and $252,000 for married filing jointly — above the top of the range, no contribution is allowed at all. A 401(k) has no income limit on employee deferrals: the same owner can put in the full $24,500. This single fact decides the CalSavers-vs-401(k) question for most profitable owners.
Why an income limit exists at all
CalSavers did not invent a restriction — it inherited one. The program's legal chassis is the Roth IRA, and federal law phases out Roth IRA contributions at higher incomes. CalSavers itself confirms that participants must meet federal Roth IRA income limits, and that savers above them may need to opt out or recharacterise to a traditional IRA.
| Filing status | 2026 MAGI phase-out range | Above the range |
|---|---|---|
| Single / head of household | $153,000 – $168,000 | No contribution permitted |
| Married filing jointly | $242,000 – $252,000 | No contribution permitted |
| Married filing separately | $0 – $10,000 | No contribution permitted |
Source: IRS 2026 limits; CalSavers saver program details.
Who this catches
Not the ultra-wealthy — they were never going to use CalSavers. It catches the successful small-business owner: the dental practice, the restaurant group with three locations, the contractor running multiple crews. An owner with $200,000 of MAGI filing single is completely locked out of the program the state requires them to administer for staff — while also being prohibited, like every CalSavers employer, from contributing anything on employees' behalf.
Even owners under the limit face a low ceiling: the 2026 Roth IRA contribution limit is $7,500, plus a $1,100 catch-up at age 50 — $8,600 at most.
The 401(k) is unaffected
Employee deferrals into a 401(k) carry no income limit — and that includes designated Roth 401(k) deferrals, which have no MAGI phase-out. The 2026 numbers side by side:
| CalSavers (Roth IRA) | 401(k) | |
|---|---|---|
| Income limit on contributions | Yes — phased out by $168K single / $252K MFJ | None |
| 2026 base limit | $7,500 | $24,500 |
| Age 50+ catch-up | +$1,100 → $8,600 | +$8,000 → $32,500 |
| Ages 60–63 enhanced catch-up | n/a — $8,600 total | $35,750 total |
| Employer contributions on top | Prohibited | Permitted and deductible |
So the owner who is locked out of CalSavers entirely can defer $24,500 into a 401(k) — 3.3× the Roth IRA limit even for those who qualify — and at ages 60–63, $35,750 against CalSavers' $8,600. The full comparison →
What to do if this is you
If your MAGI is near or above the phase-out, the decision usually makes itself: sponsor a qualified plan, certify the exemption, and let the SECURE 2.0 credits offset the startup cost. The calculator models exactly this — enter your compensation and filing status and it will tell you whether the Roth IRA door is even open to you.
Common questions
I'm over the limit but already auto-enrolled in CalSavers. What happens?
CalSavers notes that savers above the Roth IRA income limits may need to opt out or recharacterise contributions to a traditional IRA. Talk to your CPA about your specific situation — excess Roth IRA contributions carry consequences if left unaddressed.
Do the limits apply to my employees too?
Yes — Roth IRA income limits apply to every CalSavers participant. In practice few rank-and-file employees exceed them; the people who do are typically the owner and senior staff, which is exactly the problem.
Doesn't a Roth 401(k) have the same income limits?
No. The Roth IRA phase-out does not apply to designated Roth contributions inside a 401(k). A high-earning owner can make Roth-type contributions through a 401(k) that the Roth IRA rules would prohibit directly.
Is MAGI the same as my salary?
No — modified adjusted gross income includes more than wages, and for a married owner it reflects the joint return. Where you land against the ranges is a CPA question; this page is the map, not the measurement.
If I can't contribute, can I at least skip administering CalSavers?
No. Being locked out personally does not exempt the business — you must still register or certify an exemption by sponsoring a qualified plan. The exemption route →
Locked out of the state plan?
Then the comparison is really about which private plan fits. Fifteen minutes and we'll show you the arithmetic on yours.