Small firms can satisfy the mandate with CalSavers, but almost no partner should stop there: CalSavers is a Roth IRA underneath, and partners above the Roth income limits cannot meaningfully use it. A 401(k) covers both K-1 partners (through earned income) and W-2 staff, a safe harbor design protects partner deferrals from testing, and for senior partners in high-income years a cash balance layer may allow far larger deductible contributions. Associates' student debt now interacts with the plan too — SECURE 2.0 permits matching on qualifying loan payments.
Why this industry is different
The mandate treats every employer alike. The payroll realities underneath don't cooperate:
- Solo and 2–5 attorney firms have wildly variable income — a contingency payout one year, a drought the next — and fear committing to a fixed match.
- Partners want large deductible contributions in the good years, and the flat 401(k) limits alone do not provide the room.
- K-1 partner versus W-2 staff compensation is a genuinely different calculation — partner contributions run off self-employment earned income, with its own timing and deduction mechanics.
- Of-counsel and contract attorneys raise classification questions that decide who must be covered — by the plan and by the mandate.
- An existing SEP IRA quietly blocks the structure many owners actually want: SEPs allow no employee deferrals, so the owner gives up the $24,500 deferral and the catch-up.
What actually works
The chassis is a 401(k) with profit sharing: deferrals give every partner $24,500 of 2026 room ($32,500 with the age-50 catch-up) even in a lean year, while profit sharing stays discretionary — large in the good years, zero in the bad ones. A safe harbor feature protects partner deferrals from ADP testing against a small staff. For senior partners with consistently high income, a cash balance plan layered on top may allow each partner a substantially larger actuarially-determined deduction — the classic design for a firm where two or three partners in their 50s out-earn everyone else combined.
For associates, SECURE 2.0 permits the firm to match qualifying student-loan payments as if they were deferrals — a retention lever aimed precisely at the associate who says they cannot afford to save until the loans are gone.
The SECURE 2.0 credits frequently cover most of the first three years' administration for employers under 50 staff — the formula, worked honestly — and if after the arithmetic CalSavers is still the right answer for your shop, we'll say so: the full comparison · run your own numbers.
By county
This guide is statewide. The county pages go local — where the industry physically clusters, which cities it sits in, and the municipal rules that stack on top of the state mandate.
Where this industry clusters near us
Law Firms & Legal Services questions
Our partners are on K-1s, not W-2s. Can they even be in the 401(k)?
Yes. Partners participate through self-employment earned income rather than W-2 wages — their deferrals and employer contributions are calculated on net earnings after the self-employment tax adjustment, and partner deferral elections have their own timing rules. It is routine, but it is a different calculation from staff, and payroll providers frequently get it wrong.
I have a SEP IRA. Why would I change?
A SEP takes only employer contributions — no employee deferrals, no catch-up — and whatever percentage you contribute for yourself you generally must contribute for eligible staff. A 401(k) adds the $24,500 deferral on top of profit sharing and allows more flexible allocation design. Whether switching is worth it is arithmetic on your actual census; note a SEP can also complicate adopting a 401(k) in the same year, so sequencing matters.
Can the firm really match student loan payments?
Under SECURE 2.0, yes — a plan may treat an employee's qualifying student-loan payments as elective deferrals for matching purposes, so an associate paying down debt still collects the match. It requires plan-document language and a certification process, and it is one of the cleaner recruiting stories a small firm can tell.
Does our of-counsel attorney count toward CalSavers?
If she is genuinely a 1099 independent contractor, no — the mandate and the plan both count W-2 employees. But classification follows the facts, not the label, and California's tests are strict. Misclassification puts you on the wrong side of more than the retirement mandate, so it is worth confirming with employment counsel.
A plan designed around law firms & legal services — not around the average employer
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