Voluntary Plan Security Deposit Requirements
An employer must submit a security deposit as part of the Voluntary Plan (VP) approval process. The deposit is used to cover the potential liability of the VP and to reimburse the EDD if the employer fails to pay any assessments established in connection with the VP.
How to Determine the Deposit Amount
The minimum required deposit amount is determined using one of the following:
- Employers estimated taxable wages from previous year (PY) multiplied by 0.5 multiplied by the current State Disability Insurance Contribution rate
- PY X 0.5 X 1.0% = VP minimum required security deposit
The amount of security deposit in excess of the minimum $1,000 is determined by:
- The number of employees covered
- The size of the payroll
- The class of risks
- The financial standing of the employer
- Any other relevant factors as determined by the EDD
How to Submit the Deposit
The security deposit must be submitted in one of the following forms:
- Cash, in the form of a check, may be sent to the EDD to secure the employer’s VP obligations.
- Irrevocable Letter of Credit from a United States financial institution.
- Guarantee bond, issued by an admitted surety insurer.
For more information on the VP program, such as types of security deposits, reporting requirements, and disputed coverage claims, reference the Disability Insurance Employer’s Guide to Voluntary Plan Procedures (DE 2040) (PDF).
- Voluntary Plan Group (VPG) at 1-916-653-6839 (TTY users dial the California Relay Service at 711)
- Email: DIBVPSRW@edd.ca.gov
- Write to:
Employment Development Department
Disability Insurance Branch, MIC 29 VP
P.O. Box 826880
Sacramento, CA 94280-0001