In October 2021, Gov. Kathy Hochul signed an employer-mandatory retirement savings program into law for all qualified New York employers. With the New York Secure Choice Savings Program, certain employers who do not currently offer retirement savings options will be required to administer a savings plan to all employees who earn wages and are over 18.
What is the New York Secure Choice Savings Program?
The Secure Choice Savings Program automatically takes participating employee payroll deductions and enters them into a Roth IRA. It applies to both part-time and full-time employees. Employees may choose to opt out of the program, though employers cannot.
This program defines employers as:
- Has had at least 10 employees at all times over past year
- Has been in business for at least two years
- Does not offer a qualified retirement plan to employees, such as a 401(k)
What is the Employer Responsible For?
Under the Secure Choice Savings Program, employers are responsible for administering the plan for current and new employees who have chosen to opt in, including:
- Deducting payroll amounts at an agreed upon rate or at the default rate of 3%
- Enrolling employees in program
- Withholding and transferring withheld wages to program
- Providing materials and information about program to all employees
Enrollment is set to begin this year, but an exact date has not been announced. Once enrollment is open for all qualified employers, you will have 9 months to comply.
New York City Specific IRA Requirements
Signed into law in May 2021, private-sector New York City employers that do not offer a retirement plan, have operated continuously for 2 years and have more than 5 employees are also required to administer an IRA plan in the workplace. The default contribution rate for participants is 5%, which can be adjusted at any time. Employees are not required to opt-in to the program. Similar to the New York State Secure Choice Savings Program, qualified New York City employers are responsible for:
- Enrolling each of their covered participants
- Including participants with a process for withdrawals and disbursements
- Providing withdrawal options, including lump-sum or periodic payments
- Maintaining separate records and accounting for each account
- Distributing information about the program to employees
- Providing reports to participants no less than once a year
Failure to comply with this legislation may result in a civic penalty of $250 per qualified employee. The program defines employees as:
- Work more than 20 hours per week
- Are older than 21
- Have regular duties in the city
Similar to the New York State Secure Choice Savings Program, no specific enrollment deadline has been announced for New York City employers. Check back for further updates. If you have questions about New York State’s Secure Choice Savings Program, New York City’s IRA requirements, and whether either of these programs apply to your business, contact a member of the Janover team today.