In October of 2021, New York State passed Senate Bill S5395A, modifying the New York State Secure Choice Savings Program which is a retirement savings program. This new modification requires all employers in the state and city to provide an automatic enrollment plan, and there is a good chunk of information employers should first know.
Which Type of Employers Are Required?
Employers, engaged in a business, industry, profession, trade, or other enterprises including private & not-for-profit companies are required to provide a retirement plan to their employees if they meet the below qualifications:
- Employ at least 10 employees in the State of New York during the prior calendar year.
- Have been in business for at least 2 years.
- Do not offer employees, in the preceding two years, a qualified retirement plan such as a 401(k) or 403(b) plan.
Employers may also choose to provide a sponsored retirement plan or allow access to the state-run program. These employers that facilitate this access for their employees are known as “participating employers”, and must:
- Provide the Program’s informational materials, including the Opt-Out Form, to new employees at the time of hiring or to existing employees at least one month before enrollment in the program;
- Set up the Secure Choice IRA to allow employees to participate in the Program within nine (9) months of the Board opening the enrollment period;
- Manage employees’ contributions to the Secure Choice IRA who have elected to participate at a level other than the default 3% of their after-tax income; and
- Withhold and remit the payroll deductions to the Program by the 30th day after the employee is enrolled in Secure Choice IRA.
When Will This Bill Pass
The Senate held its first and only meeting on the subject in January of this year and adopted the bylaws to govern the development, administration, and implementation of the program. The Senate has up to 2 years to implement the program and figure out how to design the framework of the bill. While there is still yet to be an update on the status of the issue, employers and employees that believe this will affect them are encouraged to familiarize themselves with the regulations and details of the program. We will be keeping an eye on any new regulations that may be issued over the coming months.
Wrap Up
For employees that work for a company that doesn’t provide any retirement plan options, this can be seen as a massive step in the right direction to ensure a proper retirement plan is available. For employers who do not currently offer retirement plan options, there is likely a lot of work to be done to maintain compliance with the state. We will provide updates as they become available, in the meantime if you need any assistance in managing your retirement plan, we highly recommend you speak to one of our professionals today.