The New York Secure Choice Savings Program Act was enacted into law as part of the 2018-19 New York State Budget. The program was designed to create a system where employees that work for employers who do not already offer a retirement saving plan could voluntarily opt in to the scheme to fund an individual retirement account (IRA) through payroll deductions.
This law amends the general business law to make enrollment into the New York State Secure Choice Savings Program automatic for employees at covered employers. However, employees are able to opt out of the program. Employees will also be provided with informational materials that include an explanation of how employees can opt out of the program after being enrolled as well as a form for an employee to note his or her decision to opt out of program participation and to allow new employees to opt out of the program. Employers are not liable for an employee’s decision to opt out of the program.
Participating employers must have payroll deposit savings arrangements to allow each employee to participate in the program. Deductions of program contributions will not begin until the 30th day after enrollment.
An “employer” is defined as a person or entity that (i) has at all times during the previous calendar year employed at least ten employees in the state, (ii) has been in business at least two years, and (iii) has not offered a qualified retirement plan in the preceding two years. Notably, employers cannot terminate current qualified retirement programs to participate in the New York Secure Choice Program.
The purpose of this law is to create a self-sufficient retirement savings program in the form of an automatic enrollment payroll deduction IRA, and establish an administrative board responsible for promoting greater retirement savings for private sector employees in a convenient, low-cost, and transferable manner. Gov. Hochul stated in a press release, “Part of ensuring that New Yorkers are financially stable is guaranteeing they have a reliable retirement plan. This legislation allows all workers to have a sense of relief and security when it comes to retirement.”
This law is effective immediately. Covered employers should review this law with counsel to determine next steps.
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