New York Mandates Workplace State-Based Retirement Savings Program

The New York State Secure Choice Savings Program (Secure Choice) is a state-sponsored program that seeks to tackle the retirement savings crisis by making available a payroll deduction IRA for an estimated 3.5 million workers who lack an employer-provided retirement savings plan.

What Covered Employers Should Know About NYS Secure Choice

Businesses with 10 or more eligible in-state employees at all times during the previous calendar year are considered covered businesses and must participate in the New York state Secure Choice Savings program or often a retirement plan that satisfies the mandate. A covered businesses also:

• Has been in business for at least two years
• Has not offered a workplace retirement plan in the preceding two years 

Businesses will also be required to register for the program within nine months after the program launch date, which is currently scheduled to be implemented in late 2025, following a pilot that is launching in mid-2025. 

What Is the NY State Secure Choice Savings Program?

Originally established with funds from the state's fiscal 2019 budget, the provisions of the New York State Secure Choice Savings Program follow those in a number of state programs that are either currently operating. Key features of the program include:

• Roth IRA structure. Contributions are made on an after-tax basis. IRA deduction limits apply. Employers cannot make contributions to the plan.
• Automatic enrollment. Participating employers would be required to auto-enroll employees, although employees may choose to opt out. The automatic payroll deduction default contribution rate will be 3 percent of an employee’s paycheck.
• Limited employer involvement. Participating employers would not be considered fiduciaries, as their role is limited.
• State administration. The state comptroller is charged as chairperson of the program, which will be administered by a seven-member board.
• Investment options determined by the board. The proposal suggests a default investment of a target date lifecycle fund, with additional investment options noted as a conservative principal protection fund, a growth fund, a secure return fund, and an annuity fund, to be determined by the board.

Are There Employee Eligibility Requirements to NYS Secure Choice?

Eligible employees can participate in the NY State Secure Choice Savings program is they are:

• 18 years of age or older
• Employed in New York state
• Earning wages in New York state

Do Other Localities in NY Have Mandated Workplace Retirement Plans?

New York City passed a law May 11, 2021 that established an auto-IRA program and mandates participation for businesses with five or more employees within the city limits. However, the city law had a provision that if New York State adopted a mandatory program similar to the city’s that the city program would merge with the state one, and that is what will happen.

Looking Ahead

As developments with the New York State Secure Choice Savings Program continue to roll out, make sure that you stay aware of state retirement plan changes, key dates, and enrollment deadlines.

This article was originally published April 24, 2018.