Gov. Kathy Hochul Signs Bill Requiring Private Employers to Enroll Employees in State-Administered Retirement Savings Plan
On October 21, 2021, New York Governor Kathy Hochul signed into law a bill requiring certain private employers in the state to automatically enroll their employees in a state-administered retirement savings plan if the employer does not offer its own qualified retirement plan. The law took effect immediately. Employers will have time to establish their participation in the program once it is launched.
The law requires that employers meeting the following requirements must automatically enroll their employees in New York’s Secure Choice Savings Program:
- Ten or more employees in New York
- Employer established the business two or more years ago
- Employers have not offered their employees a qualified retirement plan such as a 401(k) or 403(b) plan in the past two years
New York’s Secure Choice Savings Program is a retirement savings program in the form of an automatic payroll deduction-funded individual retirement account. Employers will initially enroll employees at a contribution rate of three percent of their wages (with modifications permitted). Payroll deductions for contributions will not begin until after the 30th day after an employee’s enrollment in the program.
It is important to note: employers are not required to contribute to the Secure Choice Savings Program.
Employees Can Choose to Opt-Out of the Program
Employees who opt-out but later wish to participate will need to wait until an annual open enrollment period.
Employers must establish a retirement savings arrangement through payroll deposit to allow each employee to participate in the program. This must be in place no later than nine months after the NYS Secure Choice Savings board opens the program for enrollment.
Covered employers shall automatically enroll each employee who has not opted out of participation and deposit payroll contributions by employees into the program.
Employees must be provided with informational materials at least one month before the employer’s access to the program by employees. These materials must include the following information:
- Benefits and risks associated with making contributions to the program
- Process for making contributions to the program
- Notification that employees can opt-out of the program either before enrolling or after enrollment
- How to opt-out of the program
- Process by which an employee can participate in the program with a level of employee contributions other than three percent
- Notification that employees are not required to participate or contribute more than three percent
- Process for withdrawal of retirement savings
- Process for selecting beneficiaries of their retirement savings
- How to obtain additional information about the program
- Notice that employees seeking financial advice should contact financial advisors. Additionally, participating employers are not in a position to provide financial advice and are not liable for decisions employees make pursuant to the law
- Information on how to access any available financial literacy programs
- Notice that the state does not guarantee the program fund
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