The New York State Secure Choice Savings Program was first enacted in 2018 as a voluntary retirement savings plan that allowed employees whose employers did not offer retirement benefits to participate in automatic payroll deductions to put money toward retirement.
However, in 2021, Governor Hochul signed into law a bill that expanded the employers that are covered by the program and made enrollment mandatory for certain employers. In this article, we will help guide you through the ins and outs of the New York State Secure Choice Savings Program and let you know what your next steps are as an employer in New York State.
What is the New York State Secure Choice Savings Program?
This program takes automatic payroll deductions and transfers them to a Roth IRA for the employee. The program covers all employees in the state who are at least 18 and earn wages from an employer who does not offer retirement benefits. This program serves both part time and full time employees. The investment options for the Roth IRA will be decided by the program’s board.
Employees have the option to opt out of the program, however employers do not. For those who do not opt out, they can either select a specific contribution amount or they will automatically have 3% of their wages deducted. Because the accounts will be Roth IRAs, money that is contributed will be after taxes are taken out of their paycheck.
What are the Employer’s Responsibilities?
For the sake of this program, an “employer” is defined as an entity that:
Has had at least ten employees at all times during the previous calendar year
Has been in business for at least two years
Does not have a qualified retirement plan such as a 401(k) or 403 (b) offered to employees
Employers who qualify under these conditions have administrative responsibilities to ensure the Secure Choice Savings Program is enacted. According to the law, employers that qualify must:
Create payroll deductions in the chosen amount or the default 3% of employee wages
Enroll each employee in the program that does not choose to opt out
Provide necessary forms to current employees and all future employees to opt out of the program
Withhold and remit employee contributions to the program
Provide all informational materials to employees regarding the program and their options
While employers do have responsibilities when it comes to enrolling, withholding and remitting, employers are not fiduciaries under this program. That means they are not liable when it comes to benefits paid and investment returns for participants.
What are Next Steps?
The good news is that there are no immediate next steps if you are a New York State employer except to stay updated on when enrollment opens. Right now, enrollment is set to begin sometime in 2022, but an exact date is yet to be determined.
Once you receive notice that enrollment is open for all qualified employers, you will have 9 months to comply with the requirements listed above.
For more information on this or any of your other HR needs, Complete Payroll is the professional HR assistant you want by your side. Contact one of our professionals today to discuss how we can make your job in human resources easier and more streamlined.
DISCLAIMER: The information provided herein does not constitute the provision of legal advice, tax advice, accounting services or professional consulting of any kind. The information provided herein should not be used as a substitute for consultation with professional legal, tax, accounting, or other professional advisers. Before making any decision or taking any action, you should consult a professional adviser who has been provided with all pertinent facts relevant to your particular situation and for your particular state(s) of operation.
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