Key Points

• New York has officially launched the Secure Choice Savings Program. It requiring certain private-sector employers without retirement plans to facilitate employee access to state-sponsored Roth IRAs.
• The Program covers all employers in New York who meet certain criteria. Businesses must have employed 10 or more employees in the state during the prior calendar year, have been in business for at least two years and not currently be sponsoring a qualified retirement plan for their employees.
• The Program will notify employers by mail or email of their requirement to register. Businesses can also take proactive steps to register, though.

After a lengthy delay, New York Governor Kathy Hochul recently announced the official launch of the Secure Choice Savings Program (the Program).

Established in 2021 by an amendment to the New York State General Business Law, the Program is a state-sponsored retirement savings program for private-sector employers who do not offer a workplace retirement plan to their employees. The Program is overseen by the seven-member New York Secure Choice Savings Program Board.

Under the Program, an employer’s role is limited to facilitating employee access to a Roth IRA in the employee’s name. Employer obligations are generally limited to: (1) providing informational materials to their employees; (2) registering with the Program; (3) uploading employee information; and (4) coordinating with payroll providers and submitting participating employee contributions through payroll deductions each pay period. Employers are not required to make monetary contributions, nor do they have any fiduciary responsibilities with respect to the Roth IRAs created under the Program.

Once employees are added to the Program, the State will communicate with them directly to inform them of the 30-day period they have to customize their savings rate and investment choices. Following this 30-day period, employers will record their employees’ choices, begin payroll deductions and submit contribution information and funding for the employees who choose to stay in the program.

Which Employers are Required to Participate in the Program?

All New York State employers who meet the following criteria are covered under the Program:

1. Employs 10 or more employees in New York during the prior calendar year.
2. Has been in business for at least two years.
3. Does not currently sponsor a qualified retirement plan for its employees.

Are All Private-Sector Employees Going to be Enrolled in the Program?

All eligible employees — individuals 18 years of age or older who have earned taxable wages from a New York State employer — of covered employers will be automatically enrolled in the Program. The employee will have the opportunity to customize their savings rate, investment options and beneficiaries. While the default contribution rate is 3% of gross income, employees may choose to contribute up to 10%. This percentage will be deducted from the employee’s paycheck after taxes have been taken out.

Employees may opt-out of the Program at any time. If the employee chooses to opt-out, the Program will notify the employer to stop payroll deductions, and the employee may withdraw any previous contributions. The employee may also choose to re-enroll at any time during their employment.

What Should Employers Do Right Now?

The Program will notify employers by mail or email of their requirement to register, according to the Program’s website. This notification will contain a unique access code for each business to use in registration. Businesses can also take proactive steps to register before receiving notice through the Program’s website. There is an option to request the unique access code online, as well.

In the interim, employers should prepare themselves for compliance by determining whether their business is covered under the Program, or whether they should prepare to present an exemption demonstrating that they are not a covered employer under the Program or that they already offer a qualified retirement plan.

With the Program’s roll-out just beginning, employers should consult their attorneys to discuss compliance and next steps.

For more information, please contact Carolyn D. Richmond at crichmond@foxrothschild.com, Glenn S. Grindlinger at ggrindlinger@foxrothschild.com, or any member of Fox Rothschild’s New York Labor & Employment Department.

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