New York State Secure Choice Savings Program: Employer Impact

In 2021, Governor Kathy Hochul made the New York State Secure Choice Savings Program mandatory for all companies to provide an auto-enroll IRA program to their employees. Employees will be able to contribute 3% of their pay in the initial month with an option to change the amount they contribute each month going forward. If you are an employer in N.Y., you must offer the program if you:

• Have been in business for at least two years
• Have had at least 10 employees at all times over the past year
• Do not offer a qualified retirement plan to employees, such as a 401(k)

Costs to Business Owners Under NYS Secure Choice Savings Program

The only expense to business owners is the administrative fees once the program has sufficient assets to cover the operating costs. The state will pay the initial administrative costs. Additionally, employers can not contribute to or match their employee’s plans.

The administrative tasks that employers are responsible for are:

• Must automatically enroll their employees (once the program is officially running)
• Provide informational material to employees when hired
• Must provide a form for new and existing employees who choose to opt-out
• Responsible for collecting and forwarding employee payroll deductions promptly
• Establish payroll deposit arrangements for all employees no later than nine months after the program is running.

Benefits to Employees and Employers

The NYS Secure Choice Savings Program is an opportunity for employees to have the ability to contribute to their retirement. As Gov. Hochul stated in regards to the program:

“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.”

Employers benefit when their employees are happy, and in this current labor shortage, that’s more of a focus than ever. The NYS Secure Choice Savings Program will hopefully help entice more people into the workforce. Employers aren’t just worried about hiring new employees; they also need to retain them. This program is an excellent jumping-off point to offering employees other financial perks like 401-(k)s.

More to Offer

Businesses must try to stand out from others when attracting new employees and, more importantly, the right candidates. While it is great that the state will provide an avenue for employers to offer their employees the opportunities to save for their future, the structure and accessibility are quite limited. For example, a company offering a 401-(k) option with employer matching, higher contribution limits, the ability to borrow from the funds, or more investment options may be a better way to attract and retain talent.

As the employer, this may help you fill those open positions with people who will likely be more committed and dedicated than others. They will see that the company values its employees and invests in them. Adding a sense of pride in where they work along with it is worth its weight in gold and will help to set you apart from your competitors.

If you are not sure how this new mandate will affect your business or you are interested in exploring 401(k) plan options, contact us today to request a consultation!