New York State has Mandated Private Employers to Provide a Retirement Plan Option to their Employees
November 24, 2021
New York State has Mandated Private Employers to Provide a Retirement Plan Option to their Employees

Everyone knows that saving for retirement is important! Historically, the choice to save for retirement has been solely up to the direction of employees. However, times are changing! Several states have begun to enact legislation to encourage employees to save for their retirement during their working years. As of October 21, 2021 New York joins California, Illinois, and Oregon in enacting such legislation. NY Governor Kathy Hochul signed into law a bill requiring certain private employers in NYS to auto-enroll their employees in the state administered retirement savings plan if they do not currently offer their own qualified retirement plan.


Who is Impacted?

Private employers with 10 or more employees in New York State who have been in business for at least two years and have not offered a 401(k) or 403(b) plan in the last two years.


What Are Our Options?


Option 1- NY Secure Choice Savings Program

The Secure Choice Savings Plan is a NYS sponsored automatic enrollment Roth (after tax) IRA (Individual Retirement Account) Plan.


Impact on Employees

  • Must be 18+
  • Employees are auto enrolled at 3% but do have the option to change their contribution percentage or to opt-out
  • If an employee opts out and later wants to enroll, they must wait until the annual open enrollment period
  • Roth Payroll contributions begin on the 30th day after the employee has been enrolled into the program
  • Pre-tax payroll contributions are not permitted
  • IRA limit of $6,000 in annual contributions


Impact on Employers

  • No employer match is permitted
  • Must distribute educational materials relating to the plan
  • Must have a payroll deposit arrangement no later than 9 months after the board opens the program for enrollment
  • Responsible for enrolling employees (if they don’t opt out) and remitting their contributions
  • Responsible for administrative set- up fees     


Option 2- Implement a 401(k) or 403(b) Plan.

A 401(k) or 403(b) plan is an employer sponsored defined contribution retirement plan that allows employers and employers to contribute to an employee’s individual retirement account.


           Impact on Employees

  • Contributions can reduce taxable income & allow tax deferred growth of investments
  • Higher annual contribution limit of $20,500
  • Can potentially receive match funds, profit sharing, or non-elective contributions
  • Can allow loans or hardship withdrawals
  • Can receive match, non-elective contributions, or profit-sharing funds


           Impact to Employers

  • Tax advantages
  • Can contribute match, non-elective contributions, or profit-sharing funds
  • Can increase competitiveness for top talent
  • Can increase employee satisfaction and retention
  • Third Party Administrators/Financial Advisors can assist with education, management, and administration of plans
  • Greater investing options
  • Can assist employees and business owners in saving for retirement


How Can Simco help?

SimcoHR can assist by providing education and recommendations on implementing a retirement solution that is customized to your unique business needs. Please reach out to your designated Account Executive or contact us at 585-750-3246, Option 1,  if you have any questions.

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