What is the Secure Choice Savings Program?
Running a business comes with many obstacles, staying on top of ever-changing laws and regulations is one of them. Keep reading to learn about the newest New York State legislation affecting private-sector employers.
In 2018, the New York State Secure Choice Savings Program was introduced as a voluntary retirement savings program that allows private and nonprofit employees to enroll in automatic payroll deductions.
Soon this program will no longer be voluntary. On Oct. 21, 2021 Governor Kathy Hochul signed legislation that requires private sector employers to automatically enroll their employees in the program.
Don’t be caught off guard by the impending change.
Once the program is officially opened for enrollment, employers will have 9 months to prepare and set up the automatic payroll deposit system. This article will give you the who, what, when and how on the new Secure Choice Savings Program requirements.
Who will this affect?
The program will apply to both for-profit and nonprofit New York State employers who fall under the following categories:
- You have been in business for at least two years
- You have at least 10 employees in the state at all times over the past calendar year
- You have already offered a qualified retirement plan such as 401(a), 401(k), 403(a), 403(b), 408(k), 408(p) or (457(b) in the past two years
If all three of these statements describe your organization, then you are required to participate in the program. While you would be required to implement the new program, employees have the ability to opt-out. An employee who opts out would have to wait until an annual open enrollment period to rejoin later on. If you currently offer a qualified retirement plan you can not terminate your employees’ existing plans to join the Secure Choice Savings Program.
All employees 18 or older who work in New York, whether part-time or full-time, are eligible to participate in the program.
What to do as an employer
If you are required to implement this new program, there are a few requisite tasks to keep in mind.
- Set up the payroll deposit retirement savings arrangement
- Provide employees with informational materials
- Automatically enroll employees who haven’t opted out of the program
- Direct employee contributions to the program
Employers participating in the new program are not fiduciaries and therefore are not liable. The New York Secure Choice Savings Program Board is exclusively responsible for the operation of the program.
When will it take effect?
The actual timeline for the implementation of the savings program is currently undetermined but expected to start in 2022. Employers will also have nine months to set up the new system after an official start date is determined. While immediate action is not required, you can contact Staff Leasing at any time to learn how we can help you fulfill this new requirement.
How does the program work?
The program is an automatic payroll deduction IRA (individual retirement account). The state pays for administrative costs associated with the creation and management of the system until the program has assets of its own to cover those costs. Aside from the initial setup, employers will have no additional costs and are not required to contribute to employee plans.
Participating employees can select a custom contribution amount for the retirement program. The default selection will be 3% of their wages.
As you contemplate how to meet these new state requirements, reach out to Staff Leasing for help. We help small businesses stay in compliance with regulations like this all the time.
Don’t be caught off guard – Contact us today!