Several years ago, New York State enacted a law to make the Secure Choice Savings Plan (SCSP) mandatory for certain employers. Secure Choice is a retirement savings plan for private-sector employees who are not offered a retirement plan through their workplace, which will encourage more people to save for retirement. The law provides that an employer must set up payroll deposit IRAs for its employees within nine months of the date that Secure Choice opens for enrollment, which is expected to “go live” at some future date.
Employers required to participate include:
- Those engaged in any trade or business activity in NYS, whether private sector or non-profit;
- Those with at least 10 employees at all times in NYS during the previous calendar year;
- Those that have been in business for at least two years; and
- Those that have not offered a qualified retirement plan in the preceding two years.
For those employers who are required to participate, their duties are designed to be purely administrative and all costs of administering the plan are to be absorbed by the state. Employers must provide Secure Choice information and documentation to all employees, must process employee enrollment elections, must implement payroll deductions on a Roth after-tax basis, and must automatically enroll all employees that do not make an enrollment election. The employee’s after-tax payroll deductions must be equal to 3 percent of gross pay, unless the employee affirmatively opts-out of the program or voluntarily chooses a contribution percentage that is more or less than the 3 percent.
The employer is responsible for remitting payroll deductions to a state-approved Roth IRA for the employee. Guidance is yet to be issued regarding the process for remitting deposits and to what degree the employer will be responsible for ensuring participant compliance with IRS rules and regulations. The Roth individual retirement accounts under Secure Choice are designed to be portable such as they follow employees around if and when they change jobs.
In September 2023, NYS selected the Secure Choice vendor, Vestwell, and announced four limited investment options that participants will have to choose from. There is still no definitive date as to when NYS will open enrollment, and there are many questions surrounding the program that remain unanswered. Tronconi Segarra & Associates will provide additional details as more information becomes available.
