NYS offers new retirement savings option for private-sector workers without access to a 401(k) plan
The state's Secure Choice Savings Program requires employers to deduct at least 3% of an employee's gross pay for their Roth Individual Retirement Account. Credit: AP/Hans Pennink
Private-sector employees across New York State now have a new option to save for retirement if their employer doesn’t offer a 401(k) or another workplace savings plan.
Gov. Kathy Hochul announced Wednesday that the state's Secure Choice Savings Program is expanding statewide after an initial test proved successful. The program is mandatory, though employers can seek an exemption and employees can opt out.
Secure Choice requires employers to deduct at least 3% of an employee's gross pay for their Roth Individual Retirement Account. The deduction occurs after income taxes are paid.
The maximum annual contribution is the same as with other types of Roth accounts. This year, people under 50 can contribute $7,000 and those 50 and over, $8,000, according to the IRS.
The deduction amount may be changed by the worker at any time and the retirement account accompanies them if they change employers, a description of Secure Choice states
"The program provides another tool for employees to build long-term financial security and plan for a dignified retirement,” Hochul said, adding that more than 1.5 million workers are eligible for the program.
Employers don't make matching contributions or assume fiduciary responsibility unlike with other retirement savings plans.
Secure Choice only covers employers that have been in business for two years or more, have 10 or more employees, and don't offer a qualified retirement plan such as a 401(k) or 403(b).
Employees can choose from investment options such as BlackRock funds tied to their retirement year and State Street's growth and income funds, the description states.
Employers pay nothing to participate while employees are charged between 22 cents and 31 cents for every $100 invested, plus an annual fee of $28, according to the description.
More information is available at newyorksecurechoice.com.
Secure Choice is overseen by the Department of Taxation and Finance, whose acting commissioner, Amanda Hiller, said the fact that payroll deductions are automatic will help "more New Yorkers take control of their financial future.”
On Long Island, Secure Choice "will ultimately boost economic activity [by] offering employees the opportunity to save for retirement even if their workplace doesn't offer its own plan," Matt Cohen, president and CEO of the Long Island Association business group, said Thursday.
He added that the state isn't "adding another burdensome regulation on employers [because they have] the option to seek an exemption."
Secure Choice was established four years ago when Hochul signed legislation into law.
That bill expanded an earlier program with the same name but was voluntary for employers. The 2018 program, introduced by then-Gov. Andrew M. Cuomo, was never fully implemented.
Assemb. Al Stirpe, (D-Cicero), chairman of the Assembly's economic development committee, said Wednesday he was "eager" to see Secure Choice "finally launch from idea to implementation."
Assemb. Rebecca A. Seawright, (D-Manhattan), chairwoman of the Assembly's aging committee, agreed, adding in a statement that "too many older adults face economic insecurity in retirement because they lacked access to savings options during their working years."
James T. Madore writes about Long Island business news including the economy, development, and the relationship between government and business. He previously served as Albany bureau chief.
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