Understanding state legislation, especially when it concerns retirement savings plans, can be complex. This blog post aims to demystify recent New York law changes that could significantly affect businesses and offer guidance on navigating these changes.
In October 2021, Governor Kathy Hochul signed a law initiating the New York State Secure Choice Savings Plan (Secure Choice). This state-run retirement savings program mandates many private sector employers, specifically those with at least ten employees, operating for at least two years, and without a qualified retirement plan in the preceding two years, to enroll their employees.
Under Secure Choice, employers have only administrative responsibilities, while the New York Secure Choice Savings Program Board holds the fiduciary role, managing the program's design and operation. Employers are also shielded from liability regarding benefits and investment returns.
With the program's details yet to be finalized, businesses have an excellent opportunity to reassess their retirement savings strategies. An in-depth evaluation during this period can help businesses adapt to changes and make informed decisions.
However, the Secure Choice Savings Program comes with several considerations that could make it less attractive compared to other retirement plans:
Given these factors, businesses might consider alternatives, like the 401(k) plan, that may offer more flexibility and benefits to both employers and employees. It's crucial for businesses to assess their unique needs when choosing a retirement savings plan.
While state-mandated retirement savings plans might introduce complexities, they can also present opportunities for businesses with the right approach and understanding. Open communication about these changes, consulting experts, and prioritizing your organization's and employees' best interests are key.
Stay tuned for more updates on New York's retirement plan legislation. We aim to keep you informed and guide you through these evolving times.
