In 2021, New York created a state-run retirement program called the Secure Choice Savings Program (“Secure Choice”). The purpose of the program is to provide Roth IRAs to private sector employees who do not have access to a retirement plan through their employers. As part of Secure Choice, private sector employers must either register or certify that they are exempt from Secure Choice by the applicable deadline. Employers with fewer than 10 employees in the last calendar year or that already offer their employees a qualified retirement plan are exempt. Registration deadlines were phased in, and several are coming up.

Secure Choice Savings Program: Registration Deadlines

All private sector employers that have been in business for at least two years and have 10 or more employees, but no qualified retirement plan, must now register for Secure Choice. The registration date for employers with 30 or more employees has already passed, but non-exempt employers with 15 to 29 employees must register by May 15, 2026, and those with 10 to 14 employees must do so by July 5, 2026.

Employer Obligations

Employers pay no fees to participate in Secure Choice, and they are not required to contribute to or match employees’ Roth IRA contributions. However, they have administrative responsibilities, including enrolling employees and handling deductions and contributions.

Any employee 18 years of age or older working for a registered employer must be enrolled by the employer in Secure Choice. Once enrolled, employees have only 30 days to either opt out of the program or customize their plan and make investment selections. Employees who fail to act in the 30-day window must be automatically enrolled, and 3% of their gross income withheld by the employer.

Employers are also responsible for deducting the appropriate contribution from the wages of any employee who has not opted out and remitting such contributions to the employee’s IRA on a monthly basis.

As Secure Choice comes with these additional obligations, businesses may want to consider establishing a qualified retirement plan for the benefit of their employees before the registration deadline if they don’t already have one. If that is too costly or cumbersome, employers must, at a minimum, inform their employees about their options, including the right to opt out of the Roth IRAs. This is important as many lower-paid employees may not be able to bear the burden of the mandatory contributions.

Funding

In its present form, Secure Choice will be administered by a board and funded by a nominal annual fee charged to all enrolled employees, as well as an annual asset-based fee on the total invested by the employee.

It seems that Secure Choice is well-intentioned. However, given the present state of the economy, it likely will not accomplish its goal of providing all employees in the private sector with a retirement vehicle. Many lower-paid employees struggling to make ends meet will not be able to afford the reduction in take-home pay that will result from funding the Roth IRA and will have no choice but to opt out.

If you are an employer who is unsure whether Secure Choice applies to or will be good for your business, please contact one of our attorneys to review the program’s requirements.