Over the past few months, the tri-state area has been implementing required retirement programs. Recent developments in New York, New Jersey, and Connecticut are indicative of a shift towards employer accountability for the retirement plans of their employees. This article will explain the criteria for each program and what employers may need to consider for compliance.
New York State Secure Choice Savings Program
On October 21, 2021, New York Governor Kathy Hochul signed a bill enacting the New York State Secure Choice Savings Program. The law took immediate effect, though specific regulations for the program have not yet been released. The program requires all private non-profit and for-profit employers in New York, who satisfy the below criteria, to automatically enroll all employees in a payroll deduction Roth IRA program run by New York State.
Participation in the program is mandatory for employers that meet the following criteria:
- have at all times during the previous calendar year employed at least ten employees in the State of New York;
- have been in business for two years or more; and
- have not, in the previous two years, offered one of the qualifying retirement options that are listed in the new law.
The program prohibits employers from ending current retirement plans in order to participate in the State program instead. Though employers do not contribute toward the IRAs, they are responsible for program management in conjunction with New York State. In addition, because employees may themselves choose to opt-out of the program, employers must set enrollment periods for those employees to enroll in the Program.
New Jersey Secure Choice Savings Program Fund
After a postponement due to the Covid-19 pandemic, the New Jersey Secure Choice Savings Program Act finally went into effect on March 28, 2022. Employers are given nine months from the effective date to comply with the legislation. The program requires New Jersey employers, who satisfy the below criteria, to assist with automatic payroll deductions as part of the New Jersey Secure Choice Savings Program Fund (“Fund”).
Participation in the New Jersey Secure Choice Savings Program is mandatory for non-profit and for-profit employers who meet the following criteria:
- have at all times during the previous calendar year employed at least 25 employees in the state of New Jersey;
- have been in business for two years or more; and
- have not, in the previous two years, offered one of the qualified retirement options that are listed in the new law.
The law provides specific penalties for employers who do not comply without reasonable cause. In addition, there are fines for employers that deduct employee contributions and do not submit them to the Fund.
Employers with less than 25 employees are permitted, but not required, to participate in the program.
Connecticut Retirement Security Authority
The Connecticut Retirement Security Authority, though enacted in 2016, just recently opened its retirement program for enrollment on April 1, 2022. The program, now known as MyCTSavings, is estimated to supply over 600,000 private-sector employees with retirement savings plans.
Deadlines for employer registration are as follows:
- June 30, 2022 – employers with 100 or more employees.
- October 31, 2022 – employers with 26 to 99 employees.
- March 30, 2023 – employers with 5 to 25 employees.
The MyCTSavings program is mandatory for all private non-profit and for-profit employers who meet the following criteria:
- have five or more employees who received at least $5,000 in wages during the previous calendar year;
- have been in business at all times during the current and previous calendar years; and
- do not offer a qualified employer-sponsored retirement plan.
Eligible employees include those who have been employed for a minimum of 120 days by the employer, are at least nineteen years of age, and work within the state of Connecticut, with exceptions for specific types of employees as set out by the program. Employers do not pay into the program, but rather are only required to distribute information provided by the CRSA and to facilitate payroll deductions and deposits.
Conclusion
States in the tri-state area have re-vamped their employee retirement programs, and qualifying employers in these states should be aware of these changes to ensure compliance with their state’s program. If you need assistance complying with your state’s retirement plan requirements, please reach out to us.