General Business Law Article 43, New York State Secure Choice Savings Program
All terms shall have the same meaning as when used in a comparable context in the Internal Revenue Code. As used in this article, the following terms shall have the following meanings:
- Board shall mean the New York secure choice savings program board established under this article.
- Superintendent shall mean the superintendent of the department of financial services.
- Commissioner shall mean the commissioner of taxation and finance.
- Comptroller shall mean the comptroller of the state.
- Employee shall mean any individual who is eighteen years of age or older, who is employed by an employer, and who earned wages working for an employer in New York state during a calendar year.
- Employer shall mean a person or entity engaged in a business, industry, profession, trade, or other enterprise in New York state, whether for profit or not for profit, that (i) has at all times during the previous calendar year employed at least ten employees in the state, (ii) has been in business at least two years, and (iii) has not offered a qualified retirement plan, including, but not limited to, a plan qualified under sections 401(a), 401(k), 403(a), 403(b), 408(k), 408(p) or 457(b) of the Internal Revenue Code of 1986 in the preceding two years.
- Enrollee shall mean any employee who is enrolled in the program.
- Internal Revenue Code shall mean the Internal Revenue Code of 1986, or any successor law, in effect for the calendar year.
- IRA shall mean a Roth IRA (individual retirement account).
- Participating employer shall mean an employer that facilitates access to the program's payroll deduction IRA as provided for by this article for its employees who are enrollees in the program.
- Payroll deduction IRA shall mean an arrangement by which a participating employer facilitates access for enrollees to remit payroll deduction contributions to the program.
- Program shall mean the New York state secure choice savings program.
- Wages means any compensation within the meaning of section 219(f)(1) of the Internal Revenue Code that is received by an enrollee from a participating employer during the calendar year.
There is hereby established a retirement savings program in the form of an automatic enrollment payroll deduction IRA, known as the New York state secure choice savings program. The general administration and responsibility for the proper operation of the program shall be administered by the board for the purpose of promoting greater retirement savings for private-sector employees in a convenient, low-cost, and portable manner. The board may delegate such authority and responsibility for the development and implementation of the program to the Department of Taxation and Finance as the board deems proper.
There is hereby created the New York state secure choice savings program board.
- The board shall consist of the following seven members:
- the commissioner, or his or her designee, who shall serve as chair;
- the state comptroller, or his or her designee;
- the superintendent, or his or her designee;
- two public representatives with expertise in retirement savings plan administration or investment, or both, one of whom shall be appointed by the speaker of the assembly and one of whom shall be appointed by the temporary president of the senate;
- a representative of participating employers, appointed by the governor; and
- a representative of enrollees, appointed by the governor.
- Members of the board shall serve without compensation but may be reimbursed for necessary travel expenses incurred in connection with their board duties from funds appropriated for the purpose.
- The initial appointments shall be as follows: the public representatives for four years; the representative of participating employers for three years; and the representative of enrollees for three years. Thereafter, all the governor's appointees shall be for terms of four years.
- A vacancy in the term of an appointed board member shall be filled for the balance of the unexpired term in the same manner as the original appointment.
The board, the individual members of the board, the trustees, any other agents appointed or engaged by the board, and all persons serving as program staff shall discharge their duties with respect to the program solely in the interest of the program's enrollees and beneficiaries as follows:
- for the exclusive purposes of providing benefits to enrollees and beneficiaries and defraying reasonable expenses of administering the program;
- by investing with the care, skill, prudence, and diligence under the prevailing circumstances that a prudent person acting in a like capacity and familiar with those matters would use in the conduct of an enterprise of a like character and with like aims; and
- by using any contributions paid by employees and employers remitting employees' own contributions into the fund exclusively for the purpose of paying benefits to the enrollees of the program, for the cost of administration of the program, and for investments made for the benefit of the program.
In addition to the other duties and responsibilities stated in this article, the board shall, itself or through the use of appropriate financial organizations as managers:
- Cause the program to be designed, established and operated in a manner that:
- accords with best practices for retirement savings vehicles;
- maximizes participation, savings, and sound investment practices including considering the use of automatic enrollment as allowed under federal law;
- maximizes simplicity, including ease of administration for participating employers and enrollees;
- provides an efficient product to enrollees by pooling investment funds;
- ensures the portability of benefits; and
- provides for the deaccumulation of enrollee assets in a manner that provides a financial benefit in retirement.
- Explore and establish or authorize investment options, subject to this article, that offer enrollees returns on contributions and the conversion of individual retirement savings account balances to secure retirement income without incurring debt or liabilities to the state.
- Establish or authorize the process by which interest, investment earnings, and investment losses are allocated to individual program accounts on a pro rata basis and are computed at the interest rate on the balance of an individual's account.
- Make and enter into contracts necessary for the administration of the program and fund, including, but not limited to, retaining and contracting with investment managers, financial organizations, other financial and service providers, consultants, actuaries, counsel, auditors, third-party administrators, and other professionals as necessary.
- Conduct a periodic review of the performance of any financial organizations, including, but not limited to, a review of returns, fees, and customer service. A copy of reviews shall be posted to the program's Internet website.
- Cause moneys in the program to be held and invested as pooled investments or otherwise, with a view to achieving cost savings through efficiencies and economies of scale.
- Evaluate and establish or authorize the process for:
- an enrollee to contribute a portion of his or her wages to the program via payroll deduction; and
- the enrollment of participating employers in the program.
- The board may contract with financial organizations and third-party administrators with the capability to receive and process employee information and contributions for payroll deduction IRA or similar arrangements.
- Evaluate and establish or authorize the process for enrollment including the process by which an employee may opt not to participate in the program, select a contribution level, select an investment option, and terminate participation in the program.
- Evaluate, or cause to be evaluated, the need for, and procure as needed, insurance against any and all loss in connection with the property, assets, or activities of the program, and indemnify as needed each member of the board from personal loss or liability resulting from a member's action or inaction as a member of the board.
- Make provisions for the payment of administrative costs and expenses for the creation, management, and operation of the program. Subject to appropriation, the state may pay administrative costs associated with the creation and management of the program until sufficient assets are available in the program for that purpose. Thereafter, all administrative costs of the program, including repayment of any start- up funds provided by the state, shall be paid only out of moneys on deposit therein. However, private funds or federal funding received in order to implement the program until it is self-sustaining shall not be repaid unless those funds were offered contingent upon the promise of such repayment. The board shall keep its annual administrative expenses as low as possible.
- Allocate administrative fees to individual retirement accounts in the program on a pro rata basis.
- Set or authorize minimum and maximum contribution levels in accordance with limits established for IRAs by the Internal Revenue Code.
- Facilitate education and outreach to employers and employees.
- Facilitate compliance by the program with all applicable requirements for the program under the Internal Revenue Code, including tax qualification requirements or any other applicable legal, financial reporting and accounting requirements.
- Carry out the duties and obligations of the program in an effective, efficient, and low-cost manner.
- Exercise any and all other powers reasonably necessary for the effectuation of the purposes, objectives, and provisions of this article.
- Determine or authorize withdrawal provisions, such as economic hardships, portability and leakage.
- Determine employee rights and enforcement of penalties.
- Delegate such authority and responsibility for the development and implementation of the program to the Department of Taxation and Finance as the board deems proper.
The board shall annually prepare, or cause to be prepared, and adopt a written statement of investment policy that includes a risk management and oversight program. This investment policy shall prohibit the board and the program from borrowing for investment purposes. The risk management and oversight program shall be designed to ensure that an effective risk management system is in place to monitor the risk levels of the program, to ensure that the risks taken are prudent and properly managed, to provide an integrated process for overall risk management, and to assess investment returns as well as risk to determine if the risks taken are adequately compensated compared to applicable performance benchmarks and standards. The board shall consider the statement of investment policy and any changes in the investment policy at a public hearing.
- The board shall engage, after an open bid process, a financial organization or organizations to invest assets of the program. In selecting the financial organization or organizations, the board shall take into consideration and give weight to the financial organization's fees and charges in order to reduce the program's administrative expenses.
- The financial organizations shall comply with applicable federal and state laws, rules, and regulations, as well as rules, policies, and guidelines promulgated by the board with respect to the program, including, but not limited to, the investment policy.
- The financial organization or organizations shall provide such reports as the board deems necessary for the board to oversee each financial organization's performance and the performance of the program.
- The board shall establish or authorize a default investment option for enrollees who fail to elect an investment option. In making such determination, the board shall consider the cost, risk profile, benefit level and ease of enrollment. The board may change the default option if the board determines that such change is in the best interests of the enrollees.
- The board may establish or authorize any additional investment options that the board deems appropriate including but not limited to:
- a conservative principal protection fund;
- a growth fund;
- a secure return fund whose primary objective is the preservation of the safety of principal and the provision of a stable and low-risk rate of return; if the board elects to establish a secure return fund, the board may procure any insurance, annuity, or other product to insure the value of enrollees' accounts and guarantee a rate of return; the cost of such funding mechanism shall be paid out of the fund; under no circumstances shall the board, program, fund, the state, or any participating employer assume any liability for investment or actuarial risk; the board shall determine whether to establish or authorize such investment options based upon an analysis of their cost, risk profile, benefit level, feasibility, and ease of implementation;
- an annuity fund;
- a growth and income fund; or
- a life cycle fund with a target date based upon factors determined by the board.
Interest, investment earnings, and investment losses shall be allocated to individual program accounts as authorized by the board pursuant to this article. An individual's retirement savings benefit under the program shall be an amount equal to the balance in the individual's program account on the date the retirement savings benefit becomes payable. The state shall have no liability for the payment of any benefit to any enrollee in the program.
- Prior to the opening of the program for enrollment, the board shall design and disseminate, or cause to be designed and disseminated, to all employers employer informational materials and employee informational materials, which shall include background information on the program, and necessary disclosures as required by law for employees.
- The employee informational materials shall be made available in English, Spanish, Haitian Creole, Chinese, Korean, Russian, Arabic, and any other language the board deems necessary.
- The employee informational materials shall include a disclosure. The disclosure form shall explain, but not be limited to, all of the following:
- the benefits and risks associated with making contributions to the program;
- the process for making contributions to the program;
- how to opt out of the program;
- the process by which an employee can participate in the program with a level of employee contributions other than three percent;
- that they are not required to participate or contribute more than three percent;
- the process for withdrawal of retirement savings;
- the process for selecting beneficiaries of their retirement savings;
- how to obtain additional information about the program;
- that employees seeking financial advice should contact financial advisors, that participating employers are not in a position to provide financial advice, and that participating employers are not liable for decisions employees make pursuant to this article;
- information on how to access any available financial literacy programs;
- that the program fund is not guaranteed by the state; and
- that they can opt out after they have been enrolled.
- The employee informational materials shall also include a form for an employee to note his or her decision to opt out of participation in the program or elect to participate with a level of employee contributions other than three percent.
- Participating employers shall supply the employee informational materials to existing employees at least one month prior to the participating employers' facilitation of access to the program. Participating employers shall supply the employee informational materials to new employees at the time of hiring and new employees may opt out of participation in the program.
Except as otherwise provided in this article, the program shall be implemented, and enrollment of employees shall begin no later than December thirty-first, two thousand twenty-one. The provisions of this section shall be in force after the board opens the program for enrollment.
- (a) Each participating employer shall have a payroll deposit retirement savings arrangement to allow each employee to participate in the program at most nine months after the board opens the program for enrollment.
(b) Participating employers shall automatically enroll in the program each of their employees who has not opted out of participation in the program using the form described in this article and shall provide payroll deduction retirement savings arrangements for such employees and deposit, on behalf of such employees, these funds into the program.
- Enrollees shall have the ability to select a contribution level into the program. This level may be expressed as a percentage of wages or as a dollar amount up to the deductible amount for the enrollee's taxable year under section 219(b)(1)(A) of the Internal Revenue Code. Enrollees may change their contribution level at any time, subject to rules promulgated by the board. If an enrollee fails to select a contribution level using the form described in this article, then he or she shall contribute three percent of his or her wages to the program, provided that such contributions shall not cause the enrollee's total contributions to IRAs for the year to exceed the deductible amount for the enrollee's taxable year under section 219(b)(1)(A) of the Internal Revenue Code. The deduction of contributions from an employee's wages shall not begin until the thirtieth day after such employee has been enrolled in the program.
- Enrollees may select an investment option offered under the program. Enrollees may change their investment option at any time, subject to rules promulgated by the board. In the event that an enrollee fails to select an investment option, that enrollee shall be placed in the investment option selected or authorized by the board as the default under this article.
- Following initial implementation of the program pursuant to this section, at least once every year, the program shall designate an open enrollment period during which employees who previously opted out of the program may enroll in the program.
- An employee who opts out of the program and who subsequently wants to participate may only enroll during the program's designated open enrollment period or if permitted by the program at an earlier time.
- Employers shall retain the option at all times to set up any type of employer-sponsored retirement plan.
- An enrollee may terminate his or her enrollment in the program at any time in a manner prescribed by the board.
- (a) The board shall establish or authorize a website regarding the secure choice savings program.
(b) The board shall establish and maintain or authorize the establishment and maintenance of a secure website wherein enrollees may log in and acquire information regarding contributions and investment income allocated to, withdrawals from, and balances in their program accounts for the reporting period. Such website must also include information for the enrollees regarding other options available to the employee and how they can transfer their accounts to other programs should they wish to do so. Such website may include any other information regarding the program as the board may determine.
- A person or entity engaged in a business, industry, profession, trade, or other enterprise in New York State, whether for profit or not for profit, that offers a qualified retirement plan, including, but not limited to, a plan qualified under sections 401(a), 401(k), 403(a), 403(b), 408(k), 408(p) or 457(b) of the Internal Revenue Code of 1986 shall not terminate such plan for the purposes of participating in the program.
Employee contributions deducted by the participating employer through payroll deduction shall be remitted by the participating employer to the program using one or more payroll deduction IRAs established or authorized by the board under this article, either:
- on or before the last day of the month following the month in which the compensation otherwise would have been payable to the employee in cash; or
- before such later deadline prescribed by the board for making such payments, but not later than the due date for the deposit of tax required to be deducted and withheld relating to collection of income tax at source on wages or for the deposit of tax required to be paid under the unemployment insurance system for the payroll period to which such payments relate.
- The state shall have no duty or liability to any party for the payment of any retirement savings benefits accrued by any enrollee under the program. Any financial liability for the payment of retirement savings benefits in excess of funds available under the program shall be borne solely by the entities with whom the board contracts to provide insurance to protect the value of the program.
- No state board, commission, or agency, or any officer, employee, or member thereof is liable for any loss or deficiency resulting from particular investments selected under this article, except for any liability that arises out of a breach of fiduciary duty.
- Participating employers shall not have any liability for an employee's decision regarding whether to participate in, or opt out of, the program or for the investment decisions of the board or of any enrollee.
- A participating employer is not establishing or maintaining the program's payroll deduction IRA. A participating employer shall not be a fiduciary, or considered to be a fiduciary, over the program. A participating employer shall not bear responsibility for the administration, investment, or investment performance of the program. A participating employer shall not be liable with regard to investment returns, program design, and benefits paid to program participants.
- The board shall annually submit:
- an audited financial report, prepared in accordance with generally accepted accounting principles, on the operations of the program during each calendar year by July first of the following year to the governor, the commissioner, the speaker of the assembly, the temporary president of the senate, the chair of the assembly ways and means committee, the chair of the senate finance committee, the chair of the assembly labor committee, the chair of the senate labor committee; and
- a report prepared or authorized by the board, which shall include, but is not limited to, a summary of the benefits provided by the program, including the number of enrollees in the program, the percentage and amounts of investment options and rates of return, and such other information that is relevant to make a full, fair, and effective disclosure of the operations of the program. The annual report shall be made by an independent certified public accountant and shall include, but is not limited to, direct and indirect costs attributable to the use of outside consultants, independent contractors, and any other persons who are not state employees for the administration of the program.
- In addition to any other statements or reports required by law, the board shall provide or cause to be provided periodic reports at least annually to enrollees, reporting contributions and investment income allocated to, withdrawals from, and balances in their program accounts for the reporting period. Such reports may include any other information regarding the program as the board may determine.
The board may delay the implementation of the program an additional twelve months beyond the date established in section thirteen hundred ten of this article if the board determines that further delay is necessary to address legal, financial or other programmatic concerns impacting the viability of the program. The board shall provide reasonable notice of such delay to the governor, the commissioner, the speaker of the assembly, the temporary president of the senate, the chair of the assembly ways and means committee, the chair of the senate finance committee, the chair of the assembly labor committee, and the chair of the senate labor committee.
The commissioner may issue such rules and regulations as he or she deems necessary to implement the terms of this article.