On May 11, 2021, New York City enacted the Retirement Security for All Act, Int. Nos. 888-A and 901-A (the Act), which establishes a retirement savings program for private employers with five or more employees if those employers do not otherwise offer employees a retirement plan or defined benefit pension plan.
The Act obligates New York City employers to automatically enroll eligible employees in an individual retirement account (IRA) program, deposit funds into the program for each enrolled employee, and distribute information to employees. Eligible employees include those who are at least twenty-one years old and work at least twenty hours per week.
The program will be funded with deductions from employees’ wages and employers are not required to contribute to the plan. The default deduction will be 5% of an employee’s wages up to a maximum of $6,000 for employees under age 50 and $7,000 for employees age 50 or older. Employees are permitted to opt-out of the program or adjust the amount of their deduction subject to these caps.
IRAs created under the law will be portable, meaning that an employee can keep contributing even if he or she leaves a job. Employees can also roll their accounts over if they switch jobs start and participating in another employer’s retirement plan.
Although the Act is scheduled to become effective on August 9, 2021, the logistics of the program have yet to be ironed out. The Act creates a Retirement Savings Board (Board) and tasks it with entering into contracts with financial institutions and creating processes for enrollment, among other things. The Board has two years to complete this process and announce a start date for the program.
New York City employers should immediately familiarize themselves with the Act and stay abreast of information disseminated by the Board. If you have any questions, please contact Jessica Baquet at (516) 393-8292 or firstname.lastname@example.org