NYC Is Requiring Retirement Plans for Most Employees
A NYC Mandatory IRA Retirement Coverage is now law for certain employees of private businesses. The businesses affected by the law are ones in NYC that do not offer employees a retirement plan. The law also applies to businesses with five or more employees.
What Are the Details of the Required Retirement Plan?
Mandatory auto-enrollment exists for employees. The mandatory retirement plans do not require employers to make contributions. However, the plans require them to enroll employees who work at least 20 hours/week and are age 21 or older in a plan.
Moreover, the default rate for employee contribution is five percent. Even so, employees can adjust the rate up or down. They can also opt-out of the plan if they wish.
The cap on IRA contributions is the same as the yearly federal IRA maximum. The maximum is currently $6,000 or $7,000 for individuals 50 or older.
If the employee changes jobs, the IRA is portable, and they keep their accounts. They can also roll over the IRA to the employer’s plan, if eligible.
When Does Compliance Start?
The New York City Council enacted the law on May 11. Employers must begin complying with the law three months from that date.
How Does NYC Enforce Compliance?
The law established a retirement savings board to oversee the program. The Mayor has the authority to appoint three members. Their powers include:
- Determining the start of the program
- Contracting with financial institutions and administrators
- Minimizing fees and costs for the program’s administration
- Creating a process for those employees to participate who are not already covered by an employer
- Conducting education and outreach to employers and employees
The program allows the board to issue penalties to employers for violations. Multiple violations carry higher penalties.
Do You Have Concerns or Questions About the Mandatory Retirement Program?
If you have questions about the mandatory retirement program or your legal rights as an employer, obtain a legal opinion. Discuss your concerns with an attorney at Stephen D. Hans & Associates, P.C. Call (718) 275-6500.