This spring, New York City became the latest jurisdiction to pass legislation requiring private employers to provide their employees with access to a retirement plan. The “Retirement Security for All” legislation introduces a mandatory auto-enrollment payroll deduction IRA program that all businesses in the city with five or more employees must provide if they do not already offer a retirement plan.
Employers do not need to contribute to the plan, but they must adhere to the following requirements:
- Enroll employees who are age 21 or over and work at least 20 hours per week.
- Deposit funds deducted from employee earnings into the program. (The default employee contribution is 5%, but employees may adjust or opt-out.)
- Communicate information about the program to employees.
- Retain three years of annual records documenting compliance with the program.
While the law became effective August 9, 2021, the Board overseeing the program has up to two years to implement the city-mandated plan. Employers who do not comply once the program is rolled out will face fines of $250 per employee for initial violations and up to $1,000 per employee for subsequent violations.
As a reminder, if your business is considering establishing its own employee benefit plan prior to the mandate, October 1, 2021 is the deadline to set up a Safe Harbor 401(k) or Simple IRA for 2021 tax benefits.
