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A08332 Summary:

BILL NOA08332D
 
SAME ASNo Same As
 
SPONSORRodriguez
 
COSPNSRCook, Montesano, Sepulveda, Richardson, Mayer, Robinson, Solages, Dilan, Pretlow, Pichardo, Rivera, Blake, O'Donnell, Nolan, Benedetto, Rozic, Arroyo, Titone, Davila, Joyner, Farrell, DenDekker, Hooper, Linares, Walker, Gottfried, Aubry, Santabarbara, Gunther, Perry, Lupardo, Hunter, Bichotte, Crespo, Harris, Jean-Pierre, Braunstein, Lavine, Hevesi, Dinowitz, Russell, Brindisi, Barron, Mosley, Stirpe, Fahy, Castorina, Raia, Rosenthal, Skoufis
 
MLTSPNSRBrennan, Buchwald, Ceretto, Crouch, Curran, Englebright, Glick, Hyndman, Kearns, Lentol, Lopez, Lupinacci, McDonough, McLaughlin, Ra, Simanowitz, Skartados, Steck, Thiele
 
Add Art 14-C 570 - 587, R & SS L; add 99-aa & 99-bb, St Fin L
 
Creates a self-sufficient retirement savings program in the form of an automatic enrollment payroll deduction IRA, and establishes an administrative board responsible for promoting greater retirement savings for private sector employees in a convenient, low-cost, and transferable manner.
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A08332 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A8332D
 
SPONSOR: Rodriguez
  TITLE OF BILL: An act to amend the retirement and social security law and the state finance law, in relation to enacting the New York state secure choice savings program act   PURPOSE OR GENERAL IDEA OF BILL: The purpose of this is bill to create a self-sufficient retirement savings program in the form of an automatic enrollment payroll deduction IRA, and establish an administrative board responsible for promoting greater retirement savings for private sector employees in a convenient, low-cost, and transferable manner.   SUMMARY OF SPECIFIC PROVISIONS: Section 1 titles the Act the "New York State Secure Choice Savings Program Act". Section 2 amends the retirement and social security law to add a new article, 14-C. Section 570 defines terms: program established, composition of the board, fiduciary duty, duties of the board, risk management, investment firms, investment options, benefits, employer and employee information packets and disclosure forms, program implementation and enrollment, payments, duty and liability of the state, duty and liability of partic- ipating employers, audit and reports, penalties, delayed implementation, and federal considerations. Section 571 establishes the New York State Secure Choice Savings Program, in the form of an automatic enrollment payroll deduction IRA, administered by the New York Secure Choice Savings Board. Section 572 Establishes the New York state secure choice savings board, composed of 9 appointed members. Section 573 Outlines the fiduciary responsibilities and duties of the savings board. Section 574 Outlines the responsibilities and other duties of the savings board. Section 575 Requires the board to annually prepare and adopt a written statement outlining the provisions associated with risk management. Section 579 Provides for the creation and distribution of employer and employee information packets and disclosure forms. Section 580 Implements the New York state secure savings program within twenty four months after the effective date of this article. Section 582 Maintains that the state of New York shall have no duty or liability to any party for the payment of any retirement savings bene- fits seemed by any individual under the program. Section 584 Requires the board to submit annual financial reports and audits. Section 585 Enacts penalties for enrollment failure. Section 99-x Amends the state finance law to create the New York state secure choice savings program fund and the New York state secure choice administrative fund.   JUSTIFICATION: According to a survey by the Bureau of Labor Statistics, 97% of private- ly owned establishments, employing 500 workers or more, offer retirement and health benefits. That percentage is halved when compared to estab- lishments with less than 49 workers. Moreover, in 2014 President Barack Obama suggested that states need to do more to provide workers with options to fund retirement plans due to congressional inaction. This legislation would provide employees of smaller establishment's access to retirement saving options.   PRIOR LEGISLATIVE HISTORY: none   FISCAL IMPLICATIONS: To be determined   EFFECTIVE DATE: Immediately
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A08332 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         8332--D
 
                               2015-2016 Regular Sessions
 
                   IN ASSEMBLY
 
                                     August 5, 2015
                                       ___________
 
        Introduced  by  M. of A. RODRIGUEZ, COOK, MONTESANO, SEPULVEDA, RICHARD-
          SON, MAYER,  ROBINSON,  SOLAGES,  DILAN,  PRETLOW,  PICHARDO,  RIVERA,
          BLAKE,  O'DONNELL,  NOLAN,  BENEDETTO,  ROZIC, ARROYO, TITONE, DAVILA,
          JOYNER, FARRELL, DenDEKKER, HOOPER, LINARES, WALKER, GOTTFRIED, AUBRY,
          SANTABARBARA,  GUNTHER,  PERRY,  LUPARDO,  HUNTER,  BICHOTTE,  CRESPO,
          HARRIS,  JEAN-PIERRE,  BRAUNSTEIN,  LAVINE, HEVESI, DINOWITZ, RUSSELL,
          BRINDISI, BARRON, MOSLEY, STIRPE, FAHY, CASTORINA, RAIA, ROSENTHAL  --
          Multi-Sponsored  by  --  M.  of A. BRENNAN, BUCHWALD, CERETTO, CROUCH,
          CURRAN, ENGLEBRIGHT, GLICK, HYNDMAN, KEARNS, LENTOL, LOPEZ, McDONOUGH,
          McLAUGHLIN, RA, SIMANOWITZ, SKARTADOS, STECK, THIELE -- read once  and
          referred  to  the  Committee  on  Governmental  Employees -- committee
          discharged, bill amended, ordered reprinted as amended and recommitted
          to said committee -- recommitted  to  the  Committee  on  Governmental
          Employees  in  accordance  with  Assembly  Rule 3, sec. 2 -- committee
          discharged, bill amended, ordered reprinted as amended and recommitted
          to said committee -- again reported from said  committee  with  amend-
          ments,  ordered reprinted as amended and recommitted to said committee
          --  again  reported  from  said  committee  with  amendments,  ordered
          reprinted as amended and recommitted to said committee
 
        AN  ACT  to  amend  the retirement and social security law and the state
          finance law, in relation to enacting the New York state secure  choice
          savings program act
 
          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:
 
     1    Section 1. Short title. This act shall be known and may  be  cited  as
     2  the "New York state secure choice savings program act".
     3    § 2. The retirement and social security law is amended by adding a new
     4  article 14-C to read as follows:
     5                                ARTICLE 14-C
     6                NEW YORK STATE SECURE CHOICE SAVINGS PROGRAM
     7  Section 570. Definitions.

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD11645-14-6

        A. 8332--D                          2
 
     1          571. Program established.
     2          572. Composition of the board.
     3          573. Fiduciary duty.
     4          574. Duties of the board.
     5          575. Risk management.
     6          576. Investment firms.
     7          577. Investment options.
     8          578. Benefits.
     9          579. Employer  and  employee  information packets and disclosure
    10                 forms.
    11          580. Program implementation and enrollment.
    12          581. Payments.
    13          582. Duty and liability of the state.
    14          583. Duty and liability of participating employers.
    15          584. Audit and reports.
    16          585. Penalties.
    17          586. Delayed implementation.
    18          587. Federal considerations.
    19    § 570. Definitions. All terms shall have the same meaning as when used
    20  in a comparable context in the Internal Revenue Code. As  used  in  this
    21  article, the following terms shall have the following meanings:
    22    1.  "Board" shall mean the New York secure choice savings board estab-
    23  lished under this article.
    24    2. "Superintendent" shall mean the superintendent of the department of
    25  financial services.
    26    2-a. "Comptroller" shall mean the comptroller of the state.
    27    3. "Employee" shall mean any individual who is eighteen years  of  age
    28  or  older,  who  is  employed by an employer, and who has wages that are
    29  allocable to New York state during a calendar year.
    30    4. "Employer" shall mean a person or entity  engaged  in  a  business,
    31  industry,  profession,  trade,  or  other  enterprise in New York state,
    32  whether for profit or not for profit, that (i) has at no time during the
    33  previous calendar year employed fewer than twenty-five employees in  the
    34  state,  (ii)  has been in business at least two years, and (iii) has not
    35  offered a qualified retirement plan, including, but not  limited  to,  a
    36  plan  qualified  under  sections 401(a), 401(k), 403(a), 403(b), 408(k),
    37  408(p) or 457(b) of the Internal Revenue Code of 1986 in  the  preceding
    38  two years.
    39    5. "Enrollee" shall mean any employer who is enrolled in the program.
    40    6.  "Fund" shall mean the New York state secure choice savings program
    41  fund.
    42    7. "Internal Revenue Code" shall mean the  Internal  Revenue  Code  of
    43  1986, or any successor law, in effect for the calendar year.
    44    8. "IRA" shall mean a Roth IRA (individual retirement account).
    45    9.  "Participating  employer" shall mean an employer or small employer
    46  that provides  a  payroll  deposit  retirement  savings  arrangement  as
    47  provided  for by this article for its employees who are enrollees in the
    48  program.
    49    10. "Payroll deposit retirement savings  arrangement"  shall  mean  an
    50  arrangement  by which a participating employer allows enrollees to remit
    51  payroll deduction contributions to the program.
    52    11. "Program" shall mean the New  York  state  secure  choice  savings
    53  program.
    54    12.  "Small employer" shall mean a person or entity engaged in a busi-
    55  ness, industry, profession, trade,  or  other  enterprise  in  New  York
    56  state, whether for profit or not for profit, that (i) employed less than

        A. 8332--D                          3
 
     1  twenty-five employees at any one time in the state throughout the previ-
     2  ous  calendar year, or (ii) has been in business less than two years, or
     3  both items (i) and (ii), but that notifies the comptroller  that  it  is
     4  interested in being a participating employer.
     5    13.  "Wages"  means  any  compensation  within  the meaning of section
     6  219(f)(1) of the Internal Revenue Code that is received by  an  enrollee
     7  from a participating employer during the calendar year.
     8    §  571.  Program established. A retirement savings program in the form
     9  of an automatic enrollment payroll deduction IRA, known as the New  York
    10  state  secure choice savings program, is hereby established and shall be
    11  administered by the board for the purpose of promoting  greater  retire-
    12  ment savings for private-sector employees in a convenient, low-cost, and
    13  portable manner.
    14    §  572. Composition of the board. There is hereby created the New York
    15  state secure choice savings board.
    16    1. The board shall consist of the following nine members:
    17    (a) the state comptroller, or his or her designee, who shall serve  as
    18  chair;
    19    (b)  two  public  representatives with expertise in retirement savings
    20  plan administration or investment, or both, appointed by the governor;
    21    (c) a representative of  participating  employers,  appointed  by  the
    22  governor;
    23    (d) a representative of enrollees, appointed by the governor;
    24    (e) two designees appointed by the speaker of the assembly; and
    25    (f) two designees appointed by the temporary president of the senate.
    26    2.  Members  of  the board shall serve without compensation but may be
    27  reimbursed for necessary travel expenses  incurred  in  connection  with
    28  their board duties from funds appropriated for the purpose.
    29    3.  The initial appointments for the governor's appointees shall be as
    30  follows: one public representative for four years; one public  represen-
    31  tative  for two years; the representative of participating employers for
    32  three years; and the representative of enrollees for one year. Thereaft-
    33  er, all the governor's appointees shall be for terms of four years.
    34    4. A vacancy in the term of an appointed board member shall be  filled
    35  for the balance of the unexpired term in the same manner as the original
    36  appointment.
    37    5.  Each  appointment  by the governor shall be subject to approval by
    38  the chair, who, upon approval, shall certify his or her approval to  the
    39  secretary of state.
    40    § 573. Fiduciary duty. The board, the individual members of the board,
    41  the  trustees,  any  other agents appointed or engaged by the board, and
    42  all persons serving as program staff shall discharge their  duties  with
    43  respect to the program solely in the interest of the program's enrollees
    44  and beneficiaries as follows:
    45    1.  for  the exclusive purposes of providing benefits to enrollees and
    46  beneficiaries and defraying reasonable  expenses  of  administering  the
    47  program;
    48    2.  by  investing  with the care, skill, prudence, and diligence under
    49  the prevailing circumstances that a prudent  person  acting  in  a  like
    50  capacity  and familiar with those matters would use in the conduct of an
    51  enterprise of a like character and with like aims; and
    52    3. by using any contributions paid by employees and employers into the
    53  trust exclusively for the purpose of paying benefits to the enrollees of
    54  the program, for the cost of administration  of  the  program,  and  for
    55  investments made for the benefit of the program.

        A. 8332--D                          4
 
     1    §  574.  Duties  of  the  board.  In  addition to the other duties and
     2  responsibilities stated in this article, the board shall:
     3    1.  Cause  the  program  to be designed, established and operated in a
     4  manner that:
     5    (a) accords with best practices for retirement savings vehicles;
     6    (b) maximizes participation, savings, and sound investment practices;
     7    (c) maximizes simplicity, including ease of administration for partic-
     8  ipating employers and enrollees;
     9    (d) provides an efficient product to enrollees by  pooling  investment
    10  funds;
    11    (e) ensures the portability of benefits; and
    12    (f)  provides  for  the  deaccumulation of enrollee assets in a manner
    13  that maximizes financial security in retirement.
    14    2. Appoint a trustee to the IRA fund in compliance with section 408 of
    15  the Internal Revenue Code.
    16    3. Explore and establish investment options, subject to this  article,
    17  that  offer  employees  returns  on  contributions and the conversion of
    18  individual retirement savings  account  balances  to  secure  retirement
    19  income without incurring debt or liabilities to the state.
    20    4.  Establish  the process by which interest, investment earnings, and
    21  investment losses are allocated to individual program accounts on a  pro
    22  rata  basis  and  are computed at the interest rate on the balance of an
    23  individual's account.
    24    5. Make and enter into contracts necessary for the  administration  of
    25  the  program  and  fund,  including,  but  not limited to, retaining and
    26  contracting with investment managers,  private  financial  institutions,
    27  other  financial and service providers, consultants, actuaries, counsel,
    28  auditors, third-party administrators, and other professionals as  neces-
    29  sary.
    30    6. Conduct a review of the performance of any investment vendors every
    31  four  years,  including,  but not limited to, a review of returns, fees,
    32  and customer service. A copy of reviews shall be posted to  the  board's
    33  Internet website.
    34    7. Determine the number and duties of staff members needed to adminis-
    35  ter the program and assemble such a staff, including, as needed, employ-
    36  ing  staff,  appointing  a  program  administrator,  and  entering  into
    37  contracts with the comptroller to make employees of the  office  of  the
    38  comptroller available to administer the program.
    39    8.  Cause moneys in the fund to be held and invested as pooled invest-
    40  ments described in this article, with a view to achieving  cost  savings
    41  through efficiencies and economies of scale.
    42    9.  Evaluate and establish the process by which an enrollee is able to
    43  contribute a portion of his or her wages to the  program  for  automatic
    44  deposit  of those contributions and the process by which the participat-
    45  ing employer provides a payroll deposit retirement  savings  arrangement
    46  to  forward  those contributions and related information to the program,
    47  including, but not limited to, contracting with financial service compa-
    48  nies and third-party administrators with the capability to  receive  and
    49  process  employee  information  and  contributions  for  payroll deposit
    50  retirement savings arrangements or similar arrangements.
    51    10. Design and establish the  process  for  enrollment  including  the
    52  process  by which an employee can opt not to participate in the program,
    53  select a contribution level, select an investment option, and  terminate
    54  participation in the program.
    55    11.  Evaluate  and  establish  the  process by which an individual may
    56  voluntarily enroll in and make contributions to the program.

        A. 8332--D                          5
 
     1    12. Accept any grants, appropriations, or other moneys from the state,
     2  any unit of federal, state, or local government, or  any  other  person,
     3  firm,  partnership,  or  corporation  solely  for deposit into the fund,
     4  whether for investment or administrative purposes.
     5    13.  Evaluate  the  need for, and procure as needed, insurance against
     6  any and all loss in connection with the property, assets, or  activities
     7  of  the  program,  and indemnify as needed each member of the board from
     8  personal loss or liability resulting from a member's action or  inaction
     9  as a member of the board.
    10    14.  Make  provisions  for  the  payment  of  administrative costs and
    11  expenses for the creation, management, and  operation  of  the  program.
    12  Subject to appropriation, the state may pay administrative costs associ-
    13  ated  with  the  creation and management of the program until sufficient
    14  assets are available in the  fund  for  that  purpose.  Thereafter,  all
    15  administrative  costs  of  the fund, including repayment of any start-up
    16  funds provided by the state, shall be paid only out of moneys on deposit
    17  therein. However, private funds or federal funding received in order  to
    18  implement  the  program  until  the fund is self-sustaining shall not be
    19  repaid unless those funds were offered contingent upon  the  promise  of
    20  such  repayment.  The board shall keep annual administrative expenses as
    21  low as possible, but in no event shall they exceed 0.75%  of  the  total
    22  trust balance.
    23    15.  Allocate administrative fees to individual retirement accounts in
    24  the program on a pro rata basis.
    25    16. Set minimum and maximum contribution  levels  in  accordance  with
    26  limits established for IRAs by the Internal Revenue Code.
    27    17. Facilitate education and outreach to employers and employees.
    28    18.  Facilitate compliance by the program with all applicable require-
    29  ments for the program under the Internal  Revenue  Code,  including  tax
    30  qualification  requirements  or  any other applicable law and accounting
    31  requirements.
    32    19. Carry out the duties and obligations of the program in  an  effec-
    33  tive, efficient, and low-cost manner.
    34    20.  Exercise  any  and  all other powers reasonably necessary for the
    35  effectuation of the purposes, objectives, and provisions of this article
    36  pertaining to the program.
    37    21. Deposit into the New York state secure choice administrative  fund
    38  all  grants,  gifts, donations, fees, and earnings from investments from
    39  the New York state secure choice savings program fund that are  used  to
    40  recover  administrative  costs.  All expenses of the board shall be paid
    41  from the New York state secure choice administrative fund.
    42    § 575. Risk management. The board shall annually prepare and  adopt  a
    43  written  statement  of investment policy that includes a risk management
    44  and oversight program. This investment policy shall prohibit the  board,
    45  program,  and  fund  from  borrowing  for  investment purposes. The risk
    46  management and oversight program shall be designed  to  ensure  that  an
    47  effective  risk management system is in place to monitor the risk levels
    48  of the program and fund portfolio, to ensure that the  risks  taken  are
    49  prudent and properly managed, to provide an integrated process for over-
    50  all risk management, and to assess investment returns as well as risk to
    51  determine  if  the  risks  taken  are adequately compensated compared to
    52  applicable performance benchmarks and standards. The board shall consid-
    53  er the statement of investment policy and any changes in the  investment
    54  policy at a public hearing.
    55    §  576. Investment firms. 1. The board shall engage, after an open bid
    56  process, an investment manager or managers to invest the  fund  and  any

        A. 8332--D                          6
 
     1  other assets of the program. Moneys in the fund may be invested or rein-
     2  vested by the chair or may be invested in whole or in part. In selecting
     3  the  investment manager or managers, the board shall take into consider-
     4  ation  and  give  weight to the investment manager's fees and charges in
     5  order to reduce the program's administrative expenses.
     6    2. The investment manager or managers shall comply with  any  and  all
     7  applicable  federal  and  state laws, rules, and regulations, as well as
     8  any and all rules, policies, and guidelines  promulgated  by  the  board
     9  with  respect  to the program and the investment of the fund, including,
    10  but not limited to, the investment policy.
    11    3. The investment manager or managers shall provide  such  reports  as
    12  the  board  deems  necessary  for  the  board to oversee each investment
    13  manager's performance and the performance of the fund.
    14    § 577. Investment options. 1. The board shall establish as an  invest-
    15  ment  option  a life-cycle fund with a target date based upon the age of
    16  the enrollee. This shall be the default investment option for  enrollees
    17  who fail to elect an investment option unless and until the board desig-
    18  nates by rule a new investment option as the default.
    19    2. The board may also establish any or all of the following additional
    20  investment options:
    21    (a) a conservative principal protection fund;
    22    (b) a growth fund;
    23    (c)  a  secure return fund whose primary objective is the preservation
    24  of the safety of principal and the provision of a  stable  and  low-risk
    25  rate  of  return; if the board elects to establish a secure return fund,
    26  the board may procure any insurance, annuity, or other product to insure
    27  the value of individuals' accounts and guarantee a rate of  return;  the
    28  cost  of  such funding mechanism shall be paid out of the fund; under no
    29  circumstances shall the board, program, fund, the state, or any  partic-
    30  ipating  employer assume any liability for investment or actuarial risk;
    31  the board shall determine whether to establish such  investment  options
    32  based  upon  an  analysis  of  their  cost, risk profile, benefit level,
    33  feasibility, and ease of implementation; or
    34    (d) an annuity fund.
    35    3. If the board elects to establish a secure return  fund,  the  board
    36  shall  then  determine whether such option shall replace the target date
    37  or life-cycle fund as the default investment option for enrollees who do
    38  not elect an investment option. In making such determination, the  board
    39  shall  consider  the  cost,  risk  profile,  benefit  level, and ease of
    40  enrollment in the secure return fund. The board may at any  time  there-
    41  after  revisit this question and, based upon an analysis of these crite-
    42  ria, establish either the secure return fund or the life-cycle  fund  as
    43  the default for enrollees who do not elect an investment option.
    44    §  578. Benefits. Interest, investment earnings, and investment losses
    45  shall be allocated to individual program accounts as established by  the
    46  board pursuant to this article. An individual's retirement savings bene-
    47  fit  under  the  program  shall be an amount equal to the balance in the
    48  individual's program account on the date the retirement savings  benefit
    49  becomes  payable.  The  state shall have no liability for the payment of
    50  any benefit to any participant in the program.
    51    § 579. Employer and employee information packets and disclosure forms.
    52  1. Prior to the opening of the program for enrollment, the  board  shall
    53  design  and  disseminate to all employers an employer information packet
    54  and an employee  information  packet,  which  shall  include  background
    55  information  on  the program, appropriate disclosures for employees, and
    56  information regarding the vendor Internet website described.

        A. 8332--D                          7
 
     1    2. The board shall provide for  the  contents  of  both  the  employee
     2  information packet and the employer information packet.
     3    3.  The  employee  information packet shall include a disclosure form.
     4  The disclosure form shall explain, but not be limited  to,  all  of  the
     5  following:
     6    (a) the benefits and risks associated with making contributions to the
     7  program;
     8    (b) the mechanics of how to make contributions to the program;
     9    (c) how to opt out of the program;
    10    (d)  how  to  participate  in  the  program  with  a level of employee
    11  contributions other than three percent;
    12    (e) the process for withdrawal of retirement savings;
    13    (f) how to obtain additional information about the program;
    14    (g) that employees seeking financial advice should  contact  financial
    15  advisors,  that participating employers are not in a position to provide
    16  financial advice, and that participating employers are  not  liable  for
    17  decisions employees make pursuant to this article;
    18    (h) that the program is not an employer-sponsored retirement plan; and
    19    (i) that the program fund is not guaranteed by the state.
    20    4.  The  employee  information packet shall also include a form for an
    21  employee to note his or her decision to opt out of participation in  the
    22  program  or  elect to participate with a level of employee contributions
    23  other than three percent.
    24    5. Participating employers shall supply the employee information pack-
    25  et to employees upon launch  of  the  program.  Participating  employers
    26  shall  supply  the  employee  information packet to new employees at the
    27  time of hiring, and new employees may opt out of  participation  in  the
    28  program  or  elect to participate with a level of employee contributions
    29  other than three percent at that time.
    30    6. The state comptroller  shall  establish  a  website  regarding  the
    31  secure  choice  savings  program  which  shall be accessible through the
    32  state comptroller's own website.
    33    § 580. Program implementation  and  enrollment.  Except  as  otherwise
    34  provided  in this article, the program shall be implemented, and enroll-
    35  ment of employees shall  begin,  within  twenty-four  months  after  the
    36  effective  date of this article. The provisions of this section shall be
    37  in force after the board opens the program for enrollment.
    38    1. Each employer shall establish a payroll deposit retirement  savings
    39  arrangement to allow each employee to participate in the program at most
    40  nine months after the board opens the program for enrollment.
    41    2.  Employers  shall automatically enroll in the program each of their
    42  employees who has not opted out of participation in  the  program  using
    43  the  form  described in this article and shall provide payroll deduction
    44  retirement savings arrangements  for  such  employees  and  deposit,  on
    45  behalf  of such employees, these funds into the program. Small employers
    46  may, but are not  required  to,  provide  payroll  deduction  retirement
    47  savings  arrangements for each employee who elects to participate in the
    48  program.
    49    3. Enrollees shall have the ability to  select  a  contribution  level
    50  into  the  fund. This level may be expressed as a percentage of wages or
    51  as a dollar amount up to the deductible amount for the enrollee's  taxa-
    52  ble year under section 219(b)(1)(A) of the Internal Revenue Code. Enrol-
    53  lees  may  change their contribution level at any time, subject to rules
    54  promulgated by the board. If an enrollee fails to select a  contribution
    55  level  using  the  form  described in this article, then he or she shall
    56  contribute three percent of his or her wages to  the  program,  provided

        A. 8332--D                          8
 
     1  that  such  contributions  shall not cause the enrollee's total contrib-
     2  utions to IRAs for the year to exceed  the  deductible  amount  for  the
     3  enrollee's  taxable  year  under  section  219(b)(1)(A)  of the Internal
     4  Revenue Code.
     5    4.  Enrollees  may  select  an  investment  option  from the permitted
     6  investment options listed in this article. Enrollees  may  change  their
     7  investment  option  at  any  time,  subject  to rules promulgated by the
     8  board. In the event that an  enrollee  fails  to  select  an  investment
     9  option,  that enrollee shall be placed in the investment option selected
    10  by the board as the default under this article. If  the  board  has  not
    11  selected  a default investment option under this article, then an enrol-
    12  lee who fails to select an investment option  shall  be  placed  in  the
    13  life-cycle fund investment option.
    14    5.  Following  initial  implementation of the program pursuant to this
    15  section, at least once every year, participating employers shall  desig-
    16  nate  an  open  enrollment  period during which employees who previously
    17  opted out of the program may enroll in the program.
    18    6. An employee who opts out of the program who subsequently  wants  to
    19  participate through the participating employer's payroll deposit retire-
    20  ment  savings  arrangement  may  only  enroll  during  the participating
    21  employer's designated open enrollment period  or  if  permitted  by  the
    22  participating employer at an earlier time.
    23    7.  Employers  shall retain the option at all times to set up any type
    24  of employer-sponsored retirement plan or to offer an  automatic  enroll-
    25  ment  payroll deduction IRA, instead of having a payroll deposit retire-
    26  ment savings arrangement to allow employee participation in the program.
    27    8. An employee may terminate his or her participation in  the  program
    28  at any time in a manner prescribed by the board.
    29    9. The board shall establish and maintain an internet website designed
    30  to  assist  employers in identifying private sector providers of retire-
    31  ment arrangements that can be set up by the employer rather than  allow-
    32  ing  employee  participation in the program under this article; however,
    33  the board shall only establish and maintain an  internet  website  under
    34  this  subdivision  if  there  is sufficient interest in such an internet
    35  website by private sector providers and if the private sector  providers
    36  furnish  the  funding  necessary  to establish and maintain the internet
    37  website. The board must provide public notice of the availability of and
    38  the process for inclusion on the  internet  website  before  it  becomes
    39  publicly  available.  This  internet  website  must  be available to the
    40  public before the board opens the program for enrollment, and the inter-
    41  net website address must be included on any internet website posting  or
    42  other  materials  regarding  the  program  offered  to the public by the
    43  board.
    44    § 581. Payments. Employee contributions deducted by the  participating
    45  employer  through  payroll  deduction shall be paid by the participating
    46  employer to the fund  using  one  or  more  payroll  deposit  retirement
    47  savings  arrangements  established  by  the  board  under  this article,
    48  either:
    49    1. on or before the last day of the month following the month in which
    50  the compensation otherwise would have been payable to  the  employee  in
    51  cash; or
    52    2.  before such later deadline prescribed by the board for making such
    53  payments, but not later than  the  due  date  for  the  deposit  of  tax
    54  required  to  be  deducted and withheld relating to collection of income
    55  tax at source on wages or for the deposit of tax  required  to  be  paid

        A. 8332--D                          9
 
     1  under  the unemployment insurance system for the payroll period to which
     2  such payments relate.
     3    §  582.  Duty  and  liability of the state. 1. The state shall have no
     4  duty or liability to any party for the payment of any retirement savings
     5  benefits accrued by any individual  under  the  program.  Any  financial
     6  liability  for  the  payment of retirement savings benefits in excess of
     7  funds available under the program shall be borne solely by the  entities
     8  with  whom the board contracts to provide insurance to protect the value
     9  of the program.
    10    2. No state board, commission, or agency, or any officer, employee, or
    11  member thereof is liable for  any  loss  or  deficiency  resulting  from
    12  particular  investments  selected  under  this  article,  except for any
    13  liability that arises out of a breach of fiduciary duty.
    14    § 583. Duty and liability of participating employers. 1.   Participat-
    15  ing employers shall not have any liability for an employee's decision to
    16  participate  in,  or opt out of, the program or for the investment deci-
    17  sions of the board or of any enrollee.
    18    2. A participating employer shall not be a fiduciary, or considered to
    19  be a fiduciary, over the program. A  participating  employer  shall  not
    20  bear  responsibility  for  the administration, investment, or investment
    21  performance of the program. A participating employer shall not be liable
    22  with regard to investment returns, program design, and benefits paid  to
    23  program participants.
    24    § 584. Audit and reports. 1. The board shall annually submit:
    25    (a) an audited financial report, prepared in accordance with generally
    26  accepted  accounting principles, on the operations of the program during
    27  each calendar year by July first of the following year to the  governor,
    28  the comptroller, the superintendent of financial services and the senate
    29  and assembly; and
    30    (b)  a  report  prepared by the board, which shall include, but is not
    31  limited to, a summary of the benefits provided by the program, including
    32  the number of enrollees in the program, the percentage  and  amounts  of
    33  investment  options and rates of return, and such other information that
    34  is relevant to make a full, fair, and effective disclosure of the  oper-
    35  ations of the program and the fund. The annual audit shall be made by an
    36  independent  certified  public  accountant and shall include, but is not
    37  limited to, direct and indirect costs attributable to the use of outside
    38  consultants, independent contractors, and any other persons who are  not
    39  state employees for the administration of the program.
    40    2. In addition to any other statements or reports required by law, the
    41  board  shall provide periodic reports at least annually to participating
    42  employers, reporting the names of each enrollee employed by the  partic-
    43  ipating  employer  and  the amounts of contributions made by the partic-
    44  ipating employer on behalf of each employee during the reporting period,
    45  as well as to enrollees, reporting contributions and  investment  income
    46  allocated  to,  withdrawals from, and balances in their program accounts
    47  for the reporting period. Such reports may include any other information
    48  regarding the program as the board may determine.
    49    § 585. Penalties. 1. An employer who fails without reasonable cause to
    50  enroll an employee in the program within the time prescribed under  this
    51  article shall be subject to a penalty equal to:
    52    (a) two hundred fifty dollars for each employee for each calendar year
    53  or  portion  of  a  calendar  year during which the employee neither was
    54  enrolled in the program nor had elected  out  of  participation  in  the
    55  program; or

        A. 8332--D                         10
 
     1    (b) for each calendar year beginning after the date a penalty has been
     2  assessed  with  respect  to  an  employee,  five hundred dollars for any
     3  portion of that calendar year during which such employee continues to be
     4  unenrolled without electing out of participation in the program.
     5    2. After determining that an employer is subject to penalty under this
     6  section  for  a  calendar  year, the comptroller shall issue a notice of
     7  proposed assessment to such employer, stating the  number  of  employees
     8  for  which  the penalty is proposed under this section and the number of
     9  employees for which the penalty is proposed under this section for  such
    10  calendar  year,  and  the  total  amount of penalties proposed. Upon the
    11  expiration of ninety days after the date on which a notice  of  proposed
    12  assessment  was  issued, the penalties specified therein shall be deemed
    13  assessed, unless the employer had filed a protest with  the  comptroller
    14  under  this  section.  If, within ninety days after the date on which it
    15  was issued, a protest of a notice of proposed assessment is filed  under
    16  this  section,  the penalties specified therein shall be deemed assessed
    17  upon the date when the decision of the comptroller with respect  to  the
    18  protest becomes final.
    19    3.  A  written  protest against the proposed assessment shall be filed
    20  with the comptroller in  such  form  as  the  comptroller  may  by  rule
    21  prescribe, setting forth the grounds on which such protest is based.  If
    22  such  a protest is filed within ninety days after the date the notice of
    23  proposed assessment is issued,  the  comptroller  shall  reconsider  the
    24  proposed  assessment  and shall grant the employer a hearing. As soon as
    25  practicable after such  reconsideration  and  hearing,  the  comptroller
    26  shall  issue  a  notice  of  decision to the employer, setting forth the
    27  comptroller's findings of fact and the basis of decision.  The  decision
    28  of the comptroller shall become final:
    29    (a)  if no action for review of the decision is commenced, on the date
    30  on which the time for commencement of such review has expired; or
    31    (b) if a timely action for review of the decision is commenced, on the
    32  date all proceedings in court for the review  of  such  assessment  have
    33  terminated  or  the time for the taking thereof has expired without such
    34  proceedings being instituted.
    35    4. As soon as practicable after the penalties specified in a notice of
    36  proposed assessment are deemed  assessed,  the  comptroller  shall  give
    37  notice to the employer liable for any unpaid portion of such assessment,
    38  stating the amount due and demanding payment. If an employer neglects or
    39  refuses to pay the entire liability shown on the notice and demand with-
    40  in  ten days after the notice and demand is issued, the unpaid amount of
    41  the liability shall be a lien in favor of the state  upon  all  property
    42  and  rights  to  property,  whether  real  or personal, belonging to the
    43  employer.
    44    5. An employer who has overpaid a penalty assessed under this  section
    45  may  file  a  claim for refund with the comptroller. A claim shall be in
    46  writing in such form as the comptroller may by rule prescribe and  shall
    47  state  the specific grounds upon which it is founded. As soon as practi-
    48  cable after a claim for refund is filed, the comptroller  shall  examine
    49  it  and  either  issue  a  refund or issue a notice of denial. If such a
    50  protest is filed, the comptroller shall reconsider the denial and  grant
    51  the  employer  a  hearing. As soon as practicable after such reconsider-
    52  ation and hearing, the comptroller shall issue a notice of  decision  to
    53  the employer. The notice shall set forth briefly the comptroller's find-
    54  ings  of fact and the basis of decision in each case decided in whole or
    55  in part adversely to the employer.  A  denial  of  a  claim  for  refund
    56  becomes  final  ninety  days after the date of issuance of the notice of

        A. 8332--D                         11
 
     1  the denial except for such amounts denied as to which the  employer  has
     2  filed  a  protest  with  the  comptroller.  If a protest has been timely
     3  filed, the decision of the comptroller shall become final:
     4    (a)  if  no action for review of the decision is commenced on the date
     5  on which the time for commencement of such review has expired; or
     6    (b) if a timely action for review of the decision is commenced on  the
     7  date  all  proceedings  in  court for the review of such assessment have
     8  terminated or the time for the taking thereof has expired  without  such
     9  proceedings being instituted.
    10    6.  No  notice  of proposed assessment may be issued with respect to a
    11  calendar year after June thirtieth of  the  fourth  subsequent  calendar
    12  year. No claim for refund may be filed more than one year after the date
    13  of payment of the amount to be refunded.
    14    7.  Whenever  notice  is  required by this section, it may be given or
    15  issued by mailing  it  by  first-class  mail  addressed  to  the  person
    16  concerned at his or her last known address.
    17    8.  All  books  and records and other papers and documents relevant to
    18  the determination of any penalty due under this section  shall,  at  all
    19  times  during business hours of the day, be subject to inspection by the
    20  comptroller or its duly authorized agents and employees.
    21    9. The comptroller may require employers to report  information  rele-
    22  vant to their compliance with this article on tax returns and failure to
    23  provide the requested information on a return shall cause such return to
    24  be treated as unprocessable.
    25    10.  For  purposes  of  any  provision of state law allowing the comp-
    26  troller or any other agency of this state to offset an amount owed to  a
    27  taxpayer  against a tax liability of that taxpayer or allowing the comp-
    28  troller to offset an overpayment of tax against any  liability  owed  to
    29  the state, a penalty assessed under this section shall be deemed to be a
    30  tax liability of the employer and any refund due to an employer shall be
    31  deemed to be an overpayment of tax of the employer.
    32    11.  Except  as provided in this subdivision, all information received
    33  by the comptroller from returns filed by an employer or from any  inves-
    34  tigation  conducted under the provisions of this article shall be confi-
    35  dential, except for official purposes within the  office  of  the  comp-
    36  troller  or  pursuant to official procedures for collection of penalties
    37  assessed under this article.   Nothing  contained  in  this  subdivision
    38  shall  prevent  the  director from publishing or making available to the
    39  public reasonable statistics concerning the operation  of  this  article
    40  wherein  the  contents  of returns are grouped into aggregates in such a
    41  way  that  the  specific  information  of  any  employer  shall  not  be
    42  disclosed.  Nothing  contained  in  this  subdivision  shall prevent the
    43  director from divulging information to an authorized  representative  of
    44  the  employer  or  to  any person pursuant to a request or authorization
    45  made by the employer or by an authorized representative of the employer.
    46    12. Civil penalties and fees collected under  this  article  shall  be
    47  deposited  with  the  comptroller for purposes dedicated to the adminis-
    48  tration of the program.
    49    13. The comptroller may charge the board  a  reasonable  fee  for  its
    50  costs  in  performing  its  duties under this section to the extent that
    51  such costs have not been recovered from  penalties  imposed  under  this
    52  section.
    53    14.  This  section  shall become operative nine months after the board
    54  notifies the director  that  the  program  has  been  implemented.  Upon
    55  receipt of such notification from the board, the comptroller shall imme-
    56  diately  post on its internet website a notice stating that this section

        A. 8332--D                         12
 
     1  is operative and the date that it is first operative. This notice  shall
     2  include  a statement that rather than enrolling employees in the program
     3  under this article, employers may sponsor an alternative arrangement.
     4    §  586.  Delayed implementation. If the board does not obtain adequate
     5  funds to implement the program within the time  frame  set  forth  under
     6  this article, the board may delay the implementation of the program.
     7    §  587.  Federal considerations. The board shall request in writing an
     8  opinion or ruling from the appropriate entity with jurisdiction over the
     9  federal Employee Retirement Income Security Act regarding  the  applica-
    10  bility  of  the  federal  Employee Retirement Income Security Act to the
    11  program. The board may not implement the program if the IRA arrangements
    12  offered under the program fail to  qualify  for  the  favorable  federal
    13  income  tax  treatment  ordinarily  accorded  to IRAs under the Internal
    14  Revenue Code or if it is determined that  the  program  is  an  employee
    15  benefit  plan  and  state or employer liability is established under the
    16  federal Employee Retirement Income Security Act.
    17    § 3. The state finance law is amended by adding two new sections 99-aa
    18  and 99-bb to read as follows:
    19    § 99-aa. New York state secure choice savings program fund. 1.   There
    20  is  hereby  established  within the joint custody of the commissioner of
    21  taxation and finance and the state comptroller in consultation with  the
    22  New  York  state  secure  choice savings program board, a new fund to be
    23  known as the New York state secure choice savings program fund.
    24    2. The fund shall include the individual retirement accounts of enrol-
    25  lees, which shall be accounted for as individual accounts.
    26    3. Moneys in the fund shall consist of moneys received from  enrollees
    27  and participating employers pursuant to automatic payroll deductions and
    28  contributions  to  savings  made  under the New York state secure choice
    29  savings program pursuant to article fourteen-C  of  the  retirement  and
    30  social security law.
    31    4.  The  fund shall be operated in a manner determined by the New York
    32  state secure choice savings program board, provided  that  the  fund  is
    33  operated so that the accounts of enrollees established under the program
    34  meet the requirements for IRAs under the Internal Revenue Code.
    35    5.  The amounts deposited in the fund shall not constitute property of
    36  the state and the fund shall not be construed to be a department, insti-
    37  tution, or agency of the state. Amounts on deposit in the fund shall not
    38  be commingled with state funds and the state shall have no claim  to  or
    39  against, or interest in, such funds.
    40    §  99-bb.  New York state secure choice administrative fund. 1.  There
    41  is hereby established within the joint custody of  the  commissioner  of
    42  taxation  and finance and the state comptroller in consultation with the
    43  New York state secure choice savings program board, a  new  fund  to  be
    44  known as the New York state secure choice administrative fund.
    45    2.  The  New  York state secure choice savings program board shall use
    46  moneys in the administrative fund to pay for administrative expenses  it
    47  incurs  in the performance of its duties under the New York state secure
    48  choice savings program pursuant to article fourteen-C of the  retirement
    49  and social security law.
    50    3.  The  New  York state secure choice savings program board shall use
    51  moneys in the  administrative  fund  to  cover  start-up  administrative
    52  expenses  it incurs in the performance of its duties under article four-
    53  teen-C of the retirement and social security law.
    54    4. The administrative fund may receive  any  grants  or  other  moneys
    55  designated  for  administrative  purposes from the state, or any unit of
    56  federal or local government, or any other person, firm, partnership,  or

        A. 8332--D                         13
 
     1  corporation.  Any  interest  earnings that are attributable to moneys in
     2  the administrative fund must be deposited into the administrative fund.
     3    § 4. This act shall take effect immediately.
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