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A08332 Summary:

BILL NOA08332F
 
SAME ASSAME AS S06045-D
 
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, Lifton, Wright, Weprin, Ramos, Ortiz, Quart, Cancel, Seawright, Schimel, Galef, Simotas, Ryan, Bronson, Peoples-Stokes, Titus, Kavanagh, Kim, Williams, Colton, Moya, Hyndman, Woerner
 
MLTSPNSRBrennan, Buchwald, Ceretto, Curran, Englebright, Glick, Kearns, Lentol, Lopez, Lupinacci, Markey, McDonough, McLaughlin, Ra, Simanowitz, Skartados, Steck, Thiele
 
Add Art 14-C 570 - 586, 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: A8332F
 
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 accrued 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 Barrack 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--F
 
                               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,
          SKOUFIS,   LIFTON,   WRIGHT,  WEPRIN,  RAMOS,  ORTIZ,  QUART,  CANCEL,
          SEAWRIGHT, SCHIMEL, GALEF,  SIMOTAS,  RYAN,  BRONSON,  PEOPLES-STOKES,
          TITUS  --  Multi-Sponsored by -- M. of A.  BRENNAN, BUCHWALD, CERETTO,
          CROUCH, CURRAN, ENGLEBRIGHT, GLICK, HYNDMAN,  KEARNS,  LENTOL,  LOPEZ,
          LUPINACCI,  MARKEY,  McDONOUGH, McLAUGHLIN, RA, SIMANOWITZ, SKARTADOS,
          STECK, THIELE -- read once and referred to the  Committee  on  Govern-
          mental  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 amendments, ordered reprinted as
          amended and recommitted to said committee -- again reported from  said
          committee  with amendments, ordered reprinted as amended and recommit-
          ted to said committee --  again  reported  from  said  committee  with
          amendments,  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:

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD11645-17-6

        A. 8332--F                          2
 
     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.
     8          571. Program established.
     9          572. Composition of the board.
    10          573. Fiduciary duty.
    11          574. Duties of the board.
    12          575. Risk management.
    13          576. Investment firms.
    14          577. Investment options.
    15          578. Benefits.
    16          579. Employer  and  employee  information packets and disclosure
    17                 forms.
    18          580. Program implementation and enrollment.
    19          581. Payments.
    20          582. Duty and liability of the state.
    21          583. Duty and liability of participating employers.
    22          584. Audit and reports.
    23          585. Penalties.
    24          586. Delayed implementation.
    25    § 570. Definitions. All terms shall have the same meaning as when used
    26  in a comparable context in the Internal Revenue Code. As  used  in  this
    27  article, the following terms shall have the following meanings:
    28    1.  "Board" shall mean the New York secure choice savings board estab-
    29  lished under this article.
    30    2. "Superintendent" shall mean the superintendent of the department of
    31  financial services.
    32    2-a. "Comptroller" shall mean the comptroller of the state.
    33    3. "Employee" shall mean any individual who is eighteen years  of  age
    34  or  older,  who is employed by an employer, and who earned wages working
    35  for an employer in New York state during a calendar year.
    36    4. "Employer" shall mean a person or entity  engaged  in  a  business,
    37  industry,  profession,  trade,  or  other  enterprise in New York state,
    38  whether for profit or not for profit, that (i) has at all  times  during
    39  the  previous  calendar  year employed at least twenty-five employees in
    40  the state, (ii) has been in business at least two years, and  (iii)  has
    41  not  offered a qualified retirement plan, including, but not limited to,
    42  a plan qualified under sections 401(a), 401(k), 403(a), 403(b),  408(k),
    43  408(p)  or  457(b) of the Internal Revenue Code of 1986 in the preceding
    44  two years.
    45    5. "Enrollee" shall mean any employee who is enrolled in the program.
    46    6. "Fund" shall mean the New York state secure choice savings  program
    47  fund.
    48    7.  "Internal  Revenue  Code"  shall mean the Internal Revenue Code of
    49  1986, or any successor law, in effect for the calendar year.
    50    8. "IRA" shall mean a Roth IRA (individual retirement account).
    51    9. "Participating employer" shall mean an employer or  small  employer
    52  that  provides  a  payroll  deposit  retirement  savings  arrangement as
    53  provided for by this article for its employees who are enrollees in  the
    54  program.

        A. 8332--F                          3
 
     1    10.  "Payroll  deposit  retirement  savings arrangement" shall mean an
     2  arrangement by which a participating employer allows enrollees to  remit
     3  payroll deduction contributions to the program.
     4    11.  "Program"  shall  mean  the  New York state secure choice savings
     5  program.
     6    12. "Small employer" shall mean a person or entity engaged in a  busi-
     7  ness,  industry,  profession,  trade,  or  other  enterprise in New York
     8  state, whether for profit or not for profit, that (i) employed less than
     9  twenty-five employees at any one time in the state throughout the previ-
    10  ous calendar year, or (ii) has been in business less than two years,  or
    11  both  items  (i)  and (ii), but that notifies the comptroller that it is
    12  interested in being a participating employer.
    13    13. "Wages" means any  compensation  within  the  meaning  of  section
    14  219(f)(1)  of  the Internal Revenue Code that is received by an enrollee
    15  from a participating employer during the calendar year.
    16    § 571. Program established. A retirement savings program in  the  form
    17  of  an automatic enrollment payroll deduction IRA, known as the New York
    18  state secure choice savings program, is hereby established and shall  be
    19  administered  by  the board for the purpose of promoting greater retire-
    20  ment savings for private-sector employees in a convenient, low-cost, and
    21  portable manner.
    22    § 572. Composition of the board. There is hereby created the New  York
    23  state secure choice savings board.
    24    1. The board shall consist of the following eight members:
    25    (a)  the state comptroller, or his or her designee, who shall serve as
    26  chair;
    27    (b) the superintendent, or his or her designee;
    28    (c) two public representatives with expertise  in  retirement  savings
    29  plan  administration  or  investment,  or  both,  one  of  whom shall be
    30  appointed by the speaker of the  assembly  and  one  of  whom  shall  be
    31  appointed by the temporary president of the senate;
    32    (d)  a  representative  of  participating  employers, appointed by the
    33  governor;
    34    (e) a representative of enrollees, appointed by the governor;
    35    (f) the chair of the assembly governmental employees committee; and
    36    (g) the chair of the senate civil service and pension committee.
    37    2. Members of the board shall serve without compensation  but  may  be
    38  reimbursed  for  necessary  travel  expenses incurred in connection with
    39  their board duties from funds appropriated for the purpose.
    40    3. The initial appointments shall be as follows: one public  represen-
    41  tative for four years; the representative of participating employers for
    42  three years; and the representative of enrollees for three years.  Ther-
    43  eafter, all the governor's appointees shall be for terms of four years.
    44    4.  A vacancy in the term of an appointed board member shall be filled
    45  for the balance of the unexpired term in the same manner as the original
    46  appointment.
    47    5. Each appointment by the governor shall be subject  to  approval  by
    48  the  comptroller,  who, upon approval, shall certify his or her approval
    49  to the secretary of state.
    50    § 573. Fiduciary duty. The board, the individual members of the board,
    51  the trustees, any other agents appointed or engaged by  the  board,  and
    52  all  persons  serving as program staff shall discharge their duties with
    53  respect to the program solely in the interest of the program's enrollees
    54  and beneficiaries as follows:

        A. 8332--F                          4
 
     1    1. for the exclusive purposes of providing benefits to  enrollees  and
     2  beneficiaries  and  defraying  reasonable  expenses of administering the
     3  program;
     4    2.  by  investing  with the care, skill, prudence, and diligence under
     5  the prevailing circumstances that a prudent  person  acting  in  a  like
     6  capacity  and familiar with those matters would use in the conduct of an
     7  enterprise of a like character and with like aims; and
     8    3. by using any contributions paid by employees and  employers  remit-
     9  ting  employees'  own  contributions  into the trust exclusively for the
    10  purpose of paying benefits to the enrollees of the program, for the cost
    11  of administration of the program, and for investments made for the bene-
    12  fit of the program.
    13    § 574. Duties of the board.  In  addition  to  the  other  duties  and
    14  responsibilities stated in this article, the board shall:
    15    1.  Cause  the  program  to be designed, established and operated in a
    16  manner that:
    17    (a) accords with best practices for retirement savings vehicles;
    18    (b) maximizes participation, savings, and sound investment practices;
    19    (c) maximizes simplicity, including ease of administration for partic-
    20  ipating employers and enrollees;
    21    (d) provides an efficient product to enrollees by  pooling  investment
    22  funds;
    23    (e) ensures the portability of benefits; and
    24    (f)  provides  for  the  deaccumulation of enrollee assets in a manner
    25  that maximizes financial security in retirement.
    26    2. Appoint a trustee to the IRA fund in compliance with section 408 of
    27  the Internal Revenue Code.
    28    3. Explore and establish investment options, subject to this  article,
    29  that  offer  enrollees  returns  on  contributions and the conversion of
    30  individual retirement savings  account  balances  to  secure  retirement
    31  income without incurring debt or liabilities to the state.
    32    4.  Establish  the process by which interest, investment earnings, and
    33  investment losses are allocated to individual program accounts on a  pro
    34  rata  basis  and  are computed at the interest rate on the balance of an
    35  individual's account.
    36    5. Make and enter into contracts necessary for the  administration  of
    37  the  program  and  fund,  including,  but  not limited to, retaining and
    38  contracting with investment managers,  private  financial  institutions,
    39  other  financial and service providers, consultants, actuaries, counsel,
    40  auditors, third-party administrators, and other professionals as  neces-
    41  sary.
    42    6. Conduct a review of the performance of any investment vendors every
    43  four  years,  including,  but not limited to, a review of returns, fees,
    44  and customer service. A copy of reviews shall be posted to  the  board's
    45  Internet website.
    46    7. Determine the number and duties of staff members needed to adminis-
    47  ter the program and assemble such a staff, including, as needed, employ-
    48  ing staff, and appointing a program administrator.
    49    8.  Cause moneys in the fund to be held and invested as pooled invest-
    50  ments described in this article, with a view to achieving  cost  savings
    51  through efficiencies and economies of scale.
    52    9.  Evaluate and establish the process by which an enrollee is able to
    53  contribute a portion of his or her wages to the  program  for  automatic
    54  deposit  of those contributions and the process by which the participat-
    55  ing employer provides a payroll deposit retirement  savings  arrangement
    56  to  forward  those contributions and related information to the program,

        A. 8332--F                          5
 
     1  including, but not limited to, contracting with financial service compa-
     2  nies and third-party administrators with the capability to  receive  and
     3  process  employee  information  and  contributions  for  payroll deposit
     4  retirement savings arrangements or similar arrangements.
     5    10.  Design  and  establish  the  process for enrollment including the
     6  process by which an employee can opt not to participate in the  program,
     7  select  a contribution level, select an investment option, and terminate
     8  participation in the program.
     9    11. Evaluate and establish the process by which an employee may volun-
    10  tarily enroll in and make contributions to the program.
    11    12. Accept any grants, appropriations, or other moneys from the state,
    12  any unit of federal, state, or local government, or  any  other  person,
    13  firm,  partnership,  or  corporation  solely  for deposit into the fund,
    14  whether for investment or administrative purposes.
    15    13. Evaluate the need for, and procure as  needed,  insurance  against
    16  any  and all loss in connection with the property, assets, or activities
    17  of the program, and indemnify as needed each member of  the  board  from
    18  personal  loss or liability resulting from a member's action or inaction
    19  as a member of the board.
    20    14. Make provisions  for  the  payment  of  administrative  costs  and
    21  expenses  for  the  creation,  management, and operation of the program.
    22  Subject to appropriation, the state may pay administrative costs associ-
    23  ated with the creation and management of the  program  until  sufficient
    24  assets  are  available  in  the  fund  for that purpose. Thereafter, all
    25  administrative costs of the fund, including repayment  of  any  start-up
    26  funds provided by the state, shall be paid only out of moneys on deposit
    27  therein.  However, private funds or federal funding received in order to
    28  implement the program until the fund is  self-sustaining  shall  not  be
    29  repaid  unless  those  funds were offered contingent upon the promise of
    30  such repayment. The board shall keep annual administrative  expenses  as
    31  low  as  possible,  but in no event shall they exceed 0.75% of the total
    32  trust balance.
    33    15. Allocate administrative fees to individual retirement accounts  in
    34  the program on a pro rata basis.
    35    16.  Set  minimum  and  maximum contribution levels in accordance with
    36  limits established for IRAs by the Internal Revenue Code.
    37    17. Facilitate education and outreach to employers and employees.
    38    18. Facilitate compliance by the program with all applicable  require-
    39  ments  for  the  program  under the Internal Revenue Code, including tax
    40  qualification requirements or any other applicable  law  and  accounting
    41  requirements.
    42    19.  Carry  out the duties and obligations of the program in an effec-
    43  tive, efficient, and low-cost manner.
    44    20. Exercise any and all other powers  reasonably  necessary  for  the
    45  effectuation of the purposes, objectives, and provisions of this article
    46  pertaining to the program.
    47    21.  Deposit into the New York state secure choice administrative fund
    48  all grants, gifts, donations, fees, and earnings from  investments  from
    49  the  New  York state secure choice savings program fund that are used to
    50  recover administrative costs. All expenses of the board  shall  be  paid
    51  from the New York state secure choice administrative fund.
    52    22.  Determine  withdrawal  provisions,  such  as  economic hardships,
    53  portability and leakage.
    54    23. Determine employee rights and enforcement of penalties.
    55    § 575. Risk management. The board shall annually prepare and  adopt  a
    56  written  statement  of investment policy that includes a risk management

        A. 8332--F                          6
 
     1  and oversight program. This investment policy shall prohibit the  board,
     2  program,  and  fund  from  borrowing  for  investment purposes. The risk
     3  management and oversight program shall be designed  to  ensure  that  an
     4  effective  risk management system is in place to monitor the risk levels
     5  of the program and fund portfolio, to ensure that the  risks  taken  are
     6  prudent and properly managed, to provide an integrated process for over-
     7  all risk management, and to assess investment returns as well as risk to
     8  determine  if  the  risks  taken  are adequately compensated compared to
     9  applicable performance benchmarks and standards. The board shall consid-
    10  er the statement of investment policy and any changes in the  investment
    11  policy at a public hearing.
    12    §  576. Investment firms. 1. The board shall engage, after an open bid
    13  process, an investment manager or managers to invest the  fund  and  any
    14  other assets of the program. Moneys in the fund may be invested or rein-
    15  vested  by  the  comptroller  or may be invested in whole or in part. In
    16  selecting the investment manager or managers, the board shall take  into
    17  consideration  and  give  weight  to  the  investment manager's fees and
    18  charges in order to reduce the program's administrative expenses.
    19    2. The investment manager or managers shall comply with  any  and  all
    20  applicable  federal  and  state laws, rules, and regulations, as well as
    21  any and all rules, policies, and guidelines  promulgated  by  the  board
    22  with  respect  to the program and the investment of the fund, including,
    23  but not limited to, the investment policy.
    24    3. The investment manager or managers shall provide  such  reports  as
    25  the  board  deems  necessary  for  the  board to oversee each investment
    26  manager's performance and the performance of the fund.
    27    § 577. Investment options. 1. The board shall establish as an  invest-
    28  ment  option  a life-cycle fund with a target date based upon the age of
    29  the enrollee. This shall be the default investment option for  enrollees
    30  who fail to elect an investment option unless and until the board desig-
    31  nates by rule a new investment option as the default.
    32    2. The board may also establish any or all of the following additional
    33  investment options:
    34    (a) a conservative principal protection fund;
    35    (b) a growth fund;
    36    (c)  a  secure return fund whose primary objective is the preservation
    37  of the safety of principal and the provision of a  stable  and  low-risk
    38  rate  of  return; if the board elects to establish a secure return fund,
    39  the board may procure any insurance, annuity, or other product to insure
    40  the value of enrollees' accounts and guarantee a  rate  of  return;  the
    41  cost  of  such funding mechanism shall be paid out of the fund; under no
    42  circumstances shall the board, program, fund, the state, or any  partic-
    43  ipating  employer assume any liability for investment or actuarial risk;
    44  the board shall determine whether to establish such  investment  options
    45  based  upon  an  analysis  of  their  cost, risk profile, benefit level,
    46  feasibility, and ease of implementation; or
    47    (d) an annuity fund.
    48    3. If the board elects to establish a secure return  fund,  the  board
    49  shall  then  determine whether such option shall replace the target date
    50  or life-cycle fund as the default investment option for enrollees who do
    51  not elect an investment option. In making such determination, the  board
    52  shall  consider  the  cost,  risk  profile,  benefit  level, and ease of
    53  enrollment in the secure return fund. The board may at any  time  there-
    54  after  revisit this question and, based upon an analysis of these crite-
    55  ria, establish either the secure return fund or the life-cycle  fund  as
    56  the default for enrollees who do not elect an investment option.

        A. 8332--F                          7

     1    §  578. Benefits. Interest, investment earnings, and investment losses
     2  shall be allocated to individual program accounts as established by  the
     3  board pursuant to this article. An individual's retirement savings bene-
     4  fit  under  the  program  shall be an amount equal to the balance in the
     5  individual's  program account on the date the retirement savings benefit
     6  becomes payable. The state shall have no liability for  the  payment  of
     7  any benefit to any enrollee in the program.
     8    § 579. Employer and employee information packets and disclosure forms.
     9  1.  Prior  to the opening of the program for enrollment, the board shall
    10  design and disseminate to all employers an employer  information  packet
    11  and  an  employee  information  packet,  which  shall include background
    12  information on the program, appropriate disclosures for  employees,  and
    13  information regarding the vendor Internet website described.
    14    2.  The  board  shall  provide  for  the contents of both the employee
    15  information packet and the employer information packet.    The  employee
    16  information  packet shall be made available in English, Spanish, Haitian
    17  Creole, Chinese, Korean, Russian, Arabic, and  any  other  language  the
    18  comptroller deems necessary.
    19    3.  The  employee  information packet shall include a disclosure form.
    20  The disclosure form shall explain, but not be limited  to,  all  of  the
    21  following:
    22    (a) the benefits and risks associated with making contributions to the
    23  program;
    24    (b) the mechanics of how to make contributions to the program;
    25    (c) how to opt out of the program;
    26    (d)  how  to  participate  in  the  program  with  a level of employee
    27  contributions other than three percent;
    28    (e) that they are not required to participate or contribute more  than
    29  three percent;
    30    (f) that they can opt out after they have enrolled;
    31    (g) the process for withdrawal of retirement savings;
    32    (h) how to obtain additional information about the program;
    33    (i)  that  employees seeking financial advice should contact financial
    34  advisors, that participating employers are not in a position to  provide
    35  financial  advice,  and  that participating employers are not liable for
    36  decisions employees make pursuant to this article;
    37    (j) information on how  to  access  any  financial  literacy  programs
    38  implemented by the comptroller;
    39    (k) that the program is not an employer-sponsored retirement plan; and
    40    (l) that the program fund is not guaranteed by the state.
    41    4.  The  employee  information packet shall also include a form for an
    42  employee to note his or her decision to opt out of participation in  the
    43  program  or  elect to participate with a level of employee contributions
    44  other than three percent.
    45    5. Participating employers shall supply the employee information pack-
    46  et to employees upon launch  of  the  program.  Participating  employers
    47  shall  supply  the  employee  information packet to new employees at the
    48  time of hiring, and new employees may opt out of  participation  in  the
    49  program  or  elect to participate with a level of employee contributions
    50  other than three percent at that time.
    51    § 580. Program implementation  and  enrollment.  Except  as  otherwise
    52  provided  in this article, the program shall be implemented, and enroll-
    53  ment of employees shall  begin,  within  twenty-four  months  after  the
    54  effective  date of this article. The provisions of this section shall be
    55  in force after the board opens the program for enrollment.

        A. 8332--F                          8

     1    1. Each participating  employer  shall  establish  a  payroll  deposit
     2  retirement  savings arrangement to allow each employee to participate in
     3  the program at most nine months after the board opens  the  program  for
     4  enrollment.
     5    2.  Participating  employers shall automatically enroll in the program
     6  each of their employees who has not opted out of  participation  in  the
     7  program  using  the  form  described  in  this article and shall provide
     8  payroll deduction retirement savings arrangements for such employees and
     9  deposit, on behalf of such employees,  these  funds  into  the  program.
    10  Small  employers  with  less than twenty-five employees may, but are not
    11  required to, opt into the program, but only if their employees opt in to
    12  provide payroll  deduction  retirement  savings  arrangements  for  each
    13  employee who elects to participate in the program.
    14    3.  Enrollees  shall  have  the ability to select a contribution level
    15  into the fund. This level may be expressed as a percentage of  wages  or
    16  as  a dollar amount up to the deductible amount for the enrollee's taxa-
    17  ble year under section 219(b)(1)(A) of the Internal Revenue Code. Enrol-
    18  lees may change their contribution level at any time, subject  to  rules
    19  promulgated  by the board. If an enrollee fails to select a contribution
    20  level using the form described in this article, then  he  or  she  shall
    21  contribute  three  percent  of his or her wages to the program, provided
    22  that such contributions shall not cause the  enrollee's  total  contrib-
    23  utions  to  IRAs  for  the  year to exceed the deductible amount for the
    24  enrollee's taxable year  under  section  219(b)(1)(A)  of  the  Internal
    25  Revenue Code.
    26    4.  Enrollees  may  select  an  investment  option  from the permitted
    27  investment options listed in this article. Enrollees  may  change  their
    28  investment  option  at  any  time,  subject  to rules promulgated by the
    29  board. In the event that an  enrollee  fails  to  select  an  investment
    30  option,  that enrollee shall be placed in the investment option selected
    31  by the board as the default under this article. If  the  board  has  not
    32  selected  a default investment option under this article, then an enrol-
    33  lee who fails to select an investment option  shall  be  placed  in  the
    34  life-cycle fund investment option.
    35    5.  Following  initial  implementation of the program pursuant to this
    36  section, at least once every year, participating employers shall  desig-
    37  nate  an  open  enrollment  period during which employees who previously
    38  opted out of the program may enroll in the program.
    39    6. An employee who opts out of the program who subsequently  wants  to
    40  participate through the participating employer's payroll deposit retire-
    41  ment  savings  arrangement  may  only  enroll  during  the participating
    42  employer's designated open enrollment period  or  if  permitted  by  the
    43  participating employer at an earlier time.
    44    7.  Employers  shall retain the option at all times to set up any type
    45  of employer-sponsored retirement plan instead of having a payroll depos-
    46  it retirement savings arrangement to allow employee participation in the
    47  program.
    48    8. An enrollee may terminate his or her participation in  the  program
    49  at any time in a manner prescribed by the board.
    50    9.  (a)  The state comptroller shall establish a website regarding the
    51  secure choice savings program which  shall  be  accessible  through  the
    52  state comptroller's own website.
    53    (b) The board shall, in conjunction with the office of the state comp-
    54  troller,  establish  and maintain a secure website wherein enrollees may
    55  log in and acquire information regarding  contributions  and  investment
    56  income  allocated  to,  withdrawals  from, and balances in their program

        A. 8332--F                          9
 
     1  accounts for the reporting period. Such website must also include infor-
     2  mation for the  enrollees  regarding  other  options  available  to  the
     3  employee  and  how  they  can  transfer their accounts to other programs
     4  should  they  wish to do so. Such website may include any other informa-
     5  tion regarding the program as the board may determine.
     6    § 581. Payments. Employee contributions deducted by the  participating
     7  employer  through  payroll  deduction shall be paid by the participating
     8  employer to the fund  using  one  or  more  payroll  deposit  retirement
     9  savings  arrangements  established  by  the  board  under  this article,
    10  either:
    11    1. on or before the last day of the month following the month in which
    12  the compensation otherwise would have been payable to  the  employee  in
    13  cash; or
    14    2.  before such later deadline prescribed by the board for making such
    15  payments, but not later than  the  due  date  for  the  deposit  of  tax
    16  required  to  be  deducted and withheld relating to collection of income
    17  tax at source on wages or for the deposit of tax  required  to  be  paid
    18  under  the unemployment insurance system for the payroll period to which
    19  such payments relate.
    20    § 582. Duty and liability of the state. 1. The  state  shall  have  no
    21  duty or liability to any party for the payment of any retirement savings
    22  benefits  accrued  by  any  enrollee  under  the  program. Any financial
    23  liability for the payment of retirement savings benefits  in  excess  of
    24  funds  available under the program shall be borne solely by the entities
    25  with whom the board contracts to provide insurance to protect the  value
    26  of the program.
    27    2. No state board, commission, or agency, or any officer, employee, or
    28  member  thereof  is  liable  for  any  loss or deficiency resulting from
    29  particular investments selected  under  this  article,  except  for  any
    30  liability that arises out of a breach of fiduciary duty.
    31    §  583. Duty and liability of participating employers. 1.  Participat-
    32  ing employers shall not have any liability for an employee's decision to
    33  participate in, or opt out of, the program or for the  investment  deci-
    34  sions of the board or of any enrollee.
    35    2. A participating employer shall not be a fiduciary, or considered to
    36  be  a  fiduciary,  over  the program. A participating employer shall not
    37  bear responsibility for the administration,  investment,  or  investment
    38  performance of the program. A participating employer shall not be liable
    39  with  regard to investment returns, program design, and benefits paid to
    40  program participants.
    41    § 584. Audit and reports. 1. The board shall annually submit:
    42    (a) an audited financial report, prepared in accordance with generally
    43  accepted accounting principles, on the operations of the program  during
    44  each  calendar year by July first of the following year to the governor,
    45  the comptroller, the superintendent of financial services and the senate
    46  and assembly; and
    47    (b) a report prepared by the board, which shall include,  but  is  not
    48  limited to, a summary of the benefits provided by the program, including
    49  the  number  of  enrollees in the program, the percentage and amounts of
    50  investment options and rates of return, and such other information  that
    51  is  relevant to make a full, fair, and effective disclosure of the oper-
    52  ations of the program and the fund. The annual audit shall be made by an
    53  independent certified public accountant and shall include,  but  is  not
    54  limited to, direct and indirect costs attributable to the use of outside
    55  consultants,  independent contractors, and any other persons who are not
    56  state employees for the administration of the program.

        A. 8332--F                         10
 
     1    2. In addition to any other statements or reports required by law, the
     2  board shall provide periodic reports at  least  annually  to  enrollees,
     3  reporting  contributions and investment income allocated to, withdrawals
     4  from, and balances in their program accounts for the  reporting  period.
     5  Such  reports may include any other information regarding the program as
     6  the board may determine.
     7    § 585. Penalties. 1. An employer who fails without reasonable cause to
     8  enroll an employee in the program within the time prescribed under  this
     9  article shall be subject to a penalty equal to:
    10    (a) two hundred fifty dollars for each employee for each calendar year
    11  or  portion  of  a  calendar  year during which the employee neither was
    12  enrolled in the program nor had elected  out  of  participation  in  the
    13  program; or
    14    (b) for each calendar year beginning after the date a penalty has been
    15  assessed  with  respect  to  an  employee,  five hundred dollars for any
    16  portion of that calendar year during which such employee continues to be
    17  unenrolled without electing out of participation in the program.
    18    2. After determining that an employer is subject to penalty under this
    19  section for a calendar year, the comptroller shall  issue  a  notice  of
    20  proposed  assessment  to  such employer, stating the number of employees
    21  for which the penalty is proposed under this section and the  number  of
    22  employees  for which the penalty is proposed under this section for such
    23  calendar year, and the total amount  of  penalties  proposed.  Upon  the
    24  expiration  of  ninety days after the date on which a notice of proposed
    25  assessment was issued, the penalties specified therein shall  be  deemed
    26  assessed,  unless  the employer had filed a protest with the comptroller
    27  under this section. If, within ninety days after the date  on  which  it
    28  was  issued, a protest of a notice of proposed assessment is filed under
    29  this section, the penalties specified therein shall be  deemed  assessed
    30  upon  the  date when the decision of the comptroller with respect to the
    31  protest becomes final.
    32    3. A written protest against the proposed assessment  shall  be  filed
    33  with  the  comptroller  in  such  form  as  the  comptroller may by rule
    34  prescribe, setting forth the grounds on which such protest is based.  If
    35  such a protest is filed within ninety days after the date the notice  of
    36  proposed  assessment  is  issued,  the  comptroller shall reconsider the
    37  proposed assessment and shall grant the employer a hearing. As  soon  as
    38  practicable  after  such  reconsideration  and  hearing, the comptroller
    39  shall issue a notice of decision to  the  employer,  setting  forth  the
    40  comptroller's  findings  of fact and the basis of decision. The decision
    41  of the comptroller shall become final:
    42    (a) if no action for review of the decision is commenced, on the  date
    43  on which the time for commencement of such review has expired; or
    44    (b) if a timely action for review of the decision is commenced, on the
    45  date  all  proceedings  in  court for the review of such assessment have
    46  terminated or the time for the taking thereof has expired  without  such
    47  proceedings being instituted.
    48    4. As soon as practicable after the penalties specified in a notice of
    49  proposed  assessment  are  deemed  assessed,  the comptroller shall give
    50  notice to the employer liable for any unpaid portion of such assessment,
    51  stating the amount due and demanding payment. If an employer neglects or
    52  refuses to pay the entire liability shown on the notice and demand with-
    53  in ten days after the notice and demand is issued, the unpaid amount  of
    54  the  liability  shall  be a lien in favor of the state upon all property
    55  and rights to property, whether  real  or  personal,  belonging  to  the
    56  employer.

        A. 8332--F                         11
 
     1    5.  An employer who has overpaid a penalty assessed under this section
     2  may file a claim for refund with the comptroller. A claim  shall  be  in
     3  writing  in such form as the comptroller may by rule prescribe and shall
     4  state the specific grounds upon which it is founded. As soon as  practi-
     5  cable  after  a claim for refund is filed, the comptroller shall examine
     6  it and either issue a refund or issue a notice  of  denial.  If  such  a
     7  protest  is filed, the comptroller shall reconsider the denial and grant
     8  the employer a hearing. As soon as practicable  after  such  reconsider-
     9  ation  and  hearing, the comptroller shall issue a notice of decision to
    10  the employer. The notice shall set forth briefly the comptroller's find-
    11  ings of fact and the basis of decision in each case decided in whole  or
    12  in  part  adversely  to  the  employer.  A  denial of a claim for refund
    13  becomes final ninety days after the date of issuance of  the  notice  of
    14  the  denial  except for such amounts denied as to which the employer has
    15  filed a protest with the comptroller.  If  a  protest  has  been  timely
    16  filed, the decision of the comptroller shall become final:
    17    (a)  if  no action for review of the decision is commenced on the date
    18  on which the time for commencement of such review has expired; or
    19    (b) if a timely action for review of the decision is commenced on  the
    20  date  all  proceedings  in  court for the review of such assessment have
    21  terminated or the time for the taking thereof has expired  without  such
    22  proceedings being instituted.
    23    6.  No  notice  of proposed assessment may be issued with respect to a
    24  calendar year after June thirtieth of  the  fourth  subsequent  calendar
    25  year. No claim for refund may be filed more than one year after the date
    26  of payment of the amount to be refunded.
    27    7.  Whenever  notice  is  required by this section, it may be given or
    28  issued by mailing  it  by  first-class  mail  addressed  to  the  person
    29  concerned at his or her last known address.
    30    8.  All  books  and records and other papers and documents relevant to
    31  the determination of any penalty due under this section  shall,  at  all
    32  times  during business hours of the day, be subject to inspection by the
    33  comptroller or its duly authorized agents and employees.
    34    9. The comptroller may require employers to report  information  rele-
    35  vant to their compliance with this article on tax returns and failure to
    36  provide the requested information on a return shall cause such return to
    37  be treated as unprocessable.
    38    10.  For  purposes  of  any  provision of state law allowing the comp-
    39  troller or any other agency of this state to offset an amount owed to  a
    40  taxpayer  against a tax liability of that taxpayer or allowing the comp-
    41  troller to offset an overpayment of tax against any  liability  owed  to
    42  the state, a penalty assessed under this section shall be deemed to be a
    43  tax liability of the employer and any refund due to an employer shall be
    44  deemed to be an overpayment of tax of the employer.
    45    11.  Except  as provided in this subdivision, all information received
    46  by the comptroller from returns filed by an employer or from any  inves-
    47  tigation  conducted under the provisions of this article shall be confi-
    48  dential, except for official purposes within the  office  of  the  comp-
    49  troller  or  pursuant to official procedures for collection of penalties
    50  assessed under this article.   Nothing  contained  in  this  subdivision
    51  shall  prevent  the  director from publishing or making available to the
    52  public reasonable statistics concerning the operation  of  this  article
    53  wherein  the  contents  of returns are grouped into aggregates in such a
    54  way  that  the  specific  information  of  any  employer  shall  not  be
    55  disclosed.  Nothing  contained  in  this  subdivision  shall prevent the
    56  director from divulging information to an authorized  representative  of

        A. 8332--F                         12
 
     1  the  employer  or  to  any person pursuant to a request or authorization
     2  made by the employer or by an authorized representative of the employer.
     3    12.  Civil  penalties  and  fees collected under this article shall be
     4  deposited with the comptroller for purposes dedicated  to  the  adminis-
     5  tration of the program.
     6    13.  The  comptroller  may  charge the board incurred expenses for its
     7  costs in performing its duties under this section  to  the  extent  that
     8  such  costs  have  not  been recovered from penalties imposed under this
     9  section.
    10    14. This section shall become operative nine months  after  the  board
    11  notifies  the  director  that  the  program  has  been implemented. Upon
    12  receipt of such notification from the board, the comptroller shall imme-
    13  diately post on its internet website a notice stating that this  section
    14  is  operative and the date that it is first operative. This notice shall
    15  include a statement that rather than enrolling employees in the  program
    16  under this article, employers may sponsor an alternative arrangement.
    17    §  586.  Delayed implementation. If the board does not obtain adequate
    18  funds to implement the program within the time  frame  set  forth  under
    19  this  article  and  is subject to appropriation, the board may delay the
    20  implementation of the program.
    21    § 3. The state finance law is amended by adding two new sections 99-aa
    22  and 99-bb to read as follows:
    23    § 99-aa. New York state secure choice savings program fund. 1.   There
    24  is  hereby  established  within the joint custody of the commissioner of
    25  taxation and finance and the state comptroller in consultation with  the
    26  New  York  state  secure  choice savings program board, a new fund to be
    27  known as the New York state secure choice savings program fund.
    28    2. The fund shall include the individual retirement accounts of enrol-
    29  lees, which shall be accounted for as individual accounts.
    30    3. Moneys in the fund shall consist of moneys received from  enrollees
    31  and participating employers pursuant to automatic payroll deductions and
    32  contributions  to  savings  made  under the New York state secure choice
    33  savings program pursuant to article fourteen-C  of  the  retirement  and
    34  social security law.
    35    4.  The  fund shall be operated in a manner determined by the New York
    36  state secure choice savings program board, provided  that  the  fund  is
    37  operated so that the accounts of enrollees established under the program
    38  meet the requirements for IRAs under the Internal Revenue Code.
    39    5.  The amounts deposited in the fund shall not constitute property of
    40  the state and the fund shall not be construed to be a department, insti-
    41  tution, or agency of the state. Amounts on deposit in the fund shall not
    42  be commingled with state funds and the state shall have no claim  to  or
    43  against, or interest in, such funds.
    44    §  99-bb.  New York state secure choice administrative fund. 1.  There
    45  is hereby established within the joint custody of  the  commissioner  of
    46  taxation  and finance and the state comptroller in consultation with the
    47  New York state secure choice savings program board, a  new  fund  to  be
    48  known as the New York state secure choice administrative fund.
    49    2.  The  New  York state secure choice savings program board shall use
    50  moneys in the administrative fund to pay for administrative expenses  it
    51  incurs  in the performance of its duties under the New York state secure
    52  choice savings program pursuant to article fourteen-C of the  retirement
    53  and social security law.
    54    3.  The  New  York state secure choice savings program board shall use
    55  moneys in the  administrative  fund  to  cover  start-up  administrative

        A. 8332--F                         13
 
     1  expenses  it incurs in the performance of its duties under article four-
     2  teen-C of the retirement and social security law.
     3    4.  The  administrative  fund  may  receive any grants or other moneys
     4  designated for administrative purposes from the state, or  any  unit  of
     5  federal  or local government, or any other person, firm, partnership, or
     6  corporation. Any interest earnings that are attributable  to  moneys  in
     7  the administrative fund must be deposited into the administrative fund.
     8    § 4. This act shall take effect immediately.
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