Amd §§1301, 1304, 1309, 1313, 1310 & 1300, Gen Bus L
 
Ensures that employees are automatically enrolled into the secure choice savings program and if they do not want to participate in the program, they must opt out.
NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A3213A
SPONSOR: Rodriguez
 
TITLE OF BILL:
An act to amend the general business law, in relation to the secure
choice savings program
 
PURPOSE OR GENERAL IDEA OF BILL:
The purpose of this bill is 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 PROVISIONS:
Section one of the bill would amend section 1301 of the general business
law to make enrollment into the New York state secure choice savings
program automatic.
Section two of the bill would amend section 1304 of the general business
law to allow employees to opt out of the secure choice savings program.
Section three of the bill would amend section 1309 of the general busi-
ness law to require employee informational materials to include an
explanation of how employees can opt out of the program after being
enrolled and a foul. for an employee to note his or her decision to opt
out of program participation, and to allow new employees to opt out of
the program.
Section four of the bill would amend section 1313 of the general busi-
ness law to provide that an employer is not liable for an employee's
decision to opt out of the program.
Section five of the bill would amend section 1310 of the general busi-
ness law to require participating employers to have payroll deposit
savings arrangements to allow each employee to participate in the
program. This section would also require participating employers to
automatically enroll in the program each of their employees who has not
opted out of participation in the program using the form described in
this bill and to provide payroll deduction retirement savings arrange-
ments for such employees and deposit, on behalf of such employees, these
funds into the program. Additionally, this section would provide that
the deduction of contributions from an employee's wages shall not begin
until the thirtieth day after an employee has been enrolled in the
program. Finally, this section would prohibit employers who offer
retirement plans to employees from terminating such plans for the
purposes of participating in the program.
Section six of the bill would amend section 1300 of the general business
law to modify the definition of "employer" to mean a person or entity
that (i) has at all times during the previous calendar year employed at
least ten employees in the state, (ii) has been in business at least two
years, and (iii) has not offered a qualified retirement plan in the
preceding two years.
Section seven of the bill would provide the effective date.
 
DIFFERENCE BETWEEN ORIGINAL AND AMENDED VERSION (IF APPLICABLE):
This bill would amend the original bill to add language which provides
that the deduction of contributions from an employee's wages shall not
begin until the thirtieth day after an employee has been enrolled in the
program. This bill would also add language to prohibit employers who
offer retirement plans to employees from terminating such plans for the
purposes of participating in the program.
 
JUSTIFICATION:
The New York Secure Choice Savings Program was passed in the FY 2018/19
state budget. This program creates a state administered retirement
savings plan for employees working for companies who do not offer
retirement plans. Today, nearly 53% of U.S. households are at risk of
not having enough money on hand for their retirement, according to a
2012 report from Boston College. The Secure Choice Savings plan will
bring new savings plans to workers that ordinarily would not have access
to them in the workplace, at little to no cost to their employer. This
bill aims to increase access and participation rates in the program by
establishing automatic enrollment. Employees would automatically be
enrolled in the retirement savings program and must elect to opt out.
Automatic enrollment has been shown to boost participation in 401(k)
plans. A 2012 Aon Hewitt study found that firms that have adopted auto-
matic enrollment have savings plan participation rates of approximately
83 percent, a full 18 percentage points higher than in firms that have
not adopted automatic enrollment. Participation rates amongst young
people, low income workers and minority groups are traditionally lower
than other employees. Automatic enrollment has shown to increase partic-
ipation among these groups so that participation is closer to their
counterparts.
 
PRIOR LEGISLATIVE HISTORY:
None.
 
FISCAL IMPLICATIONS FOR STATE AND LOCAL GOVERNMENTS:
None.
 
EFFECTIVE DATE:
Immediately
STATE OF NEW YORK
________________________________________________________________________
3213--A
2021-2022 Regular Sessions
IN ASSEMBLY
January 22, 2021
___________
Introduced by M. of A. RODRIGUEZ, MONTESANO, FAHY, PEOPLES-STOKES, WOER-
NER, WEPRIN, BARRON, GOTTFRIED, PALMESANO, SANTABARBARA, RAMOS,
PICHARDO, JOYNER, EPSTEIN, AUBRY, DeSTEFANO, CRUZ, LAVINE, GLICK,
SIMON, CARROLL, FERNANDEZ, JACOBSON, GALEF, McDONALD, DICKENS -- read
once and referred to the Committee on Governmental Employees --
committee discharged, bill amended, ordered reprinted as amended and
recommitted to said committee
AN ACT to amend the general business law, in relation to the secure
choice savings program
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Section 1301 of the general business law, as added by
2 section 2 of part X of chapter 55 of the laws of 2018, is amended to
3 read as follows:
4 § 1301. Program established. There is hereby established a retirement
5 savings program in the form of [a] an automatic enrollment payroll
6 deduction IRA, known as the New York state secure choice savings
7 program. The general administration and responsibility for the proper
8 operation of the program shall be administered by the board for the
9 purpose of promoting greater retirement savings for private-sector
10 employees in a convenient, low-cost, and portable manner. The board may
11 delegate such authority and responsibility for the development and
12 implementation of the program to the department of taxation and finance
13 as the board deems proper.
14 § 2. Subdivisions 7 and 9 of section 1304 of the general business law,
15 as added by section 2 of part X of chapter 55 of the laws of 2018, are
16 amended to read as follows:
17 7. Evaluate and establish or authorize the process for:
18 (a) an enrollee to contribute a portion of his or her wages to the
19 program via payroll deduction; and
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD03146-02-1
A. 3213--A 2
1 (b) the [voluntary] enrollment of participating employers in the
2 program.
3 9. Evaluate and establish or authorize the process for enrollment
4 including the process by which an employee may opt not to participate in
5 the program, select a contribution level, select an investment option,
6 and terminate participation in the program.
7 § 3. Subdivisions 3, 4 and 5 of section 1309 of the general business
8 law, as added by section 2 of part X of chapter 55 of the laws of 2018,
9 are amended to read as follows:
10 3. The employee informational materials shall include a disclosure
11 form. The disclosure form shall explain, but not be limited to, all of
12 the following:
13 (a) the benefits and risks associated with making contributions to the
14 program;
15 (b) the process for making contributions to the program;
16 (c) how to [cease participation in] opt out of the program;
17 (d) the process by which an employee can participate in the program
18 with a level of employee contributions other than three percent;
19 (e) that they are not required to participate or contribute more than
20 three percent;
21 (f) the process for withdrawal of retirement savings;
22 (g) the process for selecting beneficiaries of their retirement
23 savings;
24 (h) how to obtain additional information about the program;
25 (i) that employees seeking financial advice should contact financial
26 advisors, that participating employers are not in a position to provide
27 financial advice, and that participating employers are not liable for
28 decisions employees make pursuant to this article;
29 (j) information on how to access any available financial literacy
30 programs; [and]
31 (k) that the program fund is not guaranteed by the state; and
32 (l) that they can opt out after they have been enrolled.
33 4. The employee informational materials shall also include a form for
34 an employee to note his or her decision [regarding] to opt out of
35 participation in the program or [election] elect to participate with a
36 level of employee contributions other than three percent.
37 5. Participating employers shall supply the employee informational
38 materials to existing employees at least one month prior to the partic-
39 ipating employers' facilitation of access to the program. Participating
40 employers shall supply the employee informational materials to new
41 employees at the time of hiring and new employees may opt out of partic-
42 ipation in the program.
43 § 4. Subdivision 1 of section 1313 of the general business law, as
44 added by section 2 of part X of chapter 55 of the laws of 2018, is
45 amended to read as follows:
46 1. Participating employers shall not have any liability for an employ-
47 ee's decision regarding whether to participate in, or opt out of, the
48 program or for the investment decisions of the board or of any enrollee.
49 § 5. Subdivisions 1, 2, 4 and 5 of section 1310 of the general busi-
50 ness law, as added by section 2 of part X of chapter 55 of the laws of
51 2018, are amended and a new subdivision 9 is added to read as follows:
52 1. [No employer shall be required to participate in or otherwise
53 implement the program.] (a) Each participating employer shall have a
54 payroll deposit retirement savings arrangement to allow each employee to
55 participate in the program at most nine months after the board opens the
56 program for enrollment.
A. 3213--A 3
1 (b) Participating employers shall automatically enroll in the program
2 each of their employees who has not opted out of participation in the
3 program using the form described in this article and shall provide
4 payroll deduction retirement savings arrangements for such employees and
5 deposit, on behalf of such employees, these funds into the program.
6 2. Enrollees shall have the ability to select a contribution level
7 into the program. This level may be expressed as a percentage of wages
8 or as a dollar amount up to the deductible amount for the enrollee's
9 taxable year under section 219(b)(1)(A) of the Internal Revenue Code.
10 Enrollees may change their contribution level at any time, subject to
11 rules promulgated by the board. If an enrollee fails to select a
12 contribution level using the form described in this article, then he or
13 she shall contribute three percent of his or her wages to the program,
14 provided that such contributions shall not cause the enrollee's total
15 contributions to IRAs for the year to exceed the deductible amount for
16 the enrollee's taxable year under section 219(b)(1)(A) of the Internal
17 Revenue Code. The deduction of contributions from an employee's wages
18 shall not begin until the thirtieth day after such employee has been
19 enrolled in the program.
20 4. Following initial implementation of the program pursuant to this
21 section, at least once every year, the program shall designate an open
22 enrollment period during which employees who previously opted out of the
23 program may enroll in the program.
24 5. An employee who [chooses not to participate in] opts out of the
25 program and who subsequently wants to participate may only enroll during
26 the program's designated open enrollment period or if permitted by the
27 program at an earlier time.
28 9. A person or entity engaged in a business, industry, profession,
29 trade, or other enterprise in New York state, whether for profit or not
30 for profit, that offers a qualified retirement plan, including, but not
31 limited to, a plan qualified under sections 401(a), 401(k), 403(a),
32 403(b), 408(k), 408(p) or 457(b) of the Internal Revenue Code of 1986
33 shall not terminate such plan for the purposes of participating in the
34 program.
35 § 6. Subdivisions 4 and 8 of section 1300 of the general business law,
36 as added by section 2 of part X of chapter 55 of the laws of 2018, are
37 amended to read as follows:
38 4. "Employer" shall mean a person or entity engaged in a business,
39 industry, profession, trade, or other enterprise in New York state,
40 whether for profit or not for profit, that (i) has at all times during
41 the previous calendar year employed at least ten employees in the state,
42 (ii) has been in business at least two years, and (iii) has not offered
43 a qualified retirement plan, including, but not limited to, a plan qual-
44 ified under sections 401(a), 401(k), 403(a), 403(b), 408(k), 408(p) or
45 457(b) of the Internal Revenue Code of 1986 in the preceding two years.
46 8. "Participating employer" shall mean an employer that [elects to
47 facilitate] facilitates access to the program's payroll deduction IRA as
48 provided for by this article for its employees who are enrollees in the
49 program.
50 § 7. This act shall take effect immediately.