Bill Text: NY S08654 | 2021-2022 | General Assembly | Amended


Bill Title: Relates to the secure choice savings program and participating individuals.

Spectrum: Partisan Bill (Democrat 5-0)

Status: (Introduced - Dead) 2022-05-17 - SUBSTITUTED BY A9882A [S08654 Detail]

Download: New_York-2021-S08654-Amended.html



                STATE OF NEW YORK
        ________________________________________________________________________

                                         8654--A
            Cal. No. 1029

                    IN SENATE

                                     March 25, 2022
                                       ___________

        Introduced by Sens. SAVINO, GOUNARDES, HARCKHAM, SEPULVEDA -- read twice
          and ordered printed, and when printed to be committed to the Committee
          on  Consumer  Protection  --  reported  favorably from said committee,
          ordered to first report, amended on first report, ordered to a  second
          report  and  ordered  reprinted,  retaining  its place in the order of
          second report

        AN ACT to amend the general business law,  in  relation  to  the  secure
          choice savings program and participating individuals

          The  People of the State of New York, represented in Senate and Assem-
        bly, do enact as follows:

     1    Section 1. Section 1300 of the  general  business  law,  as  added  by
     2  section 2 of part X of chapter 55 of the laws of 2018 and subdivisions 4
     3  and  8 as amended by chapter 452 of the laws of 2021, is amended to read
     4  as follows:
     5    § 1300. Definitions. All terms shall have the  same  meaning  as  when
     6  used  in  a  comparable context in the Internal Revenue Code. As used in
     7  this article, the following terms shall have the following meanings:
     8    1. "Board" shall mean the New York secure choice savings program board
     9  established under this article.
    10    2. "Superintendent" shall mean the superintendent of the department of
    11  financial services.
    12    2-a. "Commissioner"  shall  mean  the  commissioner  of  taxation  and
    13  finance.
    14    2-b. "Comptroller" shall mean the comptroller of the state.
    15    3.  "Employee"  shall mean any individual who is eighteen years of age
    16  or older, who is employed by an employer, and who earned  wages  working
    17  for an employer in New York state during a calendar year.
    18    4.  "Employer"  shall  mean  a person or entity engaged in a business,
    19  industry, profession, trade, or other  enterprise  in  New  York  state,
    20  whether  for  profit or not for profit, that (i) has at all times during
    21  the previous calendar year employed at least ten employees in the state,
    22  (ii) has been in business at least two years, and (iii) has not  offered
    23  a qualified retirement plan, including, but not limited to, a plan qual-

         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD15020-04-2

        S. 8654--A                          2

     1  ified  under  sections 401(a), 401(k), 403(a), 403(b), 408(k), 408(p) or
     2  457(b) of the Internal Revenue Code of 1986 in the preceding two years.
     3    5.  "Enrollee" shall mean any employee or participating individual who
     4  is enrolled in the program.
     5    6. "Internal Revenue Code" shall mean the  Internal  Revenue  Code  of
     6  1986, or any successor law, in effect for the calendar year.
     7    7. "IRA" shall mean a Roth IRA (individual retirement account).
     8    8.  "Participating  employer"  shall mean an employer that facilitates
     9  access to the program's payroll deduction IRA as provided  for  by  this
    10  article for its employees who are enrollees in the program.
    11    9.  "Participating  individual"  means  any individual who is eighteen
    12  years of age or older and has New York  taxable  income  as  defined  in
    13  section  six  hundred  eleven of the tax law within a calendar year, who
    14  enrolls in the program independent of an employment relationship with an
    15  eligible employer, maintains an account in the program,  and  is  not  a
    16  participating employee.
    17    10.  "Payroll  deduction  IRA"  shall  mean  an arrangement by which a
    18  participating employer facilitates access for [enrollees]  employees  to
    19  remit payroll deduction contributions to the program.
    20    [10.]  11.  "Program"  shall  mean  the  New  York state secure choice
    21  savings program.
    22    [11.] 12. "Wages" means any compensation within the meaning of section
    23  219(f)(1) of the Internal Revenue Code that is received by  an  enrollee
    24  from  a  participating  employer or by a participating individual during
    25  the calendar year.
    26    § 2. Section 1301 of the general business law, as amended  by  chapter
    27  452 of the laws of 2021, is amended to read as follows:
    28    §  1301. Program established. There is hereby established a retirement
    29  savings program in the form of an automatic enrollment payroll deduction
    30  IRA for private-sector employees and a retirement savings program in the
    31  form of a personal IRA as established by  the  board  for  participating
    32  individuals,  known as the New York state secure choice savings program.
    33  The general administration and responsibility for the  proper  operation
    34  of  the  program  shall  be administered by the board for the purpose of
    35  promoting greater retirement savings for  private-sector  employees  and
    36  participating  individuals  in  a  convenient,  low-cost,  and  portable
    37  manner. The board may delegate such authority and responsibility for the
    38  development and implementation of the program to the department of taxa-
    39  tion and finance as the board deems proper.
    40    § 3. Section 1303 of the general business law, as added by  section  2
    41  of  part  X  of  chapter  55  of the laws of 2018, is amended to read as
    42  follows:
    43    § 1303. Fiduciary duty. The  board,  the  individual  members  of  the
    44  board, the trustees, any other agents appointed or engaged by the board,
    45  and  all  persons  serving as program staff shall discharge their duties
    46  with respect to the program solely in  the  interest  of  the  program's
    47  enrollees and beneficiaries as follows:
    48    1.  for  the exclusive purposes of providing benefits to enrollees and
    49  beneficiaries and defraying reasonable  expenses  of  administering  the
    50  program;
    51    2.  by  investing  with the care, skill, prudence, and diligence under
    52  the prevailing circumstances that a prudent  person  acting  in  a  like
    53  capacity  and familiar with those matters would use in the conduct of an
    54  enterprise of a like character and with like aims; and
    55    3. by using  any  contributions  paid  by  participating  individuals,
    56  employees, and employers remitting employees' own contributions into the

        S. 8654--A                          3

     1  fund  exclusively for the purpose of paying benefits to the enrollees of
     2  the program, for the cost of administration  of  the  program,  and  for
     3  investments made for the benefit of the program.
     4    §  4.  Section 1304 of the general business law, as added by section 2
     5  of part X of chapter 55 of the laws of 2018 and subdivisions 7 and 9  as
     6  amended  by  chapter  452  of  the  laws  of 2021, is amended to read as
     7  follows:
     8    § 1304. Duties of the board. In  addition  to  the  other  duties  and
     9  responsibilities  stated  in  this  article,  the board shall, itself or
    10  through the use of appropriate financial organizations as managers:
    11    1. Cause the program to be designed, established  and  operated  in  a
    12  manner that:
    13    (a) accords with best practices for retirement savings vehicles;
    14    (b)  maximizes  participation, savings, and sound investment practices
    15  including considering the use of automatic enrollment as  allowed  under
    16  federal law;
    17    (c) maximizes simplicity, including ease of administration for partic-
    18  ipating employers and enrollees;
    19    (d)  provides  an efficient product to enrollees by pooling investment
    20  funds;
    21    (e) ensures the portability of benefits; and
    22    (f) provides for the deaccumulation of enrollee  assets  in  a  manner
    23  that provides a financial benefit in retirement.
    24    2.  Explore  and establish or authorize investment options, subject to
    25  this article, that offer enrollees  returns  on  contributions  and  the
    26  conversion  of  individual retirement savings account balances to secure
    27  retirement income without incurring debt or liabilities to the state.
    28    3. Establish or authorize the process by  which  interest,  investment
    29  earnings,  and  investment  losses  are  allocated to individual program
    30  accounts on a pro rata basis and are computed at the  interest  rate  on
    31  the balance of an individual's account.
    32    4.  Make  and enter into contracts necessary for the administration of
    33  the program and fund, including,  but  not  limited  to,  retaining  and
    34  contracting  with  investment  managers,  financial organizations, other
    35  financial and service providers, consultants, actuaries, counsel,  audi-
    36  tors, third-party administrators, and other professionals as necessary.
    37    5.  Conduct  a  periodic  review  of  the performance of any financial
    38  organizations, including, but not limited to, a review of returns, fees,
    39  and customer service. A copy of reviews shall be posted to the program's
    40  Internet website.
    41    6. Cause moneys in the program to  be  held  and  invested  as  pooled
    42  investments  or otherwise, with a view to achieving cost savings through
    43  efficiencies and economies of scale.
    44    7. Evaluate and establish or authorize the process for:
    45    (a) an [enrollee] employee to contribute a portion of his or her wages
    46  to the program via payroll deduction; and
    47    (b) the enrollment of participating employers in the program.
    48    8. The board may contract with financial organizations and third-party
    49  administrators with the  capability  to  receive  and  process  employee
    50  information  and  contributions  for  payroll  deduction  IRA or similar
    51  arrangements.
    52    9. Evaluate and establish or  authorize  the  process  for  enrollment
    53  including the process by which an employee may opt not to participate in
    54  the  program,  select a contribution level, select an investment option,
    55  and terminate participation in the program.

        S. 8654--A                          4

     1    10. Evaluate and establish or authorize the process  for  the  partic-
     2  ipation and enrollment of any participating individual.
     3    11.  Evaluate,  or cause to be evaluated, the need for, and procure as
     4  needed, insurance against any and all loss in connection with the  prop-
     5  erty, assets, or activities of the program, and indemnify as needed each
     6  member  of  the  board  from personal loss or liability resulting from a
     7  member's action or inaction as a member of the board.
     8    [11.] 12. Make provisions for the payment of administrative costs  and
     9  expenses  for  the  creation,  management, and operation of the program.
    10  Subject to appropriation, the state may pay administrative costs associ-
    11  ated with the creation and management of the  program  until  sufficient
    12  assets  are  available  in the program for that purpose. Thereafter, all
    13  administrative costs of the program, including repayment of any start-up
    14  funds provided by the state, shall be paid only out of moneys on deposit
    15  therein. However, private funds or federal funding received in order  to
    16  implement  the  program  until it is self-sustaining shall not be repaid
    17  unless those funds were offered contingent  upon  the  promise  of  such
    18  repayment.  The  board  shall keep its annual administrative expenses as
    19  low as possible.
    20    [12.]  13.  Allocate  administrative  fees  to  individual  retirement
    21  accounts in the program on a pro rata basis.
    22    [13.]  14. Set or authorize minimum and maximum contribution levels in
    23  accordance with limits established for  IRAs  by  the  Internal  Revenue
    24  Code.
    25    [14.]  15.  Facilitate education and outreach to employers and employ-
    26  ees[.] and facilitate  the  development  of  educational  materials  for
    27  participating individuals.
    28    [15.]  16.  Facilitate  compliance  by the program with all applicable
    29  requirements for the program under the Internal Revenue Code,  including
    30  tax  qualification requirements or any other applicable legal, financial
    31  reporting and accounting requirements.
    32    [16.] 17. Carry out the duties and obligations of the  program  in  an
    33  effective, efficient, and low-cost manner.
    34    [17.]  18.  Exercise any and all other powers reasonably necessary for
    35  the effectuation of the purposes, objectives,  and  provisions  of  this
    36  article.
    37    [18.]  19.  Determine  or  authorize  withdrawal  provisions,  such as
    38  economic hardships, portability and leakage.
    39    [19.] 20. Determine [employee]  enrollee  rights  and  enforcement  of
    40  penalties.
    41    [20.]  21. Delegate such authority and responsibility for the develop-
    42  ment and implementation of the program to the department of taxation and
    43  finance as the board deems proper.
    44    § 5. Section 1309 of the general business law, as added by  section  2
    45  of  part X of chapter 55 of the laws of 2018 and subdivisions 3, 4 and 5
    46  as amended by chapter 452 of the laws of 2021, is  amended  to  read  as
    47  follows:
    48    §  1309.  Employer  and employee and participating individual informa-
    49  tional materials and disclosure forms. 1. Prior to the  opening  of  the
    50  program for enrollment for employees, the board shall design and dissem-
    51  inate,  or  cause  to  be  designed  and  disseminated, to all employers
    52  employer informational materials and employee  informational  materials,
    53  which shall include background information on the program, and necessary
    54  disclosures as required by law for employees.
    55    2.  Prior to the opening of the program for enrollment for participat-
    56  ing individuals, the board shall  design  and  make  publicly  available

        S. 8654--A                          5

     1  informational  materials  which  shall include background information on
     2  the program and  how  to  participate  as  a  participating  individual,
     3  including  but  not  limited  to,  information on the benefits and risks
     4  associated  with  making  contributions  to the program, the process for
     5  making contributions, the contribution levels they may  contribute,  the
     6  process  for  withdrawal  of  retirement  savings,  and  the process for
     7  selecting beneficiaries.
     8    3. The employee and participating individual  informational  materials
     9  shall  be  made  available in English, Spanish, Haitian Creole, Chinese,
    10  Korean, Russian, Arabic, and any other language the board  deems  neces-
    11  sary.
    12    [3.]  4. The employee and participating individual informational mate-
    13  rials shall include a  disclosure  form.    The  disclosure  form  shall
    14  explain, but not be limited to, all of the following:
    15    (a) the benefits and risks associated with making contributions to the
    16  program;
    17    (b) the process for making contributions to the program;
    18    (c) how to opt out of the program;
    19    (d)  the  process  by which an employee can participate in the program
    20  with a level of employee contributions other than three percent;
    21    (e) the process by which an individual can participate in the  program
    22  as a participating individual;
    23    (f)  that [they] employees are not required to participate or contrib-
    24  ute more than three percent;
    25    [(f)] (g) the process for withdrawal of retirement savings;
    26    [(g)] (h) the process for selecting beneficiaries of their  retirement
    27  savings;
    28    [(h)] (i) how to obtain additional information about the program;
    29    [(i)]  (j) that employees and participating individuals seeking finan-
    30  cial  advice  should  contact  financial  advisors,  that  participating
    31  employers  are  not  in a position to provide financial advice, and that
    32  participating employers are not  liable  for  decisions  employees  make
    33  pursuant to this article;
    34    [(j)] (k) information on how to access any available financial litera-
    35  cy programs;
    36    [(k)] (l) that the program fund is not guaranteed by the state; and
    37    [(l)] (m) that they can opt out after they have been enrolled.
    38    [4.] 5. The employee informational materials shall also include a form
    39  for  an employee to note his or her decision to opt out of participation
    40  in the program or elect to participate with a level of employee contrib-
    41  utions other than three percent.
    42    [5.] 6. Participating employers shall  supply  the  employee  informa-
    43  tional  materials  to existing employees at least one month prior to the
    44  participating employers' facilitation of access to the program.  Partic-
    45  ipating employers shall supply the employee informational  materials  to
    46  new  employees  at  the  time of hiring and new employees may opt out of
    47  participation in the program.
    48    § 6. Subdivision 2 of section 1310 of the  general  business  law,  as
    49  amended  by  chapter  452  of  the  laws  of 2021, is amended to read as
    50  follows:
    51    2. [Enrollees] Employees shall have the ability to select  a  contrib-
    52  ution  level into the program. This level may be expressed as a percent-
    53  age of wages or as a dollar amount up to the deductible amount  for  the
    54  [enrollee's]  employee's  taxable year under section 219(b)(1)(A) of the
    55  Internal Revenue Code.  [Enrollees] Employees may change their  contrib-
    56  ution  level  at any time, subject to rules promulgated by the board. If

        S. 8654--A                          6

     1  an [enrollee] employee fails to select a contribution  level  using  the
     2  form  described  in  this article, then he or she shall contribute three
     3  percent of his or her wages to the program, provided that such  contrib-
     4  utions  shall  not cause the [enrollee's] employee's total contributions
     5  to  IRAs  for  the  year  to  exceed  the  deductible  amount  for   the
     6  [enrollee's]  employee's  taxable year under section 219(b)(1)(A) of the
     7  Internal Revenue Code. The deduction of contributions from an employee's
     8  wages shall not begin until the thirtieth day after  such  employee  has
     9  been enrolled in the program.
    10    §  7.  The  general  business  law  is amended by adding a new section
    11  1310-a to read as follows:
    12    § 1310-a. Program implementation and enrollment.  Except as  otherwise
    13  provided  in this article, the program shall be implemented, and enroll-
    14  ment of participating individuals shall begin  no  later  than  December
    15  thirty-first,  two thousand twenty-three. The provisions of this section
    16  shall be in force after the board opens the program for enrollment.
    17    1. Participating individuals shall have the ability to  make  contrib-
    18  utions into the program by personal contributions from a bank account or
    19  by  other means as determined by the board. The participating individual
    20  shall be able to select the frequency and the contribution  level  which
    21  may  be expressed as a set dollar amount up to the deductible amount for
    22  the participating individual's taxable year under  section  219(b)(1)(A)
    23  of  the Internal Revenue Code subject to rules promulgated by the board.
    24  Participating individuals may change their  contribution  level  at  any
    25  time, subject to rules promulgated by the board.
    26    2.  Participating  individuals may select an investment option offered
    27  under the program. Participating individuals may change their investment
    28  option at any time, subject to rules promulgated by the  board.  In  the
    29  event  that  a  participating  individual  fails to select an investment
    30  option, that participating individual shall be placed in the  investment
    31  option  selected  or  authorized  by the board as the default under this
    32  article.
    33    3. A participating individual may terminate his or her  enrollment  in
    34  the program at any time in a manner prescribed by the board.
    35    4.  The board shall establish and maintain or authorize the establish-
    36  ment and maintenance of a secure website wherein participating  individ-
    37  uals  may  log  in  and  acquire information regarding contributions and
    38  investment income allocated to, withdrawals from, and balances in  their
    39  program  accounts  for  the  reporting  period.  Such  website must also
    40  include information for the  participating  individual  regarding  other
    41  options  available  to  the  individual  and how they can transfer their
    42  accounts to other programs should they wish to do so. Such  website  may
    43  include  any  other  information  regarding the program as the board may
    44  determine.
    45    § 8. This act shall take effect immediately.
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