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A09882 Summary:

BILL NOA09882A
 
SAME ASSAME AS S08654-A
 
SPONSORStirpe
 
COSPNSRMcDonald, Englebright, Dickens, Lupardo, Reyes, Hevesi, Burgos, Glick, Simon, Jean-Pierre, Fahy, Galef, Magnarelli, McMahon, Colton
 
MLTSPNSR
 
Amd §§1300, 1301, 1303, 1304, 1309 & 1310, add §1310-a, Gen Bus L
 
Relates to the secure choice savings program and participating individuals.
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A09882 Actions:

BILL NOA09882A
 
04/19/2022referred to governmental employees
04/29/2022amend and recommit to governmental employees
04/29/2022print number 9882a
05/10/2022reported referred to rules
05/17/2022reported
05/17/2022rules report cal.248
05/17/2022ordered to third reading rules cal.248
05/17/2022passed assembly
05/17/2022delivered to senate
05/17/2022REFERRED TO CONSUMER PROTECTION
05/17/2022SUBSTITUTED FOR S8654A
05/17/20223RD READING CAL.1029
05/17/2022PASSED SENATE
05/17/2022RETURNED TO ASSEMBLY
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A09882 Memo:

NEW YORK STATE ASSEMBLY
MEMORANDUM IN SUPPORT OF LEGISLATION
submitted in accordance with Assembly Rule III, Sec 1(f)
 
BILL NUMBER: A9882A
 
SPONSOR: Stirpe
  TITLE OF BILL: An act to amend the general business law, in relation to the secure choice savings program and participating individuals   PURPOSE: To expand New York's Secure Choice Savings Plan to provide freelancers and the self-employed the option of enrolling in the plan.   SUMMARY OF SPECIFIC PROVISIONS: Article 43 of the General Business Law - The New York State Secure Choice Savings Program to allow participating individuals to participate in the program. "Participating Individuals": *any individual who enrolls in the program independent of an employment relationship with an eligible employer, maintains and account in the program, and is not a participating employee; *who is at least eighteen years of age and has New York taxable income within the calendar year. The Secure Choice Board shall: *consider the ability for participating individuals to select their contribution level which may be expressed as a set dollar amount upon. enrollment, the frequency of such contributions, the ability to make such contributions by direct deposit, ability to select investment options, and the termination process; *facilitate the development of educational materials for participating individuals; and, *design and make publicly available informational materials which shall include background information on the program and how to participate as a participating individual, including but not limited to, information on the benefits and risks associated with making contributions to the program, the process for making contributions, the contribution levels they may contribute, the process for withdrawal of retirement savings, and the process for selecting beneficiaries.   DIFFERENCE BETWEEN ORIGINAL AND AMENDED VERSION (IF APPLICABLE): New print makes technical amendments to clarify the intention of the bill and changes the deadline by which the Secure Choice Savings Program must be in place for participating individuals from December 31, 2022 to December 31, 2023.   JUSTIFICATION: There are well over 200,000 freelancers in New York, and among that group, many often lack job security, experience volatile incomes, and generally do not have employer-provided benefits such as health insur- ance or workplace retirement savings plans. Without adequate savings, many may face impoverished retirements or may be unable to stop working. Recent PEW surveys found that 42% of non-traditional workers do not have a defined benefit (401k or similar) plan, compared to 65% of the total labor force. In 2018, New York took an important step to help New Yorkers save for retirement by creating the Secure Choice Savings Plan that requires employers who did not offer their employees a retirement plan to enroll employees in New York's state-run savings plan. To build from that momentum, New York must expand the program to include the self-employed thereby helping even more working New Yorkers save for retirement.   LEGISLATIVE HISTORY: New bill.   FISCAL IMPLICATIONS: None.   EFFECTIVE DATE: This act shall take effect immediately.
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A09882 Text:



 
                STATE OF NEW YORK
        ________________________________________________________________________
 
                                         9882--A
 
                   IN ASSEMBLY
 
                                     April 19, 2022
                                       ___________
 
        Introduced  by M. of A. STIRPE, McDONALD, ENGLEBRIGHT, DICKENS, LUPARDO,
          REYES, HEVESI, BURGOS, GLICK, SIMON -- read once and referred  to  the
          Committee  on  Governmental  Employees  --  committee discharged, bill
          amended, ordered reprinted as amended and recommitted to said  commit-
          tee
 
        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-
    24  ified under sections 401(a), 401(k), 403(a), 403(b), 408(k),  408(p)  or
    25  457(b) of the Internal Revenue Code of 1986 in the preceding two years.
 
         EXPLANATION--Matter in italics (underscored) is new; matter in brackets
                              [ ] is old law to be omitted.
                                                                   LBD15020-03-2

        A. 9882--A                          2
 
     1    5.  "Enrollee" shall mean any employee or participating individual who
     2  is enrolled in the program.
     3    6.  "Internal  Revenue  Code"  shall mean the Internal Revenue Code of
     4  1986, or any successor law, in effect for the calendar year.
     5    7. "IRA" shall mean a Roth IRA (individual retirement account).
     6    8. "Participating employer" shall mean an  employer  that  facilitates
     7  access  to  the  program's payroll deduction IRA as provided for by this
     8  article for its employees who are enrollees in the program.
     9    9. "Participating individual" means any  individual  who  is  eighteen
    10  years  of  age  or  older  and has New York taxable income as defined in
    11  section six hundred eleven of the tax law within a  calendar  year,  who
    12  enrolls in the program independent of an employment relationship with an
    13  eligible  employer,  maintains  an  account in the program, and is not a
    14  participating employee.
    15    10. "Payroll deduction IRA" shall  mean  an  arrangement  by  which  a
    16  participating  employer  facilitates access for [enrollees] employees to
    17  remit payroll deduction contributions to the program.
    18    [10.] 11. "Program" shall  mean  the  New  York  state  secure  choice
    19  savings program.
    20    [11.] 12. "Wages" means any compensation within the meaning of section
    21  219(f)(1)  of  the Internal Revenue Code that is received by an enrollee
    22  from a participating employer or by a  participating  individual  during
    23  the calendar year.
    24    §  2.  Section 1301 of the general business law, as amended by chapter
    25  452 of the laws of 2021, is amended to read as follows:
    26    § 1301. Program established. There is hereby established a  retirement
    27  savings program in the form of an automatic enrollment payroll deduction
    28  IRA for private-sector employees and a retirement savings program in the
    29  form  of  a  personal  IRA as established by the board for participating
    30  individuals, known as the New York state secure choice savings  program.
    31  The  general  administration and responsibility for the proper operation
    32  of the program shall be administered by the board  for  the  purpose  of
    33  promoting  greater  retirement  savings for private-sector employees and
    34  participating  individuals  in  a  convenient,  low-cost,  and  portable
    35  manner. The board may delegate such authority and responsibility for the
    36  development and implementation of the program to the department of taxa-
    37  tion and finance as the board deems proper.
    38    §  3.  Section 1303 of the general business law, as added by section 2
    39  of part X of chapter 55 of the laws of  2018,  is  amended  to  read  as
    40  follows:
    41    §  1303.  Fiduciary  duty.  The  board,  the individual members of the
    42  board, the trustees, any other agents appointed or engaged by the board,
    43  and all persons serving as program staff shall  discharge  their  duties
    44  with  respect  to  the  program  solely in the interest of the program's
    45  enrollees and beneficiaries as follows:
    46    1. for the exclusive purposes of providing benefits to  enrollees  and
    47  beneficiaries  and  defraying  reasonable  expenses of administering the
    48  program;
    49    2. by investing with the care, skill, prudence,  and  diligence  under
    50  the  prevailing  circumstances  that  a  prudent person acting in a like
    51  capacity and familiar with those matters would use in the conduct of  an
    52  enterprise of a like character and with like aims; and
    53    3.  by  using  any  contributions  paid  by participating individuals,
    54  employees, and employers remitting employees' own contributions into the
    55  fund exclusively for the purpose of paying benefits to the enrollees  of

        A. 9882--A                          3
 
     1  the  program,  for  the  cost  of administration of the program, and for
     2  investments made for the benefit of the program.
     3    §  4.  Section 1304 of the general business law, as added by section 2
     4  of part X of chapter 55 of the laws of 2018 and subdivisions 7 and 9  as
     5  amended  by  chapter  452  of  the  laws  of 2021, is amended to read as
     6  follows:
     7    § 1304. Duties of the board. In  addition  to  the  other  duties  and
     8  responsibilities  stated  in  this  article,  the board shall, itself or
     9  through the use of appropriate financial organizations as managers:
    10    1. Cause the program to be designed, established  and  operated  in  a
    11  manner that:
    12    (a) accords with best practices for retirement savings vehicles;
    13    (b)  maximizes  participation, savings, and sound investment practices
    14  including considering the use of automatic enrollment as  allowed  under
    15  federal law;
    16    (c) maximizes simplicity, including ease of administration for partic-
    17  ipating employers and enrollees;
    18    (d)  provides  an efficient product to enrollees by pooling investment
    19  funds;
    20    (e) ensures the portability of benefits; and
    21    (f) provides for the deaccumulation of enrollee  assets  in  a  manner
    22  that provides a financial benefit in retirement.
    23    2.  Explore  and establish or authorize investment options, subject to
    24  this article, that offer enrollees  returns  on  contributions  and  the
    25  conversion  of  individual retirement savings account balances to secure
    26  retirement income without incurring debt or liabilities to the state.
    27    3. Establish or authorize the process by  which  interest,  investment
    28  earnings,  and  investment  losses  are  allocated to individual program
    29  accounts on a pro rata basis and are computed at the  interest  rate  on
    30  the balance of an individual's account.
    31    4.  Make  and enter into contracts necessary for the administration of
    32  the program and fund, including,  but  not  limited  to,  retaining  and
    33  contracting  with  investment  managers,  financial organizations, other
    34  financial and service providers, consultants, actuaries, counsel,  audi-
    35  tors, third-party administrators, and other professionals as necessary.
    36    5.  Conduct  a  periodic  review  of  the performance of any financial
    37  organizations, including, but not limited to, a review of returns, fees,
    38  and customer service. A copy of reviews shall be posted to the program's
    39  Internet website.
    40    6. Cause moneys in the program to  be  held  and  invested  as  pooled
    41  investments  or otherwise, with a view to achieving cost savings through
    42  efficiencies and economies of scale.
    43    7. Evaluate and establish or authorize the process for:
    44    (a) an [enrollee] employee to contribute a portion of his or her wages
    45  to the program via payroll deduction; and
    46    (b) the enrollment of participating employers in the program.
    47    8. The board may contract with financial organizations and third-party
    48  administrators with the  capability  to  receive  and  process  employee
    49  information  and  contributions  for  payroll  deduction  IRA or similar
    50  arrangements.
    51    9. Evaluate and establish or  authorize  the  process  for  enrollment
    52  including the process by which an employee may opt not to participate in
    53  the  program,  select a contribution level, select an investment option,
    54  and terminate participation in the program.
    55    10. Evaluate and establish or authorize the process  for  the  partic-
    56  ipation and enrollment of any participating individual.

        A. 9882--A                          4
 
     1    11.  Evaluate,  or cause to be evaluated, the need for, and procure as
     2  needed, insurance against any and all loss in connection with the  prop-
     3  erty, assets, or activities of the program, and indemnify as needed each
     4  member  of  the  board  from personal loss or liability resulting from a
     5  member's action or inaction as a member of the board.
     6    [11.]  12. Make provisions for the payment of administrative costs and
     7  expenses for the creation, management, and  operation  of  the  program.
     8  Subject to appropriation, the state may pay administrative costs associ-
     9  ated  with  the  creation and management of the program until sufficient
    10  assets are available in the program for that  purpose.  Thereafter,  all
    11  administrative costs of the program, including repayment of any start-up
    12  funds provided by the state, shall be paid only out of moneys on deposit
    13  therein.  However, private funds or federal funding received in order to
    14  implement the program until it is self-sustaining shall  not  be  repaid
    15  unless  those  funds  were  offered  contingent upon the promise of such
    16  repayment. The board shall keep its annual  administrative  expenses  as
    17  low as possible.
    18    [12.]  13.  Allocate  administrative  fees  to  individual  retirement
    19  accounts in the program on a pro rata basis.
    20    [13.] 14. Set or authorize minimum and maximum contribution levels  in
    21  accordance  with  limits  established  for  IRAs by the Internal Revenue
    22  Code.
    23    [14.] 15. Facilitate education and outreach to employers  and  employ-
    24  ees[.]  and  facilitate  the  development  of  educational materials for
    25  participating individuals.
    26    [15.] 16. Facilitate compliance by the  program  with  all  applicable
    27  requirements  for the program under the Internal Revenue Code, including
    28  tax qualification requirements or any other applicable legal,  financial
    29  reporting and accounting requirements.
    30    [16.]  17.  Carry  out the duties and obligations of the program in an
    31  effective, efficient, and low-cost manner.
    32    [17.] 18. Exercise any and all other powers reasonably  necessary  for
    33  the  effectuation  of  the  purposes, objectives, and provisions of this
    34  article.
    35    [18.] 19.  Determine  or  authorize  withdrawal  provisions,  such  as
    36  economic hardships, portability and leakage.
    37    [19.]  20.  Determine  [employee]  enrollee  rights and enforcement of
    38  penalties.
    39    [20.] 21. Delegate such authority and responsibility for the  develop-
    40  ment and implementation of the program to the department of taxation and
    41  finance as the board deems proper.
    42    §  5.  Section 1309 of the general business law, as added by section 2
    43  of part X of chapter 55 of the laws of 2018 and subdivisions 3, 4 and  5
    44  as  amended  by  chapter  452 of the laws of 2021, is amended to read as
    45  follows:
    46    § 1309. Employer and employee and  participating  individual  informa-
    47  tional  materials  and  disclosure forms. 1. Prior to the opening of the
    48  program for enrollment for employees, the board shall design and dissem-
    49  inate, or cause to  be  designed  and  disseminated,  to  all  employers
    50  employer  informational  materials and employee informational materials,
    51  which shall include background information on the program, and necessary
    52  disclosures as required by law for employees.
    53    2. Prior to the opening of the program for enrollment for  participat-
    54  ing  individuals,  the  board  shall  design and make publicly available
    55  informational materials which shall include  background  information  on
    56  the  program  and  how  to  participate  as  a participating individual,

        A. 9882--A                          5
 
     1  including but not limited to, information  on  the  benefits  and  risks
     2  associated  with  making  contributions  to the program, the process for
     3  making contributions, the contribution levels they may  contribute,  the
     4  process  for  withdrawal  of  retirement  savings,  and  the process for
     5  selecting beneficiaries.
     6    3. The employee and participating individual  informational  materials
     7  shall  be  made  available in English, Spanish, Haitian Creole, Chinese,
     8  Korean, Russian, Arabic, and any other language the board  deems  neces-
     9  sary.
    10    [3.]  4. The employee and participating individual informational mate-
    11  rials shall include a  disclosure  form.    The  disclosure  form  shall
    12  explain, but not be limited to, all of 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 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) the process by which an individual can participate in the  program
    20  as a participating individual;
    21    (f)  that [they] employees are not required to participate or contrib-
    22  ute more than three percent;
    23    [(f)] (g) the process for withdrawal of retirement savings;
    24    [(g)] (h) the process for selecting beneficiaries of their  retirement
    25  savings;
    26    [(h)] (i) how to obtain additional information about the program;
    27    [(i)]  (j) that employees and participating individuals seeking finan-
    28  cial  advice  should  contact  financial  advisors,  that  participating
    29  employers  are  not  in a position to provide financial advice, and that
    30  participating employers are not  liable  for  decisions  employees  make
    31  pursuant to this article;
    32    [(j)] (k) information on how to access any available financial litera-
    33  cy programs;
    34    [(k)] (l) that the program fund is not guaranteed by the state; and
    35    [(l)] (m) that they can opt out after they have been enrolled.
    36    [4.] 5. The employee informational materials shall also include a form
    37  for  an employee to note his or her decision to opt out of participation
    38  in the program or elect to participate with a level of employee contrib-
    39  utions other than three percent.
    40    [5.] 6. Participating employers shall  supply  the  employee  informa-
    41  tional  materials  to existing employees at least one month prior to the
    42  participating employers' facilitation of access to the program.  Partic-
    43  ipating employers shall supply the employee informational  materials  to
    44  new  employees  at  the  time of hiring and new employees may opt out of
    45  participation in the program.
    46    § 6. Subdivision 2 of section 1310 of the  general  business  law,  as
    47  amended  by  chapter  452  of  the  laws  of 2021, is amended to read as
    48  follows:
    49    2. [Enrollees] Employees shall have the ability to select  a  contrib-
    50  ution  level into the program. This level may be expressed as a percent-
    51  age of wages or as a dollar amount up to the deductible amount  for  the
    52  [enrollee's]  employee's  taxable year under section 219(b)(1)(A) of the
    53  Internal Revenue Code.  [Enrollees] Employees may change their  contrib-
    54  ution  level  at any time, subject to rules promulgated by the board. If
    55  an [enrollee] employee fails to select a contribution  level  using  the
    56  form  described  in  this article, then he or she shall contribute three

        A. 9882--A                          6
 
     1  percent of his or her wages to the program, provided that such  contrib-
     2  utions  shall  not cause the [enrollee's] employee's total contributions
     3  to  IRAs  for  the  year  to  exceed  the  deductible  amount  for   the
     4  [enrollee's]  employee's  taxable year under section 219(b)(1)(A) of the
     5  Internal Revenue Code. The deduction of contributions from an employee's
     6  wages shall not begin until the thirtieth day after  such  employee  has
     7  been enrolled in the program.
     8    §  7.  The  general  business  law  is amended by adding a new section
     9  1310-a to read as follows:
    10    § 1310-a. Program implementation and enrollment.  Except as  otherwise
    11  provided  in this article, the program shall be implemented, and enroll-
    12  ment of participating individuals shall begin  no  later  than  December
    13  thirty-first,  two thousand twenty-three. The provisions of this section
    14  shall be in force after the board opens the program for enrollment.
    15    1. Participating individuals shall have the ability to  make  contrib-
    16  utions into the program by personal contributions from a bank account or
    17  by  other means as determined by the board. The participating individual
    18  shall be able to select the frequency and the contribution  level  which
    19  may  be expressed as a set dollar amount up to the deductible amount for
    20  the participating individual's taxable year under  section  219(b)(1)(A)
    21  of  the Internal Revenue Code subject to rules promulgated by the board.
    22  Participating individuals may change their  contribution  level  at  any
    23  time, subject to rules promulgated by the board.
    24    2.  Participating  individuals may select an investment option offered
    25  under the program. Participating individuals may change their investment
    26  option at any time, subject to rules promulgated by the  board.  In  the
    27  event  that  a  participating  individual  fails to select an investment
    28  option, that participating individual shall be placed in the  investment
    29  option  selected  or  authorized  by the board as the default under this
    30  article.
    31    3. A participating individual may terminate his or her  enrollment  in
    32  the program at any time in a manner prescribed by the board.
    33    4.  The board shall establish and maintain or authorize the establish-
    34  ment and maintenance of a secure website wherein participating  individ-
    35  uals  may  log  in  and  acquire information regarding contributions and
    36  investment income allocated to, withdrawals from, and balances in  their
    37  program  accounts  for  the  reporting  period.  Such  website must also
    38  include information for the  participating  individual  regarding  other
    39  options  available  to  the  individual  and how they can transfer their
    40  accounts to other programs should they wish to do so. Such  website  may
    41  include  any  other  information  regarding the program as the board may
    42  determine.
    43    § 8. This act shall take effect immediately.
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