New York Retirement Mandate: Secure Choice or a 401(k)
New York Secure Choice explained: who must register, the staged deadlines, how the state auto-IRA works, and when your own 401(k) is the better call.
A friend who runs a print shop outside Rochester forwarded me a letter from New York State with an access code printed on it and asked whether it was a scam. It was not. It was the state telling him that because he had never set up a retirement plan, he now had a registration deadline and a payroll job attached to it.
What surprised him was how little the state actually wanted. No contribution. No plan document. No investment decisions. What it wanted was a payroll deduction, taken from employees who did not opt out and remitted on time, and a roster kept up to date.
This covers what the New York retirement mandate requires of an employer with no plan of its own: who registers and when, what happens if you miss it, exactly how the auto-IRA behaves once it is running, and the case for skipping the state program and sponsoring a 401(k) instead.
I build the people and records tooling for businesses without an HR department at FirstHR, and FirstHR is an onboarding and HR platform rather than a payroll or retirement provider. This is general information, not tax or legal advice.
What New York Secure Choice Is
New York Secure Choice is the state retirement savings program for private-sector employees whose employer offers no plan at all, built on individual retirement accounts (IRAs) that the employees own. If you are covered, you register, you deduct, and you remit. That is the entire scope of what the state asks of you.
Section 1301 describes it in one line: a retirement savings program in the form of an automatic enrollment payroll deduction IRA. The board may delegate development and implementation to the Department of Taxation and Finance, and it did so by resolution in January 2022, which is why the program sits with the tax department rather than a labor agency.
The design point that matters most for an employer sits in Section 1313. A participating employer is not establishing or maintaining the payroll deduction IRA, is not a fiduciary over the program, and bears no responsibility for its administration, investment, or investment performance (New York General Business Law Article 43). Hold on to that sentence. It is the difference between this and running a plan.
Who Has to Register
Three conditions have to be true at the same time. Section 1300 defines a covered employer as one that employed at least ten employees in New York at all times during the previous calendar year, has been in business at least two years, and has not offered a qualified retirement plan in the preceding two years.
All three conditions do real work. A business that crossed the headcount threshold in June is not covered on that basis, because the statutory test looks at the whole of the previous calendar year rather than a snapshot. A company in its first eighteen months sits outside the mandate no matter how many people it employs.
An employee, for this purpose, is anybody aged eighteen or older who earned wages working for the employer in New York during the calendar year. There is no hours test and no tenure test, which is why the question of whether part-time staff count has a dull answer here: they do.
The statute applies whether the enterprise is for profit or not, so nonprofits are inside it on the same terms. Treat the mandate as one of the statutory obligations that attaches to payroll rather than as a benefits decision you get to weigh.
The Registration Deadlines
New York staged the original registration deadlines by employer size, and all three have now passed. According to the New York Secure Choice employer help center (September 2026), newly eligible employers, meaning businesses that became eligible after those deadlines, must register by November 18, 2026.
| Employer size band | Deadline to register or certify | Current status |
|---|---|---|
| Thirty or more employees | March 18, 2026 | Passed |
| At least fifteen employees, fewer than thirty | May 15, 2026 | Passed |
| At least ten employees, fewer than fifteen | July 15, 2026 | Passed |
| Newly eligible employers | November 18, 2026 | Upcoming |
The New York Secure Choice Savings Program Board notifies employers it believes are covered when it is time to register. That notice carries a unique access code, which you use together with your federal employer identification number (EIN) to complete registration or certify an exemption on the program site.
If the notice went to an old address or straight to a previous bookkeeper, request a replacement code rather than waiting for a second letter. The program resends the code by email, and nothing about the obligation pauses while the envelope is missing.
If you were due under the original deadlines and have not registered or certified an exemption, you are late rather than early, with no runway left. Register now, start the enrollment clock, and treat the retirement mandate as one line on a longer list of New York employer requirements rather than as a project with a future start date.
Certifying Out If You Already Have a Plan
If you already sponsor a qualified retirement plan you are exempt, but exemption is a status you claim rather than one the state works out for you. Section 1300 lists what counts: plans qualified under sections 401(a), 401(k), 403(a), 403(b), 408(k), 408(p), or 457(b) of the Internal Revenue Code.
In plain terms that is a 401(k), a 403(b), a SEP IRA under 408(k), and a SIMPLE IRA under 408(p). It does not include an informal payroll deduction arrangement you set up with a local advisor, and it certainly does not include an intention to start a plan next year.
The certification runs through the same portal as registration, with the same access code and EIN. Employers who toss the notice because they know they have a plan miss what it is for: the program sends its notices to employers it believes are covered, and only a certification puts the exemption on record.
What Missing the Deadline Costs
New York has not published a penalty schedule. Section 1304 gives the Secure Choice Savings Program Board authority to determine employee rights and the enforcement of penalties, and the board has not yet converted that authority into a public dollar figure.
That does not mean there is no penalty. It means the amount is not knowable in advance, and an unknown penalty is harder to plan around than a published one.
Other states show the shape enforcement usually takes. California applies a fine per eligible employee that escalates the longer noncompliance continues after a final notice, under California Government Code 100033, which turns a filing failure into a number that scales with headcount. Read the New York silence as unfinished rather than lenient.
The second exposure is quieter and far more certain. Employee contributions belong to the employee from the moment they are withheld. Deducting and then failing to remit on schedule is a wage handling failure, and it sits alongside the rest of your payroll deduction obligations rather than in some separate program-only category.
How the Auto-IRA Actually Works
Once you register, the program does the enrolling. Employees you add to the roster are automatically enrolled into a Roth IRA in their own name at a default rate of 3 percent of gross pay, and they get thirty days to opt out or change that before a single dollar moves.
The escalation detail is where New York differs from several other state programs, and it is the easiest thing on this page to get backwards. Savings rate increases here are elected by the employee, not applied automatically. Someone who ignores every message from the program stays at 3 percent indefinitely.
Because the account is a Roth IRA rather than a workplace plan, federal IRA rules govern the ceiling. The limit is $7,500 for 2026 across every IRA an individual holds, or $8,600 from age 50, and higher earners are phased out of Roth contributions entirely on modified adjusted gross income (Internal Revenue Service).
Section 1310 adds two timing rules that matter operationally. Deductions cannot begin until the thirtieth day after an employee has been enrolled. And people who opt out are not gone for good: the program must designate an open enrollment period at least once a year in which previous decliners can enroll, and it lets savers re-enroll at any time.
Your Job Is Payroll, Not Plan Sponsorship
Your obligations are administrative and they are short: register, hand out the state materials, keep the roster current, deduct at the rate each employee chose, and remit on time. Nothing on that list involves money of yours or a judgment call about investments.
Two things carry the whole obligation: knowing where each person sits in the thirty day window, and knowing that last month's money went out on time. Both fit in one file.
| A | B | C | D | E | F | G | H | I | |
|---|---|---|---|---|---|---|---|---|---|
| 1 | Employee | Hire date | State materials given | Added to program | Window ends (30th day) | Election recorded | Rate % | Deduction starts | Status |
| 2 | |||||||||
| 3 | |||||||||
| 4 | |||||||||
| 5 | |||||||||
| 6 | |||||||||
| 7 | |||||||||
| 8 | Note | Election: opt out, default rate, custom rate, or no response. | |||||||
| 9 | Note | No deduction may begin before the thirtieth day after the employee is enrolled. | |||||||
| 10 | Note | Somebody who makes no election contributes at the default rate of 3 percent of gross pay. | |||||||
| 11 | Note | Rate increases are elected by the employee. Nothing on this sheet escalates on its own. | |||||||
| 12 | Note | Status: active, opted out, rate changed, terminated. Mark leavers the week they leave. | |||||||
| 13 | Note | New employees receive the state materials at the time of hiring, so add the row at onboarding. |
The federal reason this stays off your books is not the long-standing payroll deduction IRA safe harbor. That 1975 rule keeps an IRA arrangement outside ERISA, the federal law that sets fiduciary and reporting duties for employer plans, only where the employer contributes nothing and participation is completely voluntary (29 CFR 2510.3-2).
The Department of Labor said in 2016 that automatic enrollment fails that test even with an opt-out (Federal Register). What keeps a state program outside ERISA is that the state, not the employer, establishes and maintains it.
The Ninth Circuit held exactly that about California's program in 2021 (Howard Jarvis Taxpayers Association v. California Secure Choice), and Section 1313 writes the same point into New York law.
That is why the state program produces no Form 5500 and why the duties that come with ERISA coverage never attach to you. It is also why you should not answer employee questions about which investment option to choose. Point them at the program and stay out of it.
Dwight SchruteSales3 people
Darryl PhilbinWarehouse1 person
Kelly KapoorCustomer Service1 personSponsoring Your Own 401(k) Instead
The alternative to registering is to become a plan sponsor, and the honest reason to do it is the ceiling. A 401(k) lets an employee defer $24,500 in 2026, with a further $8,000 from age 50 and $11,250 for ages 60 through 63, against $7,500 in an IRA.
For an owner who wants to save seriously, that gap is the whole argument. The state program caps you at the IRA limit and phases you out of Roth contributions above an income threshold, so the people with the most to save get the least out of it. A plan of your own does neither of those things.
What you take on in exchange is real, and it is not just cost: a plan document, a recordkeeper, fiduciary responsibility for the investment lineup, an annual filing in most cases, and nondiscrimination testing that a small business with low participation fails more often than it expects.
Two things soften that. A safe harbor design requires an employer contribution, fully vested when made in the traditional version, and in return you skip the annual nondiscrimination tests on deferrals and matching contributions.
SECURE 2.0 also raised the startup tax credit to 100 percent of eligible costs for employers with 50 or fewer employees who received at least $5,000 in pay, up to $5,000 a year for three years (Internal Revenue Service).
Which One Fits Your Business
Register for the state program if your goal is compliance at zero employer cost. Sponsor a 401(k) if you or your senior people want to save beyond the IRA limit, or if you want the plan to do recruiting work rather than only satisfy a statute.
| Question | New York Secure Choice | Your own 401(k) |
|---|---|---|
| Employer contribution | None permitted | Optional, or required under a safe harbor design |
| Annual saver limit | IRA limit: $7,500 for 2026, $8,600 from age 50 | $24,500 for 2026 plus catch-up amounts |
| Income limits on the saver | Roth phase-out applies on modified AGI | No income phase-out on deferrals |
| Who is the fiduciary | Not the employer | The employer |
| Plan document and annual filing | Neither | Plan document, and Form 5500 in most cases |
| Nondiscrimination testing | None | Yes, unless a safe harbor design applies |
| Direct cost to the employer | Payroll administration only | Provider fees, plus any contribution |
| Value as a hiring argument | Access to an IRA | A funded benefit employees compare across offers |
Nothing locks you in. Section 1310 preserves the point explicitly: employers retain the option at all times to set up any type of employer-sponsored retirement plan. Registering now and sponsoring a plan later is a normal sequence, not a reversal.
The order I would suggest is unglamorous. Get compliant first, because the original deadlines have already gone and the exposure is running for anyone who missed them. Then decide about a plan on its own merits, with the contribution ceiling and the recruiting argument as the two questions that actually settle it.
Employees Who Work Outside New York
The mandate follows where the work happens, not where your office sits. The statutory test counts employees who earned wages working for you in New York, so a distributed team can put you inside one state mandate and outside another at the same time.
That is the position most growing companies reach without noticing, because the state programs run on separate registers, separate portals, and separate deadlines. Each one has to be handled on its own terms, and none of them tells you about the others.
Sponsoring a single 401(k) is the one move that answers all of them at once, since a qualified plan exempts you everywhere rather than state by state. That is an argument for a plan that has nothing to do with contribution limits and everything to do with not running a separate registration for each state program.
Whichever route you take, the mandate interacts with the rest of your multi-state payroll work, because the deduction has to be configured per employee in the right jurisdiction and remitted to the right program on the right schedule.
Where Employers Get This Wrong
Employers get this wrong in five ways, and the first is the one I would rule out before any of the others.
The first is assuming the notice is junk mail. The letter carries the access code you need, and treating it as marketing costs you the easy path to registering.
The second is having a plan and never certifying. Exemption is claimed, not inferred, and until you certify, the program has no record of the exemption, no matter how good the plan is.
The third is believing the savings rate escalates on its own. In New York it does not. If you tell employees their contribution will rise automatically, you have told them something untrue about their own pay.
The fourth is advising employees on investment options, and it is the one that converts a payroll job into a liability. The statute keeps you out of the fiduciary role, and answering that question is how employers volunteer their way back into it.
The fifth is letting the roster drift. New hires who never get added and leavers who never get marked terminated turn a clean deduction file into a monthly reconciliation exercise nobody has time for.
Nick Anisimov, FirstHR founder
Frequently Asked Questions
Who has to register for New York Secure Choice?
A New York business has to register when three tests are all met. First, it had ten or more employees working in the state throughout the previous calendar year. Second, it has been in business for two years or longer. Third, it has not offered a qualified retirement plan during the past two years. These tests come from Section 1300 of the General Business Law. Nonprofits are not carved out, because the statute reaches an enterprise whether or not it operates for profit. The headcount includes anyone aged eighteen or older who was paid wages by the employer for work done in New York during the calendar year, and there is no minimum number of hours or length of service, so part-time and seasonal workers are counted just like full-time staff.
What are the New York Secure Choice registration deadlines?
All three of the original deadlines have passed, and each one depended on how many people you employ. Program materials gave March 18, 2026 to employers with thirty or more employees, May 15, 2026 to those with at least fifteen but fewer than thirty, and July 15, 2026 to those with at least ten but fewer than fifteen. Employers that became eligible after those waves get a later date, and the program gives newly eligible employers until November 18, 2026. If you belong to one of the original groups and have neither registered nor certified an exemption, you are overdue, so act now instead of waiting for another notice. The program notifies employers it believes are covered and sends a unique access code, which you enter together with your federal employer identification number in the program portal to register or to certify an exemption.
Does the employer have to contribute to the state program?
No. The program does not allow employer contributions at all, so there is no match and no nonelective contribution. Money in a New York Secure Choice account comes only from the employee’s own paycheck, at a rate the employee picks. Your cost is the payroll work: running the deduction and sending it to the program on time. That is the main structural difference from a 401(k), where you can add employer money. It also means the state program is a weaker recruiting tool than a matched plan, because what you are offering employees is access to an IRA rather than extra compensation.
What is the default contribution rate and can employees opt out?
The default is 3 percent of gross pay into a Roth IRA, and yes, employees can opt out at any time. Under Section 1310, anyone who makes no election is enrolled at that rate. Nothing can be withheld until the thirtieth day after enrollment, so every employee has a window to decline or customize before any money moves. Later, savers can raise or lower the rate, elect a 1 percent increase each January until they reach 10 percent, or stop contributing altogether. Opting out is not permanent either: a saver can re-enroll whenever they choose, and the statute guarantees an open enrollment window at least once a year for people who declined earlier.
What is the penalty for not complying with the New York retirement mandate?
New York has not published a penalty schedule. Section 1304 of the General Business Law gives the Secure Choice Savings Program Board authority over employee rights and the enforcement of penalties, but the board has not announced a public dollar amount. An unknown penalty is harder to budget for than a published one, so do not read the silence as leniency. California shows what enforcement can look like: its program fines employers per employee, with the amount rising the longer noncompliance continues after a final notice, under Government Code 100033. A separate problem is employee money. Withholding it and then failing to remit it on schedule is a wage handling failure in its own right.
How do I certify an exemption if I already have a retirement plan?
Use the same portal as registration, entering the same access code and federal employer identification number. A plan counts if it is qualified under section 401(a), 401(k), 403(a), 403(b), 408(k), 408(p), or 457(b) of the Internal Revenue Code, as Section 1300 lists them. In plain terms that covers a 401(k), a 403(b), a SEP IRA, or a SIMPLE IRA. The state does not work out your exemption for you, so a plan you have but never certify leaves the program with no record of it. One limit applies on the other side: Section 1310 bars an employer that offers a qualified plan from terminating it in order to take part in the state program.
Is a 401(k) better than the state program?
A 401(k) is better when you need room to save, and unnecessary when you do not. The state program stops at the federal IRA limit, which the IRS set at $7,500 for 2026 ($8,600 from age 50), and it phases higher earners out of Roth contributions based on income. A 401(k) allows an employee to defer $24,500 in 2026, with additional catch-up amounts from age 50, and lets you add an employer contribution. In exchange you take on a plan document, a recordkeeper, fiduciary duty over the investment lineup, nondiscrimination testing, and in most cases an annual Form 5500 filing. If you are an owner who wants to save seriously, that trade tends to pay off.
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