2026 New York State Mandatory IRA Rules: What Employers Must Do to Stay Compliant
New York State now requires many employers to offer a retirement savings option through the state-mandated Secure Choice IRA program. If your business has at least 10 employees and does not already offer a qualified retirement plan, participation is mandatory. Our analysis at Greenbush Financial Group shows that understanding who must comply, how the program works, and what alternatives exist can help business owners avoid penalties while improving employee retention. This article explains New York’s mandatory IRA rules and outlines smarter planning options for employers.
What Is the New York State Mandatory IRA Program?
The New York State mandatory IRA requirement applies through the New York State Secure Choice Savings Program, a state-facilitated retirement savings option for private-sector employees.
Secure Choice is designed for workers who do not have access to an employer-sponsored retirement plan. Employers act as facilitators, while the state oversees the program’s administration.
Key characteristics:
Roth IRA structure for employees
Automatic payroll deductions
No employer contributions required
State-administered investment options
Which New York Employers Are Required to Offer a Mandatory IRA?
Under New York law, participation is mandatory if all of the following apply:
You have 10 or more employees
You have been in business for at least two years
You do not currently offer a qualified retirement plan such as a 401(k), SIMPLE IRA, or SEP IRA
At Greenbush Financial Group, we commonly see confusion around part-time and seasonal employees. For Secure Choice purposes, employees are generally counted if they are on payroll, regardless of hours worked.
Which Businesses Are Exempt From the Requirement?
You are exempt from the New York mandatory IRA requirement if your business already offers:
A 401(k) or Safe Harbor 401(k)
A SIMPLE IRA
A SEP IRA
A defined benefit or cash balance pension plan
Offering any qualified retirement plan removes the obligation to participate in Secure Choice. This exemption often creates an opportunity for employers to choose a more flexible and customizable plan instead.
How the Secure Choice IRA Works for Employees
Eligible employees are automatically enrolled unless they opt out.
Default program features include:
Automatic enrollment at a preset contribution rate
Contributions made on a Roth (after-tax) basis
Employee-owned accounts that move with them if they change jobs
Limited investment menu selected by the state
Employees can:
Change contribution amounts
Opt out at any time
Withdraw funds subject to Roth IRA rules and penalties
Employer Responsibilities Under the Mandatory IRA Law
Although employers do not contribute financially, they still carry administrative responsibilities.
Employer duties include:
Registering with the Secure Choice program
Providing employee information
Processing payroll deductions
Submitting contributions on schedule
Distributing required employee notices
Failure to comply may result in state enforcement actions once deadlines are fully phased in.
Deadlines and Penalties for Non-Compliance
New York’s rollout is being phased in by employer size, with enforcement expected to increase through 2026.
Potential consequences of non-compliance include:
Monetary penalties
State enforcement notices
Increased scrutiny for repeat violations
Our analysis at Greenbush Financial Group suggests that many business owners delay action simply because they are unaware the rule applies to them.
Is Secure Choice the Best Option for Employers?
For some businesses, Secure Choice meets the minimum requirement. However, it may not be the best long-term solution.
Limitations of the mandatory IRA include:
No employer contribution flexibility
Roth-only structure
Limited investment choices
Reduced perceived benefit compared to a 401(k)
In contrast, alternatives such as SIMPLE IRAs or 401(k) plans can:
Increase tax deductions for employers
Improve employee recruitment and retention
Offer higher contribution limits
Allow customized plan design
At Greenbush Financial Group, we often help employers compare Secure Choice with private retirement plans to determine the most cost-effective and strategic solution.
Planning Considerations for Business Owners
When deciding how to comply, consider:
Your employee demographics and turnover
Tax deductions available to the business
Administrative complexity
Long-term growth and scalability
Choosing the right retirement plan is not just about compliance; it is a strategic business decision.
Rob Mangold
About Rob……...
Hi, I’m Rob Mangold. I’m the Chief Operating Officer at Greenbush Financial Group and a contributor to the Money Smart Board blog. We created the blog to provide strategies that will help our readers personally, professionally, and financially. Our blog is meant to be a resource. If there are questions that you need answered, please feel free to join in on the discussion or contact me directly.
Frequently Asked Questions About New York State Mandatory IRAs
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Is the New York State Secure Choice IRA mandatory for all businesses?No. It is only mandatory for businesses with 10 or more employees that do not already offer a qualified retirement plan.
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Do employers have to contribute to the Secure Choice IRA?No. Employers are not allowed or required to make contributions; only employee payroll deductions are permitted.
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What happens if my business ignores the mandatory IRA requirement?Non-compliance may result in penalties and enforcement actions as the state increases oversight.
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Can employees opt out of the New York mandatory IRA?Yes. Employees are automatically enrolled but may opt out or change contributions at any time.
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Does offering a SIMPLE IRA exempt my business from Secure Choice?Yes. Offering a SIMPLE IRA, 401(k), or SEP IRA fully satisfies the requirement.
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Is Secure Choice better than a 401(k) for small businesses?Not always. While Secure Choice is simple, many businesses benefit more from private plans with higher limits and tax advantages.
