2026 New York State Mandatory IRA Rules: What Employers Must Do to Stay Compliant
New York State’s Secure Choice IRA program is creating new compliance requirements for many employers beginning in 2026. Businesses with 10 or more employees that do not already offer a qualified retirement plan may be required to enroll workers in this state-facilitated Roth IRA program. Our analysis at Greenbush Financial Group explains who must comply, employer responsibilities, potential penalties, and why alternative retirement plans like SIMPLE IRAs or 401(k)s may offer greater long-term value.
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
-
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.
-
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.
-
What happens if my business ignores the mandatory IRA requirement?Non-compliance may result in penalties and enforcement actions as the state increases oversight.
-
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.
-
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.
-
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.
New York State Secure Choice Law — Companies Are Now Required to Sponsor Retirement Plans for Employees
New York’s SECURE Choice program is changing how many employers must handle retirement benefits. If your business doesn’t currently offer a qualified retirement plan, you may be required to either register for SECURE Choice or implement an alternative plan option. In this article, we break down who must comply, key deadlines, and what employers should do now to avoid penalties and ensure employees have a retirement savings solution.
By Michael Ruger, CFP®
Partner and Chief Investment Officer at Greenbush Financial Group
The New York State Secure Choice Savings Program requires most companies and not-for-profit organization in New York to either:
Sponsor a qualified employer-sponsored retirement plan, or
Register for the state-run Roth IRA program and remit employee contributions.
This law affects businesses based on size and existing retirement plan offerings. In this article, we’ll explain:
Who is covered under the law
Important effective dates by company size
What qualifies as an exempt employer-sponsored retirement plan
How to certify exemptions
Employer responsibilities in remitting contributions
How employees interact with their state-run IRAs
Penalties for non-compliance
Practical tips for employers to prepare
What Is the NY Secure Choice Savings Program?
The Secure Choice program is a state-sponsored retirement savings program that allows participating employees to save for retirement through automatic payroll deductions into a Roth IRA. Employers who do not already offer a qualified plan are required to facilitate the program.
The program is overseen by the New York Secure Choice Savings Program Board and is designed to expand retirement savings access to private-sector workers across the state.
Who Must Comply?
An employer must either offer a employer-sponsored retirement plan or participate in the Secure Choice program if all of the following are true:
The employer has 10 or more employees in New York during the prior calendar year;
The employer has been in business for at least two years;
The employer does not already offer an employer-sponsored retirement plan to employees.
Employers with fewer than 10 employees are generally not required to participate in the state program, though they must still register and certify exemption if applicable.
Effective Dates Based on Employer Size
Secure Choice implementation in 2026 is staggered based on the number of New York employees:
These are the dates by which employers must either:
Register for the Secure Choice program, or
Certify exemption via the official state portal.
Exemptions: Qualifying Employer-Sponsored Retirement Plans
However, even if an employer meets the employee-size threshold above, it is exempt from the Secure Choice program if it already sponsors an employer-sponsored retirement plan. Employers must still certify their exemption through the Secure Choice portal.
Qualifying employer-sponsored plans include:
401(k) plans
403(a) qualified annuity plans
403(b) tax-sheltered annuity plans
SEP IRAs
SIMPLE IRA plans
457(b) plans
If you offer one of the above, your business can avoid participation in the state program — but you must still submit an exemption through the official portal.
How to Certify an Exemption
Employers seeking exemption need to log in to the Secure Choice employer portal and submit documentation of their qualified plan. Details include:
Federal Employer Identification Number (EIN)
Access Code (typically sent to employers by mail or email)
Plan documentation showing current retirement plan offerings
Official website for registration and exemptions: www.NewYorkSecureChoice.com
Employer Responsibilities if Participating in Secure Choice
If your business does not qualify for an exemption, you must:
Register for Secure Choice by the deadline assigned to your employer size.
Automatically enroll eligible employees into the program. (Eligibility is all employee age 18 or older with earned taxable wages)
Set up payroll deductions and begin subtracting employee contributions.
Remit contributions to the state-administered Roth IRAs.
Upload employee data and maintain records via the program portal.
Employers do not contribute to the accounts, and they cannot offer matching contributions under the Secure Choice IRA program.
How Contributions Work
Remitting Employee Payroll Contributions
Contributions are deducted from employee paychecks via automatic payroll withholding.
Employers are responsible for timely remittance of these contributions to the state program’s recordkeeper (program administrators).
Employers do not make employer contributions.
Default Contribution and Adjustments
Employees are typically auto-enrolled at a default 3% contribution rate of gross pay.
Employees may adjust the contribution amount or opt out entirely within the enrollment period or later open enrollment windows.
Employee Experience With Secure Choice
Account Setup and Features
Each participating employee gets a Roth IRA account through the Secure Choice program.
Contributions are after-tax, meaning withdrawals in retirement are generally tax-free (subject to Roth IRA rules).
Accounts are portable — employees keep them even if they change jobs.
Investing, Contribution Limits, and Withdrawals
Employees can choose investment options provided by the program or stay with the default investment.
They can change contribution rates or opt out after the initial enrollment period.
Roth IRA contribution limits apply (e.g., the standard IRA annual limits — $7,500 for 2026 before catch-up, potentially higher with catch-up contributions for those 50+, etc.).
Distributions follow general Roth IRA rules (qualified distributions tax-free and penalty-free after meeting age/service requirements).
How Employees Are Enrolled in the NY Secure Choice Roth IRA Program
A common question from employers is whether they are responsible for enrolling employees, or whether employees must sign themselves up. Under the New York State Secure Choice Savings Program, the process works as follows:
Employers Facilitate Enrollment — Employees Do Not Self-Enroll
Employers do not actively “sign up” employees, and employees do not enroll themselves directly. Instead, enrollment happens through automatic payroll facilitation by the employer.
Here’s how the process works step-by-step:
Step 1: Employer Registers and Uploads Employee Information
Once an employer registers for Secure Choice (or confirms participation is required), the employer must:
Upload required employee data into the Secure Choice employer portal, including:
Employee name
Social Security number or Tax ID
Date of hire
Contact information
Identify eligible employees who meet program requirements
For newly hired employees, the employer needs to enroll them in the Secure Choice Program within 30 days of their hire date
This step triggers the enrollment process, but it does not immediately deduct contributions.
Step 2: Employees Receive Enrollment Notice From the State Program
After the employer uploads employee information:
The Secure Choice program (or its appointed program administrator) sends official enrollment notices directly to employees
The notice explains:
That the employee will be automatically enrolled
The default contribution rate
How to opt out or change contribution levels
Where to access their account online
This communication comes from the state program, not the employer.
Step 3: Automatic Enrollment Occurs Unless the Employee Opts Out
If the employee takes no action during the notice period:
The employee is automatically enrolled in a state-sponsored Roth IRA
Payroll deductions begin at the default contribution rate (generally 3% of gross pay, unless adjusted by the employee)
If the employee chooses to opt out:
No deductions are taken
The employer must maintain records showing the opt-out election
Step 4: Employer Begins Payroll Withholding and Remittance
Once enrollment is active:
The employer withholds the elected contribution amount from each paycheck
Contributions are remitted to the Secure Choice program on a recurring basis, aligned with payroll schedules
The employer’s role is limited to withholding and remitting contributions — similar to payroll taxes
Importantly:
Employers do not select investments
Employers do not manage accounts
Employers do not provide investment advice
Employers do not contribute employer funds
Step 5: Ongoing Employee Control
After enrollment:
Employees manage their own accounts directly through the Secure Choice program
Employees can:
Change contribution percentages
Opt out or opt back in later
Select or change investment options
Request distributions (subject to Roth IRA rules)
The account belongs to the employee and is fully portable if they change jobs.
Penalties for Non-Compliance
While specific penalties in the Secure Choice law are still being formalized, failure to register or certify your exemption by the applicable deadline can subject employers to:
Administrative penalties and fines
Potential liability for missed remittance obligations
Ongoing penalties until compliance is achieved
For example, programs in other states have assessed penalties like $250 per employee per month for non-compliance, escalating over time. While New York’s specific fines may vary, the risk of enforcement is real and growing as the program rolls out statewide. However, as of February 2026, New York has yet to communicate when penalities will begin and what the amounts will be.
Tips for Employers
Start Early — Don’t Wait
Act well in advance of your registration deadline. If your company currently sponsors an employer-sponsored retirement plan, it’s making sure someone on your team will be logging into the NYS portal to file the exemption. For companies that plan to implement an employer-sponsored retirement plan prior to their deadline, there is extreme urgency to start evaluating as soon as possible both the type of plan that is best for the company and the platform for their plan. Establishing an employer-sponsored plan often involves:
Plan design and adoption
Document creation and compliance testing
Employee communications and elections
Payroll integration
If it’s the intent of your company / organization not establish a retirement plan and enroll employees in the state-mandated Roth IRAs, advanced action is still required. Companies will be required to gather the employee data and upload it to the NYS Secure Choice website, confirm how payroll will handle the automatic Roth deductions from payroll, who will be responsible for remitting the contributions to the NYS platform each pay period, and communication to the employees in advance of the payroll deduction is highly recommended.
Many businesses will be acting on these requirements in 2026 — waiting until the last minute can create unnecessary compliance risk.
Evaluate Whether to Offer Your Own Plan
Offering a 401(k) or other qualified plan may be more attractive for recruiting and retention, may allow employer matching, and could provide tax incentives not available under the state program. Also, there are a number of tax credits currently available to help offset some or all of the plan fees associated with establishing an employer-sponsored retirement plan for the first time. See our article below for detail on the start-up plan tax credits available:
GFG Article: 3 New Start-up 401(k) Tax Credits
How Many Other States Have Similar Mandated Retirement Programs?
New York is not alone in adopting a mandatory retirement savings program for private-sector employees. In fact, Secure Choice builds on a growing national trend aimed at addressing the retirement savings gap for workers who do not have access to an employer-sponsored plan.
As of today:
More than a dozen states (15+) have enacted legislation requiring certain employers to either:
Offer a qualified employer-sponsored retirement plan, or
Participate in a state-facilitated IRA program funded through payroll deductions.
Several of these programs are fully operational, while others are in various stages of implementation or phased rollout.
States that were early adopters (such as California, Oregon, and Illinois) now have millions of workers enrolled and billions of dollars in assets within their state-facilitated retirement programs.
New York Has Selected Vestwell
New York has selected a company by the name of Vestwell to serve as the program administrator for the state-mandated Roth IRA accounts.
Choosing a Startup Retirement Plan Provider: What Employers Should Know
For many employers, the Secure Choice law will prompt a first-time decision about whether to start an employer-sponsored retirement plan instead of participating in the state-run IRA program. While this can be a positive move for employee recruitment and retention, it’s important to understand that not all startup plan providers — or pricing models — are the same.
There Are Many Choices — and Fees Vary Widely
Employers exploring startup plans will quickly find a wide range of providers, including bundled platforms, payroll-integrated solutions, and self-directed providers. Costs can differ significantly depending on:
Plan administration fees
Investment platform and fund expenses
Recordkeeping and compliance costs
Per-participant charges
Advisor or fiduciary service fees (if applicable)
Some providers advertise low headline pricing but layer on additional costs elsewhere. Others charge flat fees that may be economical at certain asset levels but expensive for smaller plans. Understanding how fees are structured — and how they may grow over time — is critical when selecting a provider.
Start-up 401(k) Provider
In the past, we have worked with companies that successfully used Employee Fiduciary as a start-up 401(k) solution. Employee Fiduciary is a national-level 401(k) provider that offers flexibility with plan design, Vanguard index funds for investment options, and fee transparency.
Disclosure: This statement is not an endorsement of Employee Fiduciary or their 401(k) solution. Our firm has had experience in working with Employee Fiduciary in the past, and since we do not offer investment services to start-up plans, we want to be able to connect readers with what I, as the author of this article, deem to be a high-quality start-up 401(k) plan solution. Our firm does not receive any form of compensation for referring clients to Employee Fiduciary.
Conclusion
The New York Secure Choice Savings Program represents a significant change for private employers in the state. Whether you must register for the state-run IRA program or certify exemption with your existing retirement plan, compliance is mandatory and deadlines are coming fast in 2026.
By planning ahead — and consulting legal, tax, or benefits professionals if needed — employers can meet these requirements smoothly while ensuring their employees have access to valuable retirement savings opportunities.
A Note on Our Firm’s Focus
Our firm does not offer solutions for brand-new startup plans. We specialize in working with established retirement plans that already have at least $250,000 in plan assets, for which we provide investment management and plan consulting services.
About Michael……...
Hi, I’m Michael Ruger. I’m the managing partner of Greenbush Financial Group and the creator of the nationally recognized Money Smart Board blog . I created the blog because there are a lot of events in life that require important financial decisions. The goal is to help our readers avoid big financial missteps, discover financial solutions that they were not aware of, and to optimize their financial future.
