Name: jeff kuzmich - Migrate_NY_State_Mandate_0121206_5173707
Uploaded: 2026-02-26T05:54:37.752Z
Duration: 30 min 29 s
Description: jeff kuzmich - Migrate_NY_State_Mandate_0121206_5173707

Transcript for "jeff kuzmich - Migrate_NY_State_Mandate_0121206_5173707": -Hello, and thanks for joining us today for our presentation on New York Action Plan for Businesses. My name is Stephanie Schifano, and I'll be moderating today's session. First, please note that the primary audio connection for today's session is streaming via your computer, and there is no dial in option. Be sure to check your speaker volume to ensure your computer is turned on and set to an audible level. To refresh or reload your webinar browser, on a PC you can press the F5 key, or on a Mac you press Command and R. Let's take a closer look at some other important features. To download and print a copy of today's deck for future reference and to access additional resources, refer to the Files and Resources window at the top right of your console. This is available at any time during the event. If you have questions today, please you can send them via the Ask Us a Question window. To submit a question, simply write in your question and click Submit. Please note the presentation does not constitute legal advice and is for informational purposes only. And now I'd like to introduce today's speakers. I'm excited today to have Zachary Keep and Doug Johnson joining us. Zach has more than fifteen years of experience in retirement plan compliance and is well versed in the complexities of ERISA and non ERISA four zero one, four zero three, four fifty seven plans. Doug has expertise in human capital management solutions. His current focus is on sales leadership and business development within the HR and retirement services sector. I'm lucky enough to walk you through today's agenda and then pass this off to our presenters. So we're focusing on the New York State Retirement Mandate. We're going to give you a five step action plan that'll help you comply with this new law requiring most New York businesses to offer an employee of retirement plan. We'll walk you through the steps. So step one is understanding the law. Step two is knowing your options. Step three is comparing New York secure choice IRA versus a four zero one ks. Step four is to explore four zero one ks benefits. And then step five, we're going to make sure you choose the right plan for your business. And with that, let me hand it off to Zach. Okay. Thank you so much, Stephanie. I appreciate the opportunity to be here today. And, thank you all to our, hearing my voice. It's always exciting to get the chance to talk a little bit about what is new in the world of retirement. And boy, I've got to say that state plans, the growth of state plans has been absolutely phenomenal. We've seen it all across the country. We'll talk a little bit about some of those trends in a moment, but we have seen a tremendous amount of traction with state retirement plans. Very exciting to see that New York is joining at this point, probably close to 50% of states in the union have some kind of state plan either active or being contemplated. Very excited to see that New York is joining the bandwagon here. In 2026, New York State is going to require that most non exempt businesses offer some kind of a retirement plan to their employees. And the way that this, mandate is phased in is fairly typical. It, pretty much matches what we've seen with other states in the union that have rolled out this type of employer mandate, which is to say that the larger your employee base is, the sooner you'll need to comply with this mandate. The, the largest employers, those with 30 or more employees will need to comply on March 18. And obviously things phase down from there. If you have, between 15 and 29, that's May 15. And then 10 to 14 is July 15. Now again, not for all businesses. There are some exceptions that, that we'll talk about as we, move through our presentation today, but most businesses are going to need to at least think about offering a retirement plan. So we're gonna talk about what New York State will require and also what some of your options are. But first, I'd like to chat just a little bit about why are state mandates so popular and in particular, why did New York choose now to, to join this growing trend? You know, item one, many states, let's say the entire country, is experiencing a retirement crisis. It is very difficult to turn on the news without seeing some type of, spot about the retirement crisis. We see retirement crisis, we see personal savings crisis. And, legislation has been enacted to help with both of those. But at the federal level, we haven't really seen much in the way of a mandate. We've seen incentives, which we'll talk about, but there has been no retirement mandate. So for about, at this point, ten years, we have seen states stepping into the void left by the lack of federal legislation. We all know that Social Security funds are in jeopardy. We all know that lots of people have no retirement savings or are underserved when it comes to retirement. So starting about a decade ago, certain States pioneered the concept of a state mandated retirement plan. These retirement plans often look very, very similar. It's an IRA or an individual retirement account based retirement plan. It's administered by the state and a record keeper of the state's choosing. And again, like we've already seen in New York, most states have sort of that phased enactment of the mandate. New York state is a pretty average retirement plan. Not to say it's bad, but, it doesn't look that much different than at this point. Again, roughly half of states in the union have something like this in the works or already active. So if you are an employer in New York State in the early days of 2026, this begs the question, you know, what should you do? What are your options and what do you need to think about? Well, I think broadly speaking, we've got three options as a business in New York State to comply with the mandate. Number one is you can sign up for New York Secure Choice Auto IRA. That that is absolutely an option. That's why New York State has the mandate in in a manner of speaking, you know, a little bit of a spoiler for what I'll talk about in a moment, but, you know, a lot of the a lot of the industry really speculates, and I've had some conversations with lawmakers to this effect, that in fact, the goal of these state mandates are not so much to get people in the state IRA, as they are to foster adoption of that third option on the far right, which is to establish a qualified retirement plan like a four zero one k. I think most businesses are going to go for option one on the left or three on the right. The middle path gang is a very narrow path. That's gonna involve registering for an exemption. That debt is gonna prove difficult for, I think, a lot of businesses, but let's talk about each of these options in order. The first, sign up for Secure Choice. That absolutely will satisfy any business's obligations with respect to this to the employer mandate. Again, what we have here is a basic automatic IRA. The deadlines, let's say between 2026, based on the number of employees that you have. This will, you know, it will get your employees access to a basic IRA based retirement plan. That is not a bad thing. It is very difficult to argue with enhanced access to retirement. There are some other options out there though, so let's talk about that. Option two. A business might be exempt from the program if there is, a number of qualifying factors. You know, the classic one is if you're already offering some type of retirement plan. You have already satisfied your mandate, and thus you need not worry about New York State legislation. As we saw on the first slide, there's also, you know, some size qualifications, some businesses can squeak through, and often there's gonna be a carve out something like, a church affiliated employer, something like that might need to worry a little bit less about this. But again, I think it's fair to say that most businesses by the 2026 are going to at least need to think about, if not act upon, the establishment of a retirement plan. Which leads us to option three. And option three establish a qualified four zero one ks plan, administered by a professional provider that satisfies the New York State Retirement Mandate, and has tax credits that are frankly fairly lucrative. So I wanna delve into this a little bit more because this really, to me, it sums up the trend that has characterized the retirement industry as a whole for now roughly the past five, maybe even a little bit longer years. On one hand, we have the growth of state mandates. More and more states saying, Hey, employer, you need to offer some kind of retirement plan. One of the very earliest states to do this was Maryland, but quickly other states jumped on the bandwagon. And as we've had conversations with some folks in DC, what we've heard is, you know, yeah, this is a safety net. We envision these state plans as a little bit of a safety net. The hope, maybe even the intent, was to drive employers towards the adoption of a four zero one ks plan. And interestingly, although the federal government has been silent when it comes to a mandate, they have done a lot when it comes to incentivizing employers to offer a four zero one ks. Not too terribly long ago, Secure two point o, setting every community up for retirement, That passed in the waning days of '22, and it established some incredibly lucrative tax benefits for an employer establishing a four zero one k plan. Specifically, it offset startup costs. Startup costs for a four zero one k are now a tax credit for the employer. It also, and very interestingly, it created sort of a tax credit for employers choosing to match in a four zero one k. So what we have here is an environment where many, not most employers in New York and elsewhere in the country, they need to offer some kind of retirement plan. And they have two options, they have the state plan, they also have what's arguably a better, certainly a more fully featured plan, and that has, tax credits that offset the cost of establishment. So what we at Paychex and others in the industry have seen is that oftentimes employers look at this and they think, well, let's think about the pros and the cons. Let's sort of weigh the options of a state plan like the New York Secure Choice IRA versus a four zero one k. And I don't mind saying what we typically see is that employers will choose that four zero one k option. Let's talk a little bit about why that might be. I think there's really three advantages for both employers and employees. You know, number one, it's a much higher contribution limit. More than three times higher in four zero one k versus a IRA. So what does that mean? It means that participants can save more, they can save faster. It also allows for employer matching. I think most everyone is fairly familiar with that in a four zero one ks. An employer can choose to match a percentage of what an employee defers. This is, yeah, honestly, four zero one k's in general, but I think the employer match in particular is a great way to attract and retain high quality employees. That is, you know, in our experience here at Paychex, the benefits that employees like are retirement, health insurance and paid time off. Employees like all benefits, but those seem to be the big three. And oftentimes, I think a four zero one k that is richly featured, that has that employer match, that does allow for loans, that does allow for hardship distributions, a plan document that is well designed to support employees, that is going to incentivize and it's going to keep the types of employees that employers really want to retain. So number one, we have a four zero one ks with a much higher savings limit. We have a four zero one ks with an employer match in particular and just more features in general. A four zero one ks can do a lot more. You can get a lot more creative with it. I think that's a good thing. And then of course, what we just talked about, we have the tax credits. Here's the benefit to the employer. That is an offset of startup costs like we discussed, that is 100% of startup costs that are going to be offset. We also have that, tax credit for the employer when it comes to offering an employer match, back to point number two. So not only is it, let's say, if not the same, it's gonna be substantially similar in terms of startup costs, but it is also a lot cheaper when it comes to making that employer match that your employees are potentially going to be looking for. So let's look in a little bit more detail. The 26 contribution limit. This is new every year, almost every year it goes up. We're looking at 24,500 versus 7,500. That's how much the employee can defer. There is also a catch up contribution for individuals over the age of 50, and there's no competition there. Startup tax credits. Again, that's not something that we're going to see for an employer choosing to utilize a state plan. Not to say that it's a bad thing to utilize the state plan, but when we look at that higher contribution limit, the options when it comes to catch up provisions, the options when it comes to tax deductible employer contributions, it starts to really heavily weight things in favor of a four zero one ks plan. I think it's also important to talk a little bit about what the employer needs to do, not just to register for a state plan. We're going to go through that in a moment, but I want to talk from a compliance standpoint a little bit about some of the risks that an employer might face when it comes to establishing a retirement plan. One of the big ones is what we call fiduciary risk. As a plan sponsor, the employer can ultimately be responsible for selecting investments in the fashion that provides the greatest benefit to an employee. With a IRA plan, with a state based IRA, often it falls to the employer to select investments or that menu of investments might be a little bit limited. With a four zero one ks, you can turn to a third party administrator. You can turn to an entity that will operate that four zero one ks plan on your behalf that will select those benefits on your behalf. And although you need to oversee that entity, there's a little bit of insulation from the day to day, bumps and bruises of operating a retirement plan. And then I think last but not least, we need to talk about cost to employer. Those costs with the four zero one ks can absolutely be offset with some of those tax credits. Obviously you'll want to speak to your accountant, but the offset as you can see above can be pretty substantial. With the state plan, you know, there's going to be a little bit of administrative burden. Time is money and, we do see that being at least a little bit of a factor with those state plans. So for those of you who are looking to go the state plan route, again, if you if you weigh the pros and cons and you determine the four zero one ks plan just isn't for you, here's a good overview of what is going to be required when it comes to getting involved with the state plan. You know, number one, you're going to need to go to New York State, New York State Secure Choice. You're going to receive an access code. There's going to be a registration process. And I might add that it is going to be very important to register before your deadline. It will take probably about thirty days to set up an account to upload that employee roster. And during that time frame, the employee can kinda choose what to do. If they can they can choose to be automatically enrolled, they can choose to customize, or they can choose to opt out. And then finally, you'll get to that first paycheck with the payroll deductions. You as the employer are going to need to initiate that deduction. So again, there's a little bit of that administrative burden that we were just talking about. Although the state plan is basic, it's not necessarily free of work from an employer standpoint. So with that overview of what's involved in a state plan versus what's involved in a more traditional four zero one ks. I think I'd like to turn it over to my colleague Doug. Doug, did you kind of want to walk through some more of the benefits of a four zero one ks? Absolutely. And thank you, Zach. Greetings everyone and really great information that Zach shared there about four zero one ks and what the differences are with the New York Secure Act. So let's dive in some of the benefits of what a four zero one ks can provide. All right, so first a major benefit that the four zero one plan can provide is tax credits as you heard Zach talk about. The Secure Act and Secure two point zero provide tax advantages for qualified employers and participants. Some of the key employer benefits when we talk about tax credits is there is a startup tax credit that's available for establishing a new retirement plan that is up to 5,000 maximum per year for the first three years. Yes. The additional $500 tax credit for each year for the first three years that a business owner would be available to would be for auto enroll. Excuse me. These tax credits can go to start up costs, rendering the plan virtually free for the first three years. For businesses who choose to match a portion of their employer's contributions or provide a profit sharing contribution, a new tax credit of up to $1,000 per employee per year is available for five years. So some really, really great tax incentives that you can offer as a business owner. The employer contribution credit is generally a percentage of the amount contributed by the employer up to $1,000 per employee each year for five years. The additional credit is limited to employers with 50 or less employees and reduced for employers with between fifty one and one hundred employees. All right, let's talk about some other benefits for a business. Obviously, by implementing a four zero one ks there's some other benefits that can help a business. One of those, a real big one that we talk about all the time, is attract and retain quality employees. As you know, it's really necessary to have good employees and they can help you maintain and grow your business. And as everyone probably knows, turnover is expensive, so reducing turnover is always a key for a business. Something to note that 401s are very popular amongst employees these days. Another key advantage or key benefit is save on business taxes. Employer contributions to a four zero one, meaning the expenses of that, are deductible on an employer's income tax return. Business owners can also participate and contribute on a pretax and or Roth basis. One of the key things here too, it helps employees and owners save for tomorrow. So more than three times higher contribution limits than IRAs. And that means that participants can save more faster. All right, so today four zero one plans are no longer just for really big companies. Within the family of 401s, you and your employees have many options. There are many plans designed to fit budgets and needs of small businesses. One of these is the pooled employer four zero one ks plan, known as a PEP. This plan is tailor made for clients who don't have a lot of time or staff to handle paperwork and administration. Here's how it works. Employers collectively participate in a four zero one plan that is professionally administered by a pooled plan provider. This is a great solution for businesses that need to be compliant with the New York state legislation, want to offer more than what the New York Secure Choice brings to the table, and don't have a lot of time or staff to manage a plan or do the administration, as you heard what Zach talked about. There's flexible plan options, payroll integration, a safe harbor, auto enroll and Roth that come along with that. Now, what are some of the benefits of the Paychecks PEP four zero one ks? Well, all the benefits of a four zero one ks plus, you've got reduced administrative tasks with the payroll integration as well as the simplified plan management. You've got reduced fiduciary liability. You've also got reduced administrative costs potentially, and also those tax credits that are available through Secure Act and Secure two point zero. So really great option for a lot of businesses. So as we just talked about, there's really two good options here. You've got the traditional four zero one and the PEP. They're really great options for a business. It really all depends on what the individual needs of each client are. So when you look at these two columns here, I'm not going go through every detail here, but the PEP basically gives you less work, lower cost with no audits. And then a traditional plan gives a little bit more flexibility and more control for that business owner to have control over what their investments are and how they want to design their plan. So some of the major differences, as you heard Zach talk about, is with a pooled employer plan on the plan sponsor side, the plan sponsor is the pooled plan provider. They're named as the fiduciary. Whereas with a traditional four zero one, the employer is the plan sponsor and they are named as the fiduciary on the plan. But a lot of similarities, especially with the tax credits, they're the same for each one. One of the other differences with audits, with a pool plan provider, you also have the ability to the plan provider takes care of all the audits for a large plan, whereas with a traditional four zero one, that would mean the large plan is the responsibility of the audit for the employer. One of the popular options that we have, another option we have with four zero one is the safe harbor provision. There are many benefits with this type of plan, so let's explore some of them. So basically, the IRS mandates that annual testing has to happen with a four zero one to confirm that the plans are not being used as a tax shelter for owners or high earning employees. So with a safe harbor plan, this testing is waived. Now this is a big benefit for very small businesses because testing can be time consuming, can create a little bit of anxiety, and the safe harbor eliminates the cost and complexity of the testing. Safe harbors also promote high levels of engagement in the plan amongst non highly compensated employees with providing a match. Finally, businesses still get the same advantages of any standard four zero one plan. What I'd like to do these next couple of minutes is kind of look at some of the misconceptions that many people have about four zero one ks's. In fact, more businesses are adopting four zero one ks plans today because of the tax credits you heard earlier that Zach talked about and plus the emergence of a very much more affordable plans tailored for small businesses. So when you take a look at this, one of the biggest ones is four zero one plans are too expensive. That's one of the myths out there. But as you can see, the SECURE Act really addresses those by increasing the tax credits potentially up to $16,500 over three years. That pretty much can help make that plan free for the first three years. Now, the pool employer plan also is a very cost effective option because it actually can help with resources and helps with economies of scale. Another one we see is my company is too small to offer a retirement plan. Well, actually, 401s exist for all business sizes, including small proprietorships and with no employees. And the tax credits also can help with paying some of those costs or getting credit for those costs. A PEP is a really great option for those small and medium sized businesses as well. Sometimes we hear, my employees can't afford it. Well, actually, the impact of employers' net pay is less because of the pretax deductions. So your employees may spend maybe $5 a day on a cup of coffee, right? But it's probably very feasible for them to be able to save a certain amount per pay period to help save for their future based on that pretax deduction. Auto enroll is also a great feature that can help with that as well. Another one, a myth, is a simple IRA is enough. Well, as you heard earlier, four zero one contributions are much higher than a simple IRA. In 2026, the per participant can defer up to $24,500 with, if you're over 50, an additional $8,000 that you can contribute to a four zero one ks. Another one we hear is it's too complicated. Well, of these affordable solutions are there to ease the administration of these retirement plans. So as you've heard, a lot of the things that we can provide with a four zero one ks make it a really great option for any size business. With that, I want to turn it back over to Stephanie. Doug, thank you so much, and Zach, thank you also. This was a great event today, and I'm sure everybody loved learning what the New York retirement mandate requires, what their businesses need to do to comply with that, the differences between the IRAs and the 401s, and then also the types of plans that are best for those businesses. With that, what I'd like to do is give you a couple important reminders that have been mentioned throughout the webinar, but the deadlines will be pending soon, so thirty or more employees is going to be due 03/18/2026. For those 15 to 29 employee size companies, it's 05/15/2026. And then for the 10 to 14 employee size companies, that's going to be 07/15/2026. With that, we do have a poll question that's going to pop up separately on your screen, so please mark your response and click Submit button. The question is going to be, Would you like to speak with a paycheck sales professional about adding retirement options to your business offerings? And then I'll give you a yes or a no response. With that, what'll happen is we can have somebody reach out if you're interested, and they can review what the offerings are, or actually just follow-up on some of the content from the webinar today. With that, again, thank you, Zach and Doug, and thank you everyone for joining us. As a reminder, you can find the printable version of today's deck in the files and resources area on the upper right screen of your console. It should be the first resource listed in that window. You'll also find a wealth of multimedia tools and information at our Retirement Plan Resources hub when you follow the link on your console. As we close today's session, you'll see a short survey pop up, and we invite you to contribute feedback to help us ensure that our resources continue to meet your needs. If you can spare an extra few moments, please let us know what you think. Thanks again, and we hope you have a great day.