Tag: retirement

October 10, 2025

New York Secure Choice: Key 2026 Deadlines for Employers

New York Secure Choice, the state-facilitated Roth IRA program, officially launched on October 8, 2025. Covered employers face 2026 registration deadlines and new, ongoing payroll and notice obligations. Below is what New York employers need to know now, with the latest official dates and practical guidance.

The New York Secure Choice program only applies to private employers and their employees. Existing state retirement systems remain in place for the public (government) sector. New York joins more than a dozen states now mandating access to payroll-based savings plans in private employment.

Who’s Covered by New York Secure Choice

An employer is covered if it:

Has at all times during the previous calendar year employed at least 10 employees in New York;
Has been in business at least two years; and
Does not offer a qualified retirement plan (such as a 401(k), 403(b), SEP, SIMPLE, or 457(b)).

Employers meeting these criteria must register through the Secure Choice portal. However, those who meet the first two criteria, but already sponsor a qualified plan, must still log in to certify their exemption. Others may still choose to certify exemption (based on size or duration of business) to avoid complications.

At this point, it does not appear that otherwise exempt employers can voluntarily participate in Secure Choice.

Employees are eligible for the program if they are 18 or older and work for a covered employer in New York.

Effective Dates: Staggered 2026 Registration Deadlines

New York Secure Choice has published employer registration deadlines based on employer size:

30 or more employees: March 18, 2026
15–29 employees: May 15, 2026
10–14 employees: July 15, 2026

Employers will receive notice as their deadline approaches, but registration is open now.

What the Program Is (and Isn’t)

The Secure Choice program is a state-sponsored, automatic-enrollment payroll-deduction Roth IRA program. It is not an ERISA plan. Employees are automatically enrolled unless they opt out, and each account is an individual Roth IRA owned by the employee, not the employer.

By default, contributions start at 3% of pay. Funds are initially placed in a principal protection option for approximately 30 days. Then they are transferred to an age-based target-date fund, unless the saver chooses otherwise. Employees can elect to automatically increase their contribution by 1% each year, up to a maximum of 10%. Participation is voluntary, and employees may opt out at any time.

Employers cannot make matching or other contributions to the Secure Choice IRAs. They may only deduct and remit from an employee’s earned wages.

As an IRA, employees maintain the same Secure Choice retirement account when they change jobs.

Employer Duties Once You’re in the New York Secure Choice Program

Once registered, employers must:

Upload employee information to the Secure Choice portal.
Allow the program to notify employees, who have a 30-day window to opt out or adjust their settings.
Begin payroll deductions after that opt-out window closes.
Remit employee contributions each pay period.

Employers must submit all employee contributions by the last day of the month following the month in which the corresponding wages were paid. Nonetheless, employers have no fiduciary responsibility for investments or plan management. Vestwell will administer the program, and The Bank of New York Mellon serves as custodian.

Exemptions and Existing Plans

Employers that already offer a qualified retirement plan are exempt from Secure Choice requirements but must certify their exemption through the portal. Certification helps the State track compliance and avoid unnecessary reminders or enforcement actions.

Enforcement and Penalties

The State has the authority to establish penalties for employers that do not register or remit contributions. As of now, however, no penalty schedule has been published. Enforcement guidance is expected closer to the 2026 registration deadlines.

Accordingly, you should monitor program updates in 2025 for the release of final enforcement procedures.

Practical Steps for Employers

1. Confirm coverage and timing.
Determine your employee count and identify which 2026 deadline applies to your business. Some companies will be close to the thresholds and need to carefully analyze their coverage status.

2. Decide whether to register or certify an exemption.
If you already sponsor a retirement plan, log in to the portal and certify your exemption. If not, register and prepare your payroll system for deductions.

3. Prepare for the 30-day employee opt-out window.
After you upload employees, the program will notify them directly. Payroll deductions begin only after this period expires.

4. Coordinate with your payroll provider.
Ensure your payroll system can support Secure Choice deductions and remittances.

5. Train HR and payroll staff.
They should understand the employer’s limited role—facilitating payroll deductions and data maintenance only. Employers may not provide investment or tax advice.

Why New York Secure Choice Matters

Secure Choice shifts the default for New York employers that don’t sponsor a plan. If you’re covered, you must either implement your own qualified plan or register with the State program on the applicable 2026 timeline. Taking proactive steps now will help you avoid last-minute compliance issues and ensure a smooth rollout when your registration window opens.

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March 15, 2018

Voluntary Separation Programs

Voluntary separation programs can be mutually beneficial devices for making workforce adjustments. Employers can use them on their own or as a precursor to an involuntary program. Each program is different, but some common elements appear regularly.

What Is a Voluntary Separation Program?

Generally, I’m talking about any circumstance where an organization provides a group of employees the opportunity to resign voluntarily and obtain specified benefits that they would not otherwise be entitled to receive.

Reasons for Voluntary Separation Programs

There are many reasons why companies decide to implement voluntary separation programs. These are probably the most common:

Reduce Headcount

Whether due to lower business volume, technological advances, or other factors, sometimes companies no longer need as many workers. The result: a reduction in force. The options? Voluntary or involuntary terminations. It’s usually not enough for a company to announce that it needs 10 fewer employees only to discover that 10 people are ready to leave anyway. Instead, they may try to offer some inducement to entice employees to move on.

Reduce Payroll

Although reducing headcount can sometimes be a cost-saving measure, it doesn’t have to be. Some companies may have reason to downsize without spending less on labor costs. Space constraints, for example might make it economical to pay fewer people to do as much or more work.

But often money is a significant factor. And reducing payroll doesn’t have to mean reducing headcount. The focus could be on parting ways with more highly compensated employees. The company may even plan to replace them very soon, but with someone who demands a lower wage or salary.

Reorganize Functions

Neither money nor numbers have to be primary considerations. An organization may simply have the wrong personnel for their business going forward. Voluntary separation programs may coincide with retraining programs, for example. The idea could be to allow those who don’t want to transition to new roles to leave the company with some form of compensation for helping the business progress.

Facilitate Retirements

Companies can’t force employees out because of their age. But there may be ways they can make it easier for an employee to retire voluntarily. Many workers of traditional retirement age who would like to retire cannot afford to do so these days. In some situations it makes sense for their employers to provide an optional retirement program that would provide monetary or other (e.g., health insurance) benefits to allow employees to wrap up their careers on their own terms.

Structuring Voluntary Separation Programs

The ideal first step is to determine the company’s goals. Is it one of the four categories above? A combination of them? Something else?

With goals in mind, the employer can then consider which employees will be eligible to participate in the program. The program shouldn’t discriminate based on any protected characteristic, but not everyone needs to be offered the chance to participate. If the goals correspond to functional or headcount issues, then the company might only offer the program to specific departments or job functions. If costs are a factor, then the offer may extend only to relatively high earners.

The next step is to determine what to offer the employees. Usually, this would include some amount of cash severance pay. Health insurance or other benefit continuation may also be appropriate. Sometimes employers also offer out-placement services, like career counseling or skills training, to individuals who will remain in the workforce rather than retire altogether.

Normally, if the employer will be giving out something of value to employees who choose to leave, they should require the employee to sign a release of claims. Otherwise, despite the “voluntary” nature of the program, employees may turn around and sue the company. They may claim wrongful termination, or the allegations may relate to other aspects of their prior employment. Most employees who choose to participate in a separation program won’t object to signing a release. Those who do were probably going to cause trouble anyway. Then at least their reluctance or refusal to sign sends a valuable signal to the employer.

(Click here more on employee releases.)

Pitfalls to Avoid

Voluntary separation programs often work out well. However, as with everything, there are traps for the unwary. Here are some.

First, some employers use these programs to get younger. This raises potential age discrimination concerns. Merely offering a voluntary program that gives more senior employees the opportunity to resign/retire usually shouldn’t be unlawful. But companies must be careful about their approach. An employer who has been outspoken about getting younger to cut costs, bring on new skill sets, etc., can expect rumblings about age discrimination (if not litigation) if it later terminates the employment of older workers, even if justifiable on factors other than age.

Second, employers should obtain releases only after employment has ended. Sometimes employees accept a voluntary severance package, sign a release, and then continue to work until a later separation date. Then if something transpires between signing the release and the formal separation from employment, the release will not stop the employee from asserting a claim.

Third, organizations must plan for multiple possible outcomes. Sometimes the voluntary program produces the desired workforce changes on its own. Other times, too many, too few, or the wrong employees elect to participate. It may be possible to structure the program to avoid some of these bad outcomes (e.g., by limiting participation to a particular number of employees). But, whatever the approach, the voluntary nature leaves the results largely in the employees’ hands. Thus, employers should plan ahead for the next steps based on different contingencies.

Fourth, business needs can change quickly. And it takes time to design and implement a voluntary separation program. It is often best to keep a tight timeline for the program, so it wraps up before business conditions change significantly.

Final Thoughts

Implementing a voluntary separation program requires considerable planning. For most companies this planning should involve a team who can both provide the necessary background information/skills and keep the program confidential until launch. Team members ideally should include upper management, supervisors, human resources, and legal counsel experienced with group termination programs.

February 8, 2018

Tax Reform Affects Sexual Harassment Settlements and Employee Benefits

On December 22, 2017, President Donald Trump signed sweeping tax reform legislation. The controversial tax bill includes many changes that directly affect the employment relationship. These range from sexual harassment settlements and paid family and medical leave to reimbursed employee expenses and retirement plans.

Although I am neither a tax lawyer, nor an accountant, I offer a synopsis of these changes here.

Tax Deductions for Sexual Harassment Settlements

In response to the ongoing #MeToo movement, Senator Bob Menendez (D-NJ) introduced a new provision to the Internal Revenue Code’s section on tax deductions for ordinary trade or business expenses. The provision prohibits deductions for:

any settlement or payment related to sexual harassment or sexual abuse if such settlement or payment is subject to a nondisclosure agreement; or
attorney’s fees related to such a settlement or payment.

The tax reform bill doesn’t expand on the meanings of the terms used in this new provision. That leaves its application open for debate, at least until the IRS issues guidance and begins to apply the restriction to actual returns.

Clearly, this new tax code provision will affect settlements of employment claims. This may include both cases of an asserted claim involving sexual harassment or sexual abuse and those where the employer seeks a general release to cover all employment-related claims. In the latter scenario, the employee may not have specifically alleged sexual harassment/abuse. But a broad release would typically reference Title VII and similar state laws that could encompass sexual harassment claims. Employers (and employees) will need to weigh the trade-off between release coverage, confidentiality, and tax deductibility.

Employer Credit for Paid Family & Medical Leave

Employers can now claim a tax credit starting at 12.5% of wages paid to qualifying employees on family and medical leave. Wages paid must be at least 50% of the employee’s normal wages. The credit increases by 0.25% for each full percentage point by which the employer’s wage payment exceeds 50% of the employee’s normal wages, up to a maximum 25% credit.

To be eligible to take the credit, the employer must provide all qualifying full-time employees at least two weeks of paid family and medical leave each year under a written policy. The employer must also provide part-time employees leave on a pro-rata basis.

Qualifying employees are only those who have been employed for one year or more and whose wages do not exceed $72,000 (in 2018, indexed for inflation).

The credit is limited to 12 weeks of paid leave per employee in a tax year. It is only in place for 2018 and 2019 and does not apply to paid leave mandated by state or local law.

Certain Reimbursed Expenses No Longer Excluded from Employee Income

The 2017 tax reform bill repeals certain exclusions from employees’ taxable income. One such exclusion previously applied for certain moving expenses reimbursed by their employer. Another permitted employees to exclude up to $20 per month of qualified bicycle commuting expenses reimbursed by their employer. Under the new tax law, neither of these exclusions apply between January 1, 2018 and December 31, 2025. Subject to future Congressional action, these exclusions are scheduled to return in 2026.

The reforms also indefinitely eliminated employer deductions for certain transportation benefits provided to employees. Specifically, these deductions applied to up to $255 per month for employee mass transit commuting and parking and up to $20 per month in bicycle costs.

There are also changes to tax treatment of qualified equity grants to employees, employee achievement awards, and length of service award plans.

Retirement Plans

The tax changes also affect employer-sponsored defined contribution plans. It gives employees more time to roll over loan balances to an IRA following plan termination or separation from employment. Under the old rules, employees had 60 days to avoid having the loan treated as a distribution. They now have until the due date for filing that year’s tax return.

Other earlier drafts included additional changes that were ultimately dropped. These included reducing the age for beginning in-service distributions from defined benefit and state and local governmental plans to 59 1/2 and changing rules regarding hardship distributions.

Health Care

The new tax bill eliminates the penalty connected to the Affordable Care Act’s individual mandate as of 2019. The penalty still applies to individuals who haven’t maintained sufficient health insurance coverage in 2017 and 2018.

It also reduces the threshold for claiming itemized deductions for qualified medical expenses from 10% to 7.5% of income in 2017 and 2018. The 10% threshold returns in 2019.

Response to Employment-Related Tax Reform Issues

Most of these issues do not require employers to take action (other than paying taxes differently). However, because they will affect taxation of both the employing organization and the employees, questions are likely to arise. Proactive employers should consider the tax impacts and plan accordingly.

Businesses should seek further guidance from appropriate professionals in considering their approach in response to these developments. Often that will mean accounting or tax law professionals. But it will also include attorneys involved in settling disputes with employees, especially (but not only) those involving sexual harassment allegations. An experienced employment lawyer can also assist in preparing a credit-qualifying paid family and medical leave policy.

The IRS indicates that it will provide updates and resources about the new tax reforms here.