KENMORE, NY (WKBW) — Millions of employees in New York State, who do not have retirement plans, now have an option.
Governor Kathy Hochul signed a new law last month that allows employees of some businesses to opt into the state’s “Secure Choice Savings Program”.
This law applies to private employers with ten workers or more, who have been in business for at least two years, and currently do not offer a 401(k) savings plan.
You might think a young dish washer and cook at a restaurant would not be willing to set aside anything for retirement just yet.
But at The Plaka Restaurant on Delaware Avenue in the Village of Kenmore, Joe Morelli, says he would definitely opt in.
Under a new state law, he can initially contribute 3% of his wages to a state retirement plan.
“How would that help you?” Buckley asked. “Well, if the social security runs out before I’m that age, then it would be some type of cushion,” replied Morelli.
His employer, Telly Gogos, owner, says this is the first he’s hearing about this new law, and he’s embracing it for his employees.
“I think it's a great idea. They work hard — the hours are long and they should reap some benefits form the state,” remarked Gogos.
The restaurant owner says as a small employer, he’s not able to offer a retirement package.
Employers are not required to contribute to this plan.
“That's even better, so it think it's a great idea,” declared Gogos.
“Luckily it's not going to cost the employer any money, but it's something they have to make their employees aware of,” remarked Christopher Fabian, vice president of tax, EG Tax, Town of Tonawanda.
Fabian says he is trying to contact clients who this will affect.
“And so we're just trying to make all the employers aware of this new pension mandate that they're doing,” Fabian.
Fabian says right now, he’s not sure if a business fails to comply if they will face any state penalties.
The law, which took effect October 21st when Governor Hochul signed it, fails to state if this applies to part-time employees.
Fabian says he's not a fan of this law because he does not believe workers at smaller business will be able to contribute.
“Especially if we're talking restaurants or little stores — these employees don't make a lot of money to begin with how can they contribute to it,” Fabian said.
Fabian says he also thinks those who already contribute to their own IRA account, will be strapped to contribute to both.
“You should start saving when you’re younger,” Fabian reflected. “We have a lot of clients who contribute to an IRA. They would rather control their own money than have the company do it. It could limit their own contributions to their own retirement plan.”
Employees can opt out of this program if they wish, but if they decide to join it at some point they would have to wait for the annual open enrollment.
But Morelli says he can spare 3% and wants to start saving for retirement now.
“Oh yeah, absolutely, especially with the past year and a half we've had,” responded Fabian.