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New York City Council Votes To Create Auto-IRA Program


The New York City Council voted April 30 to create an auto-IRA retirement savings plan for private-sector workers in the largest U.S. city, as well as a retirement security board to oversee it.
 
 

New York City Council Votes To Create Auto-IRA Program


The New York City Council voted April 30 to create an auto-IRA retirement savings plan for private-sector workers in the largest U.S. city, as well as a retirement security board to oversee it.
The authorizing legislation takes effect in 90 days (July 29), and the retirement security board has up to two years from that date to implement the plan. The law would require employers that do not offer retirement benefits to enable their employees to contribute a default amount equal to 5% of their pay to an auto-IRA. They could adjust the contribution up or down or opt out at any time. The annual contribution is limited to the annual IRA maximum of $6,000, or $7,000 for those age 50 or older.
Out of roughly 3.5 million private-sector workers in New York City, only 41% have access to an employer-sponsored retirement plan, the City Council said on its website. That is lower than the national average of 53% and down from 49% a decade ago. The City Council also noted that 40% of New Yorkers near retirement age have less than $10,000 saved for retirement.
The retirement savings board would consist of three members appointed by the mayor. They would work with the New York City Comptroller to select the investment strategies and policies. The board would be required to report annually on its activities and actions.
“Even in our beloved but expensive city where the cost of living is high, every New Yorker should be able to save for retirement, says Council Member Ben Kallos, who is an ERISA lawyer. “This legislation is a huge first step in helping generations of New Yorkers working for small businesses to save and be that much more ready to be self-sufficient when it is time to retire. With this legislation, New York City is leading the way by providing residents something in addition to their Social Security.”
 

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