New York has always been one of the more expensive places in the country to run a business. High state income taxes, steep operating costs, and a regulatory environment that demands constant attention are just some of the challenges business owners in the Empire State face, on top of tough winter weather that frequently disrupts travel, logistics, and worker commutes. And now there’s another steep hurdle looming, but few are paying attention to it – mandatory retirement plans for workers at businesses with 10 or more employees.

New York’s Secure Choice Savings Program is now in active enforcement. Private-sector employers with 10 or more employees and at least two years in business must either offer a qualified retirement plan to all employees or enroll their workers in the state-run program (or certify exemption) by the following dates:

30 or more employees: March 18, 2026

15 to 29 employees: May 15, 2026

10 to 14 employees: July 15, 2026

Penalties for noncompliance are estimated at $250 per employee for a first offense, climbing to $1,000 or more per employee for repeat violations. For a business with 12 employees already managing tight margins that adds up fast.

Most employers who act on this mandate will do what feels obvious: enroll in Secure Choice, satisfy the requirement, and move on. That is understandable. But the default option is rarely the optimal one, and in this case it comes with a real cost that most business owners have not been told about.

The cheaper, easier path isn’t necessarily best

Under the SECURE 2.0 Act, small businesses that establish a qualifying retirement plan, a 401(k), SEP-IRA, or SIMPLE IRA, are eligible for up to $5,000 in federal startup tax credits per year for three years. Additional credits apply for automatic enrollment and employer contributions. For employers with one to 50 employees, the employer contribution credit covers 100% of contributions up to $1,000 per participant in the first two plan years, phasing down in subsequent years.

You can’t claim these credits if you enroll in the New York State Secure Choice program. They apply only if you offer workers a qualified private plan. That distinction matters more than most people realize. A business with 12 employees that sets up a 401(k) instead of enrolling in Secure Choice can capture enough in federal credits to offset the cost of running the plan in its early years. The state program, by contrast, costs nothing upfront but accomplishes nothing beyond the minimum.

There is also a practical issue with Secure Choice that most employers have not thought through. As with California’s CalSavers Retirement Savings Program, the Secure Choice program auto-enrolls eligible employees and deducts contributions from their paychecks at a default rate of 3%. Employees who did not ask to be enrolled and who suddenly see money leaving their paycheck each week can become frustrated, or worse, cynical about the employer who put them in. That is not the outcome anyone is looking for from a benefits program.

Compliance is the floor, not the ceiling

The Secure Choice deadline is a forcing function. New York businesses are used to those. The question is whether employers will respond reactively, by enrolling in the state program before the penalty clock runs out, or proactively, by using this moment to build something that actually serves the business they are trying to grow.

A well-structured retirement plan strengthens the compensation package businesses use to compete for talent in one of the most competitive hiring markets in the country. New York employees increasingly expect retirement benefits. Businesses that offer a real plan will be better positioned to attract and retain the people they need, not just avoid a fine.

Conclusion

Missing the July 15 deadline may lead to financial penalties. But the greater cost, the one you won’t see on any notice, is staying locked into a program that only does the bare minimum when a stronger alternative is available. The businesses that truly come out ahead won’t just be the ones that avoided a fine; they’ll be the ones that used the deadline as a catalyst to build something valuable.

By Nick Pasquarosa, Founder and CEO of Bookkeeper360