New York has become the latest state to give the nod to a retirement savings program for workers who lack access to one where they work.
Endorsed by the state legislature on Saturday via approval of its fiscal 2019 budget, the program would be similar to others cropping up around the country that provide private sector workers with a tax-advantaged retirement account if their employer does not offer one.
The budget authorizes the creation of the New York Secure Choice Savings Program. While details are slim — a state board would be charged with working out the specifics — participation would be voluntary for both businesses and workers. Employees who choose to enroll would be able to direct part of their paycheck to a Roth IRA.
While contributions to Roth IRAs are not tax-deductible, the assets grow tax-free and withdrawals in retirement generally also are untaxed.
Since 2012, more than 40 states have acted to implement or consider legislation to create such state-run retirement programs, according to Georgetown University's Center for Retirement Initiatives.
Across the country, an estimated 57 million private sector workers are employed at companies that do not offer a 401(k) plan or similar retirement plan, according to AARP. In New York, the program potentially could help about 3.5 million such workers.
* Map doesn't reflect legislation introduced in 2018 in some states including Michigan, New Hampshire and Wyoming.
In Oregon, officials began rolling out the OregonSaves program in phases last year. In contrast to the New York plan, employees in Oregon are automatically enrolled, with 5 percent of their paycheck going into a Roth IRA. Workers can adjust their withholding rate or opt out of the program altogether.
So far, 436 companies have registered through OregonSaves, covering more than 35,800 eligible employees. Of those workers, about 7,400 (about 21 percent) have chosen not to participate. The remainder have invested $1.6 million in assets through the program thus far.
Other states — including Illinois, Connecticut and California — are in various stages of implementing similar strategies.
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