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H-4717.1SUBSTITUTE HOUSE BILL 2516State of Washington66th Legislature2020 Regular SessionByHouse Consumer Protection & Business (originally sponsored by Representatives Duerr, Kirby, Ryu, Kilduff, Springer, Tarleton, Valdez, Tharinger, and Ormsby)READ FIRST TIME 02/07/20.AN ACT Relating to creating the secure choice retirement savings program;
H-3776.2HOUSE BILL 2516State of Washington66th Legislature2020 Regular SessionByRepresentatives Duerr, Kirby, Ryu, Kilduff, Springer, Tarleton, Valdez, Tharinger, and OrmsbyRead first time 01/15/20.Referred to Committee on Consumer Protection & Business.AN ACT Relating to creating the secure choice retirement savings program;
For purposes of sections 2 through 13 of this act, a covered employee, as defined in this subsection, who is performing services for a client employer that has entered into a professional employer agreement with a professional employer organization, as such terms are defined in RCW 50.04.298, must be treated as in the employment of the client employer and not by the professional employer organization.(7) "Covered employer" means an employer that:(a) Has been in business for at least five years;(b) Has not sponsored, maintained, or contributed to a retirement plan under sections 401(a), 401(k), 403(a), 403(b), 408(k), or 408(p) of the internal revenue code, including such a plan sponsored or maintained by a professional employer organization with which the employer has a professional employer agreement, as such terms are defined in RCW 50.04.298, at any time during the preceding two calendar years and does not currently sponsor, maintain, or contribute to a retirement plan;
For purposes of sections 2 through 13 of this act, a covered employee, as defined in this subsection, who is performing services for a client employer that has entered into a professional employer agreement with a professional employer organization, as such terms are defined in RCW 50.04.298, must be treated as in the employment of the client employer and not by the professional employer organization.(7) "Covered employer" means an employer that:(a) Has not sponsored, maintained, or contributed to a retirement plan under sections 401(a), 401(k), 403(a), 403(b), 408(k), or 408(p) of the internal revenue code, including such a plan sponsored or maintained by a professional employer organization with which the employer has a professional employer agreement, as such terms are defined in RCW 50.04.298, at any time during the preceding two calendar years and does not currently sponsor, maintain, or contribute to a retirement plan;
and(c) Has more than five individuals in employment.
or(b) Elects to be a covered employer if and as permitted in accordance with rules and procedures established by the commissioner.(8) "Employer" means a person or entity engaged in a business, profession, trade, or other enterprise in the state, whether for profit or not for profit;
For purposes of this subsection (7)(c), the size of the employer for a calendar year shall be determined by averaging the number of employees reported by the employer pursuant to RCW 50A.20.030 over the four completed quarters immediately preceding July 1st in the immediately previous year.(8) "Employer" means a person or entity engaged in a business, profession, trade, or other enterprise in the state, whether for profit or not for profit;
and the automatic escalation rate provided that the contribution rate is no more than ten percent;(f) To employ a program director and such other individuals as the commissioner determines to be necessary or desirable to administer the program and the administrative fund;(g) To develop and implement an outreach plan to gain input and disseminate information regarding the program and retirement and financial education in general, to employees, employers, and other constituents in the state;(h) To prescribe the records covered employers must maintain, to inspect and make copies of such records at any reasonable time and as often as may be necessary, and to coordinate, to the extent practicable, records inspections with the same activities conducted under Titles 50, 50A, and 50B RCW;(i) To develop and implement a marketing strategy for the program that includes outreach to communities of color and encourages small business engagement;(j) To determine the number of days by which an eligible employer must make the program available to a covered employee upon first becoming an eligible employer or covered employee;(k) To adopt rules and procedures for the establishment and operation of the program and to take such other actions necessary or desirable to establish and operate the program in accordance with sections 2 through 13 of this act;(l) To set requirements for when covered employees may change their election to participate in the program, change their contribution rate, or change their election to have automatic increases in their contribution rate apply, provided that such changes may not be permitted more frequently than quarterly.(2) The commissioner shall use the following principles in the design and operation of the program:(a) Operate with reasonable costs but sufficient to ensure that the program is sustainable;(b) Structure the program so that covered employees are automatically enrolled and covered employer participation is required;(c) Ensure that the program does not conflict with or be preempted by federal law, including the employee retirement income security act of 1974;(d) Provide customer service processes to any and all pertinent persons and disseminate program information to covered employers and covered employees;(e) Monitor the investment adviser's financial management policies, processes, and performance.(3) Other state agencies must provide appropriate and reasonable assistance to the commissioner as needed, including gathering data and information, in order for the commissioner to carry out the purpose of sections 2 through 13 of this act.
and the automatic escalation rate provided that the contribution rate is no more than ten percent;(f) To employ a program director and such other individuals as the commissioner determines to be necessary or desirable to administer the program and the administrative fund;(g) To develop and implement an outreach plan to gain input and disseminate information regarding the program and retirement and financial education in general, to employees, employers, and other constituents in the state;(h) To prescribe the records covered employers must maintain, and to inspect and make copies of such records at any reasonable time and as often as may be necessary;(i) To develop and implement a marketing strategy for the program that includes outreach to communities of color and encourages small business engagement;(j) To determine the number of days by which an eligible employer must make the program available to a covered employee upon first becoming an eligible employer or covered employee;(k) To adopt rules and procedures for the establishment and operation of the program and to take such other actions necessary or desirable to establish and operate the program in accordance with sections 2 through 13 of this act.(2) The commissioner shall use the following principles in the design and operation of the program:(a) Operate with reasonable costs but sufficient to ensure that the program is sustainable;(b) Structure the program so that covered employees are automatically enrolled and covered employer participation is required;(c) Ensure that the program does not conflict with or be preempted by federal law, including the employee retirement income security act of 1974;(d) Provide customer service processes to any and all pertinent persons and disseminate program information to covered employers and covered employees;(e) Monitor the investment adviser's financial management policies, processes, and performance.(3) Other state agencies must provide appropriate and reasonable assistance to the commissioner as needed, including gathering data and information, in order for the commissioner to carry out the purpose of sections 2 through 13 of this act.
The commissioner may reimburse the other state agencies from the administrative fund established in section 7 of this act for reasonable expenses incurred in providing appropriate and reasonable assistance.(4) The commissioner shall not impose any obligations on the state, nor may it pledge the credit of the state.(5)(a) The commissioner shall establish an advisory committee comprised of the following members:(i) The commissioner, or his or her designee, who shall serve as the chair;(ii) The director of the department of financial institutions or his or her designee;(iii) The director of the department of retirement systems or his or her designee;(iv) The executive director of the state investment board or his or her designee;
The commissioner may reimburse the other state agencies from the administrative fund established in section 7 of this act for reasonable expenses incurred in providing appropriate and reasonable assistance.(4) The commissioner shall not impose any obligations on the state, nor may it pledge the credit of the state.(5) The commissioner, in consultation with the legislature, has the discretion to establish an advisory board of individuals with experience in investments or retirement plan oversight and management.(6) The commissioner, in consultation with the state investment board and the department of financial institutions, has discretion to establish and maintain the program by:
and(v) The following members to be appointed by the commissioner:(A) One member representing employers;(B) One member representing retirees;
and(C) One member with retirement savings and investment expertise.(b) The committee shall provide feedback on department rule making, policies, implementation of this chapter, and other initiatives, and study other issues as determined by the committee.
(c) The members shall serve without compensation but are entitled to reimbursement for travel expenses as provided in RCW 43.03.050 and 43.03.060.
The committee may utilize such personnel and facilities of the commissioner as it needs without charge.
All expenses of the committee must be paid by the administrative fund.(6) The commissioner, in consultation with the state investment board and the department of financial institutions, has discretion to establish and maintain the program by:
A covered employer may not withhold contributions in lump sums from a covered employee.(5) An individual who no longer meets the definition of a covered employee solely because the number of individuals in the employment of the individual's employer is reduced from more than five to five or less must be permitted to continue to contribute to the IRA established for the individual's benefit without the participation of the individual's employer.(6) The IRAs are intended to qualify for favorable federal income tax treatment under section 408 or 408A of the internal revenue code.(7) The commissioner may establish intervals after which a covered employee must reaffirm elections, including opt-out elections, with regard to participation or escalation.(8) Each covered employer shall deposit covered employees' withheld contributions under the program with the trustee in such manner as is determined by the commissioner.(9) The commissioner shall determine the rules and procedures for withdrawals, distributions, transfers, and rollovers of IRAs and for the designation of IRA beneficiaries.(10) The commissioner shall report annually to the governor and the legislature outlining the commissioner's activities and the program's operations.(11) The commissioner shall cause to be furnished to each covered employer and may provide directly to covered employees:(a) Information regarding the program;(b) Required disclosures to be furnished to covered employees.
A covered employer may not withhold contributions in lump sums from a covered employee.(5) The IRAs are intended to qualify for favorable federal income tax treatment under section 408 or 408A of the internal revenue code.(6) The commissioner may establish intervals after which a covered employee must reaffirm elections, including opt-out elections, with regard to participation or escalation.(7) Each covered employer shall deposit covered employees' withheld contributions under the program with the trustee in such manner as is determined by the commissioner, provided that the employer shall deliver the amounts withheld to the trustee in good order within ten business days after the date such amounts otherwise would have been paid to the covered employee.(8) The commissioner shall determine the rules and procedures for withdrawals, distributions, transfers, and rollovers of IRAs and for the designation of IRA beneficiaries.(9) The commissioner shall report annually to the governor and the legislature outlining the commissioner's activities and the program's operations.(10) The commissioner shall cause to be furnished to each covered employer and may provide directly to covered employees:(a) Information regarding the program;(b) Required disclosures to be furnished to covered employees.
and that the state, the program, and the covered employer have no liability with respect to any failure of the covered employee to be eligible to make IRA contributions or any contribution in excess of the maximum IRA contribution;(c) Information, forms, and instructions to be furnished to covered employees at such times as the commissioner determines that provide the covered employee with the procedures for:(i) Making contributions to the covered employee's IRA established under the program, including a description of the automatic enrollment rate, the automatic escalation rate and frequency, and the right to elect to make no contribution or to change the contribution rate under the program;(ii) Making an investment election with respect to the covered employee's IRA established under the program, including a description of the default investment fund;(iii) Making transfers, rollovers, withdrawals, and other distributions from the covered employee's IRA.(12) Each covered employer shall deliver or facilitate the delivery of the items set forth in subsection (11)(b) and (c) of this section to each covered employee at such time and in such manner as determined by the commissioner.(13) The program must be designed and operated in a manner that will cause it not to be an employee benefit plan within the meaning of section 3(3) of the employee retirement income security act of 1974.
and that the state, the program, and the covered employer have no liability with respect to any failure of the covered employee to be eligible to make IRA contributions or any contribution in excess of the maximum IRA contribution;(c) Information, forms, and instructions to be furnished to covered employees at such times as the commissioner determines that provide the covered employee with the procedures for:(i) Making contributions to the covered employee's IRA established under the program, including a description of the automatic enrollment rate, the automatic escalation rate and frequency, and the right to elect to make no contribution or to change the contribution rate under the program;(ii) Making an investment election with respect to the covered employee's IRA established under the program, including a description of the default investment fund;(iii) Making transfers, rollovers, withdrawals, and other distributions from the covered employee's IRA.(11) Each covered employer shall deliver or facilitate the delivery of the items set forth in subsection (10)(b) and (c) of this section to each covered employee at such time and in such manner as determined by the commissioner.(12) The program must be designed and operated in a manner that will cause it not to be an employee benefit plan within the meaning of section 3(3) of the employee retirement income security act of 1974.
If any provision of this act is found to be in conflict with federal law or regulations, including the employee retirement income security act of 1974, the conflicting provision of this act is declared to be inoperative solely to the extent of the conflict, and that finding or determination shall not affect the operation of the remainder of this act.(14) Nothing in sections 2 through 13 of this act prohibits a covered employer from contracting with a third party, such as a payroll service provider or a professional employer organization, to assist such employer with the tasks required of a covered employer under sections 2 through 13 of this act.NEW SECTION.  Sec.
If any provision of this act is found to be in conflict with federal law or regulations, including the employee retirement income security act of 1974, the conflicting provision of this act is declared to be inoperative solely to the extent of the conflict, and that finding or determination shall not affect the operation of the remainder of this act.(13) Nothing in sections 2 through 13 of this act prohibits a covered employer from contracting with a third party, such as a payroll service provider or a professional employer organization, to assist such employer with the tasks required of a covered employer under sections 2 through 13 of this act.NEW SECTION.  Sec.
By March 1, 2021, the commissioner shall establish a program administration spending plan and an administrative fee schedule to discharge any projected cash deficit to the fund.
By January 1, 2021, the commissioner shall establish a program administration spending plan and an administrative fee schedule to discharge any projected cash deficit to the fund.
(1) If the commissioner determines to exercise his or her discretion under section 4(6) of this act:(a) Only the secure choice retirement savings administrative fund may be used to contract with another state to use that state's program or to create a joint program or consortium with one or more states offering an existing program.(b) The rate of the administrative fee for covered employees may not exceed the rate charged to employees of another state participating in the same program.(2) If the commissioner determines to not exercise his or her authority under section 4(6) of this act, the rate of the administrative fee for covered employees may not exceed one and five-hundredths percent.NEW SECTION.  Sec.
(1) If the commissioner determines to exercise his or her discretion under section 4(6) of this act:(a) Only the secure choice retirement savings administrative fund may be used to contract with another state to use that state's program or to create a joint program or consortium with one or more states offering an existing program.(b) The rate of the administrative fee for covered employees may not exceed the rate charged to employees of another state participating in the same program.(2) If the commissioner determines to not exercise his or her authority under section 4(5) of this act, the rate of the administrative fee for covered employees may not exceed one and five-hundredths percent.NEW SECTION.  Sec.
(1) The commissioner must develop an implementation plan that details how the employment security department will design, establish, operate, and market the program under sections 2 through 10 of this act.(2) By February 1, 2020, and in compliance with RCW 43.01.036, the commissioner must submit a report to the appropriate committees of the legislature describing the implementation plan.(3) Beginning on December 1st of the first year after fully implementing the program, the commissioner must report annually on administrative fees.
(1) The commissioner must develop an implementation plan that details how the employment security department will design, establish, operate, and market the program under sections 2 through 10 of this act.(2) By December 1, 2020, and in compliance with RCW 43.01.036, the commissioner must submit a report to the appropriate committees of the legislature describing the implementation plan.(3) Beginning on December 1st of the first year after fully implementing the program, the commissioner must report annually on administrative fees.
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