HB 1263 — An Act establishing the Keystone Saves Program, the Keystone Saves Program Fund, the Keystone Saves Administrative Fund and the Keystone Saves Program Advisory Board; and providing for powers and duties of the Treasury Department, for investment and fiduciary responsibilities and for program implementation.

PRIOR PRINTER'S NO.

1406 PRINTER'STHE NO.GENERAL ASSEMBLY OF PENNSYLVANIA HOUSE BILL Session of No.

16231263 THE2025 GENERALINTRODUCED ASSEMBLYBY OFMULLINS, PENNSYLVANIAGALLAGHER, HOUSEWEBSTER, BILLGIRAL, SessionVENKAT, ofHANBIDGE, No.SANCHEZ, HADDOCK, BOROWSKI, STEELE, BRENNAN,MON, DONAHUE, HOHENSTEIN, WAXMAN, PROKOPIAK, CERRATO, WARREN, O'MARA, DOUGHERTY AND BOYD, APRIL 17, 2025 REFERRED TO COMMITTEE ON COMMERCE, APRIL 17, 2025 AN ACT Establishing the Keystone Saves Program, the Keystone Saves Program Fund, the Keystone Saves Administrative Fund and the Keystone Saves Program Advisory Board;

1263 2025 INTRODUCED BY MULLINS, GALLAGHER, WEBSTER, GIRAL, VENKAT, HANBIDGE, SANCHEZ, HADDOCK, BOROWSKI, STEELE, BRENNAN,MON, DONAHUE, HOHENSTEIN, WAXMAN, PROKOPIAK, CERRATO, WARREN, O'MARA, DOUGHERTY, BOYD AND CEPEDA-FREYTIZ, APRIL 17, 2025 AS REPORTED FROM COMMITTEE ON COMMERCE, HOUSE OF REPRESENTATIVES, AS AMENDED, MAY 6, 2025 AN ACT Establishing the Keystone Saves Program, the Keystone Saves Program Fund, the Keystone Saves Administrative Fund and the Keystone Saves Program Advisory Board;

20250HB1263PN162320250HB1263PN1406 - 2 - Chapter 13.

(ii) An employee on whose behalf an employer makes 20250HB1263PN162320250HB1263PN1406 - 3 - contributions to a multi-employer pension trust fund.

If an employer does not maintain a specified tax-favored retirement plan for a portion of a calendar year ending on or after the effective date of this definition and adopts a specified tax-favored retirement plan for the remainder of the calendar year, 20250HB1263PN162320250HB1263PN1406 - 4 - the employer is not included in this term for the remainder of the calendar year.

"Person." A corporation, partnership, limited liability company, business trust, other association, estate, trust, foundation or natural person, including natural persons doing 20250HB1263PN162320250HB1263PN1406 - 5 - business as sole proprietors.

(5) Accounting costs, actuarial costs, legal costs, marketing expenses, education expenses, trading costs, 20250HB1263PN162320250HB1263PN1406 - 6 - insurance annuitization costs and other costs reasonably related to the program.

(5) Investment earnings and interest that are attributable to money in the program fund shall be deposited 20250HB1263PN162320250HB1263PN1406 - 7 - in the program fund and credited appropriately to individual accounts.

(c) Sources of money.--The administrative fund shall receive deposits from the individual account assessments under section 304(c) and funds designated for administrative purposes from the Federal Government, the Commonwealth or a local government entity or in the form of gifts, donations or grants made by any 20250HB1263PN162320250HB1263PN1406 - 8 - other person, firm, partnership or corporation for deposit into the administrative fund.

(c) Program costs.--All fees, costs and expenses of administering and operating the program and investing the assets of the program fund shall be incurred by the participants and paid from assessments against the balances of the individual program accounts as established by the State Treasurer and 20250HB1263PN162320250HB1263PN1406 - 9 - deposited in the administrative fund.

(3) Four members, one each appointed by the President pro tempore of the Senate, the Speaker of the House of 20250HB1263PN162320250HB1263PN1406 - 10 - Representatives, the Minority Leader of the Senate and the Minority Leader of the House of Representatives.

(3) Make recommendations on the board's own initiative 20250HB1263PN162320250HB1263PN1406 - 11 - for the improvement of the program.

20250HB1263PN162320250HB1263PN1406 - 12 - (i) Staffing capabilities and capacity.

(8) Promulgate rules and regulations and develop policies and procedures that the department deems necessary 20250HB1263PN162320250HB1263PN1406 - 13 - or advisable for the implementation of this act and the administration and operation of the program.

(10) Adopt, and periodically review, a written 20250HB1263PN162320250HB1263PN1406 - 14 - investment policy to ensure, among other considerations, that investment risks are prudent and properly managed and are appropriate in comparison to applicable performance benchmarks and standards.

An employer that maintains or contributes to a specified tax- favored retirement plan for the employer's employees or has 20250HB1263PN162320250HB1263PN1406 - 15 - done so effective in form and operation at any time within the current or three preceding calendar years shall not be eligible to participate in the program.

The department, and investment managers engaged by the department, shall be in a fiduciary relationship with 20250HB1263PN162320250HB1263PN1406 - 16 - participants and shall discharge each duty under this act solely in the interest of participants:

(c) Recommendations.--The investment policies shall include recommendations regarding the desirability of limiting investment choices under the program to a reasonable number in the interest of simplicity and in consideration of the extensive investment choices available to participants if the participants 20250HB1263PN162320250HB1263PN1406 - 17 - roll over to an IRA existing outside of the program.

(b) Fees and charges.--An investment manager's fees and 20250HB1263PN162320250HB1263PN1406 - 18 - charges shall not exceed 60 basis points of program fund assets under management.

20250HB1263PN162320250HB1263PN1406 - 19 - (a) Participation.--No later than the deadlines established under section 1106(b), a participating employer shall facilitate a qualified arrangement and register with the department, certifying that the participating employer has facilitated a qualified payroll deposit retirement savings arrangement.

(ii) Managing and facilitating opt-in and opt-out 20250HB1263PN162320250HB1263PN1406 - 20 - paperwork with employees.

(i) Provide the department with the name of the covered employee and other information as may be required by the departmentdepartment. FOR THE SOLE PURPOSE OF THE <-- ESTABLISHMENT OF THIS ACT.

(7) Allow a participant to completely opt out of deductions, increase or decrease the deduction rate, freeze 20250HB1263PN1623 - 21 - automatic annual deduction rate increases or increase the 20250HB1263PN1406 - 21 - deduction rate, subject to the annual contribution limit permitted by the Internal Revenue Code.

(a) Roth IRAs.--Subject to the requirements for a Roth IRA under the Internal Revenue Code, participant contributions, including contributions from a participant who does not select 20250HB1263PN1623 - 22 - an investment option, shall be made to a Roth IRA.

20250HB1263PN1406 - 22 - (b) Alternative structures for emergency savings.--The department may offer an alternative investment option for a participant to select that facilitates access, in the event of emergency, to the participant's contributions comparable to that allowed by a Roth IRA.

(1) A covered employer employing 100 or more employees shall register no later than 24 months after the effective 20250HB1263PN1623 - 23 - date of this subsection.

20250HB1263PN1406 - 23 - (2) A covered employer employing at least 20 but no more than 99 employees shall register no later than 30 months after the effective date of this subsection.

(c) Deductions held in trust.--All deductions collected by a person from a covered employee in accordance with or under color of this act that have not been properly returned by the person 20250HB1263PN1623 - 24 - to the covered employee shall constitute a trust fund for the 20250HB1263PN1406 - 24 - covered employee until contributed to the covered employee's program account.

(2) Establishing distribution procedures for 20250HB1263PN1623 - 25 - participants that encourage participants to elect, in 20250HB1263PN1406 - 25 - combination with the designation of a lifetime income investment product, that at least 50% of a participant's program account balance on the date the participant attains the normal retirement age be invested in the lifetime income investment product.

20250HB1263PN1623 - 26 - (3) A participant, as follows:

20250HB1263PN1406 - 26 - (i) Information that will assist a participant in the prudent decumulation of savings during retirement.

(d) Procedures.--The department shall establish procedures to allocate interest, investment earnings and investment losses 20250HB1263PN1623 - 27 - to the program account of a participant.

A participant's 20250HB1263PN1406 - 27 - retirement savings benefit under the program shall be an amount equal to the balance in the participant's account on the date the retirement savings benefit becomes payable.

(4) The design of the program or benefits paid to a 20250HB1263PN1623 - 28 - participant.

20250HB1263PN1406 - 28 - (5) An individual's awareness of or compliance with the conditions and other provisions of Federal and State tax laws that determine whether the individual is eligible to make tax-favored contributions to IRAs, including the amount of the contributions and the time frame and manner of the contributions.

and (4) assess investment returns and risks to determine if the risks taken are adequately compensated compared to 20250HB1263PN1623 - 29 - applicable performance benchmarks and standards.

20250HB1263PN1406 - 29 - (b) Insurance.--In preparing the risk management and oversight program under subsection (a), the department shall evaluate whether to obtain insurance against any and all losses in connection with the property, assets or activities of the program.

(b) Reports to participating employers.--In addition to other statements or reports required by Federal or State law, at least annually, the department shall provide a report to each participating employer that contains a list of the names of each participant employed by the participating employer and the 20250HB1263PN1623 - 30 - amounts of deductions taken by the participating employer and 20250HB1263PN1406 - 30 - contributed to the program on behalf of each participant during the reporting period.