Iowa Senate Bill SF2232

Iowa 2023-2024 Regular Session

• Introduced: 2/6/24
• Refer: 2/6/24

Caption

A bill for an act establishing a retirement savings plan trust, and including implementation provisions.

Impact

This bill has the potential to significantly influence retirement savings behaviors among Iowans by implementing an automatic enrollment system for individuals employed in the state. It will allow employees to contribute a portion of their earnings directly to their retirement savings, with the default contribution rate to be determined by the treasurer. Participants have the option to opt out at any time, creating a voluntary yet structured approach to savings. Additionally, the legislation prevents local governments from offering their own retirement plans, centralizing retirement savings under the state’s control and potentially limiting local initiatives tailored to specific community needs.

Summary

Senate File 2232 establishes the Iowa retirement savings plan trust, aimed at enhancing the ability of Iowans to save for retirement. This legislation is a response to the finding that a significant percentage of Iowans are inadequately prepared for retirement. The trust is created under the jurisdiction of the state treasurer, who is empowered to administer the trust according to federal tax laws, specifically those in the Internal Revenue Code, ensuring it offers a viable retirement savings option for Iowa residents. The state treasurer is responsible for overseeing contributions and participant agreements, and they will also provide annual financial reports detailing the operations and performance of the trust.

Contention

Notable points of contention surrounding SF2232 may arise over the preemption of local retirement savings plans, as critics might argue that this centralization limits the flexibility of local governments to address unique demographic needs. Some advocates could raise concerns about the effectiveness of automatic enrollment policies, questioning whether this method sufficiently encourages savings behavior or leads to complacency. Moreover, the lack of guaranteed returns on contributions signifies a potential risk for participants, as the trust will not guarantee investment outcomes, which might deter some from participating. Transparency and the management of participant funds will also be critical as the trust is established.