Senate Study Bill 1234 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON APPROPRIATIONS BILL BY CHAIRPERSON KRAAYENBRINK) A BILL FOR An Act establishing a retirement savings plan trust, making 1 appropriations, and including implementation provisions. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 2993XC (4) 91 sc/ns
S.F. _____ Section 1. NEW SECTION . 12L.1 Definitions. 1 As used in this chapter, unless the context otherwise 2 requires: 3 1. Administrative fund means the administrative fund 4 established under section 12L.4. 5 2. Employer means a person or entity engaged in a 6 business, industry, profession, trade, or other enterprise in 7 Iowa. 8 3. Internal Revenue Code means the same as defined in 9 section 12I.1. 10 4. Iowa retirement savings plan trust or trust means the 11 trust created under section 12L.2. 12 5. Participant means an employed individual that has 13 entered into a participation agreement under this chapter to 14 contribute to an Iowa retirement savings plan. 15 6. Participation agreement means an agreement between a 16 participant and the Iowa retirement savings plan trust entered 17 into under this chapter. 18 7. Program fund means the program fund established under 19 section 12L.4. 20 Sec. 2. NEW SECTION . 12L.2 Creation of Iowa retirement 21 savings plan trust. 22 An Iowa retirement savings plan trust, as allowed by the 23 Internal Revenue Code, is created for the purpose of helping 24 Iowans save for retirement. The treasurer of state is the 25 trustee of the trust, and has all powers necessary to carry out 26 and effectuate the purposes, objectives, and provisions of this 27 chapter pertaining to the trust, including the power to do all 28 of the following: 29 1. Make and enter into contracts necessary for the 30 administration of the trust. 31 2. Enter into agreements with any financial institution, 32 the state, or any federal or other state agency, or other 33 entity as required to implement this chapter. 34 3. Carry out the duties and obligations of the trust 35 -1- LSB 2993XC (4) 91 sc/ns 1/ 7
S.F. _____ pursuant to this chapter. 1 4. Accept any grants, gifts, legislative appropriations, 2 and other moneys from the state, any unit of federal, state, or 3 local government, or any other person, firm, partnership, or 4 corporation which the treasurer of state shall deposit into the 5 administrative fund or the program fund. 6 5. Carry out studies and projections so the treasurer of 7 state may advise participants regarding present and estimated 8 future retirement needs and levels of financial participation 9 in the trust required in order to enable participants to 10 achieve their retirement funding objectives. 11 6. Participate in any federal, state, or local governmental 12 program for the benefit of the trust. 13 7. Procure insurance against any loss in connection with the 14 property, assets, or activities of the trust. 15 8. Enter into agreements with participants and employers. 16 9. Make distributions and refunds to participants pursuant 17 to participation agreements as prescribed by the Internal 18 Revenue Code. 19 10. Invest moneys from the program fund in any investments 20 which are determined by the treasurer of state to be 21 appropriate. 22 11. Engage investment advisors, if necessary, to assist in 23 the investment of trust assets. 24 12. Contract for goods and services and engage personnel 25 as necessary, including consultants, actuaries, managers, 26 legal counsel, and auditors, for the purpose of rendering 27 professional, managerial, and technical assistance and advice 28 to the treasurer of state regarding trust administration and 29 operation. 30 13. Establish, impose, and collect administrative fees 31 and charges in connection with transactions of the trust, and 32 provide for reasonable service charges, including penalties for 33 cancellations and late payments with respect to participation 34 agreements. 35 -2- LSB 2993XC (4) 91 sc/ns 2/ 7
S.F. _____ 14. Develop and disseminate information designed to educate 1 individuals about the benefits of planning and saving for 2 retirement, including information in furtherance of financial 3 capability and financial literacy, and to help participants 4 decide the savings strategies and level of financial 5 participation in the trust that may be appropriate. 6 15. Administer the funds of the trust. 7 16. Adopt rules pursuant to chapter 17A for the 8 administration of the trust. 9 Sec. 3. NEW SECTION . 12L.3 Limitation of liability. 10 1. The Iowa retirement savings plan trust, the treasurer of 11 state, and the state of Iowa shall not guarantee any rate of 12 return or any interest rate on any contribution to the trust. 13 The trust, treasurer of state, and the state of Iowa are not 14 liable for any loss incurred by any person as a result of 15 participating in the trust. 16 2. An employer shall not be liable for any of the following: 17 a. A participants investment decisions. 18 b. The administration, investment, investment returns, or 19 investment performance of the plan including but not limited 20 to an interest rate or rate of return on a contribution or 21 account balance, provided the employer is not involved in the 22 administration or investment of the plan. 23 c. The plan design or the benefits paid to a participant. 24 d. Any loss, failure to realize gain, or other adverse 25 consequence resulting from participation in the plan including 26 but not limited to adverse tax consequences or loss of 27 favorable tax treatment, public assistance, or other benefits. 28 Sec. 4. NEW SECTION . 12L.4 Program and administrative funds 29 investment and payments. 30 1. The treasurer of state shall segregate moneys received 31 by the Iowa retirement savings plan trust into two funds, the 32 program fund and the administrative fund. 33 2. All moneys paid by participants in connection with 34 participation agreements shall be deposited as received into 35 -3- LSB 2993XC (4) 91 sc/ns 3/ 7
S.F. _____ separate accounts within the program fund. 1 3. Contributions to the trust made by participants shall 2 only be made in the form of cash. 3 4. For the fiscal year beginning July 1, 2025, there is 4 appropriated from the unclaimed property trust fund established 5 in section 556.18 to the treasurer of state, an amount not 6 to exceed two hundred thousand dollars for deposit in the 7 administrative fund. 8 5. Between July 1, 2026, and June 30, 2032, the treasurer 9 of state shall transfer the amount appropriated in subsection 10 4 from the administrative fund to the unclaimed property 11 trust fund in a manner determined by the treasurer of state 12 using moneys obtained from fees authorized by section 12L.2, 13 subsection 13. 14 Sec. 5. NEW SECTION . 12L.5 Cancellation of agreements. 15 A participant may cancel a participation agreement at will. 16 Upon cancellation of a participation agreement, a participant 17 shall be entitled to the return of the participants account 18 balance subject to penalties prescribed by the Internal Revenue 19 Code. 20 Sec. 6. NEW SECTION . 12L.6 Annual audited financial report. 21 1. The treasurer of state shall submit an annual audited 22 financial report, prepared in accordance with generally 23 accepted accounting principles, on the operations of the Iowa 24 retirement savings plan trust by November 1 to the governor and 25 the general assembly. 26 2. The annual audit shall be made either by the auditor 27 of state or by an independent certified public accountant 28 designated by the auditor of state and must include direct and 29 indirect costs attributable to the use of outside consultants, 30 independent contractors, and any other persons who are not 31 state employees. 32 3. The annual audit must be supplemented by all of the 33 following information prepared by the treasurer of state: 34 a. Any related studies or evaluations prepared in the 35 -4- LSB 2993XC (4) 91 sc/ns 4/ 7
S.F. _____ preceding year. 1 b. A summary of the benefits provided by the trust, 2 including the number of participants in the trust. 3 c. Any other information which is relevant in order to make 4 a full, fair, and effective disclosure of the operations of the 5 trust. 6 Sec. 7. NEW SECTION . 12L.7 Tax considerations. 7 For federal tax purposes, the Iowa retirement savings plan 8 trust shall conform to the requirements established by the 9 Internal Revenue Code to be able to operate as a retirement 10 plan. The plan may conform to the requirements under section 11 401(a), 401(k), 403(a), 403(b), 408(k), 408(p), or another 12 section of the Internal Revenue Code which allows Iowans the 13 best retirement option under the trust as determined by the 14 treasurer of state. 15 Sec. 8. NEW SECTION . 12L.8 Property rights to assets in 16 trust. 17 1. The assets of the Iowa retirement savings plan trust 18 shall at all times be preserved, invested, and expended solely 19 and only for the purposes of the trust and shall be held in 20 trust for the participants. 21 2. No property rights in the trust shall exist in favor of 22 the state. 23 3. The assets of the trust shall not be transferred or used 24 by the state for any purposes other than the purposes of the 25 trust. 26 Sec. 9. NEW SECTION . 12L.9 Construction. 27 This chapter shall be construed liberally in order to 28 effectuate its purpose. 29 Sec. 10. IMPLEMENTATION PROVISION. The treasurer of state 30 shall provide that when the requirements of chapter 12L are 31 enacted, individuals may begin making contributions to the Iowa 32 retirement savings plan trust, as created by section 12L.2, as 33 enacted in this Act, no earlier than January 1, 2026. 34 EXPLANATION 35 -5- LSB 2993XC (4) 91 sc/ns 5/ 7
S.F. _____ The inclusion of this explanation does not constitute agreement with 1 the explanations substance by the members of the general assembly. 2 This bill creates the Iowa retirement savings plan trust 3 under the office of treasurer of state for the purpose of 4 helping Iowans save for retirement. The bill provides that the 5 trust be operated so that, for federal tax purposes, the trust 6 meets the requirements of a retirement plan as provided by the 7 Internal Revenue Code and functions according to other federal 8 law. 9 The state treasurer is the trustee of the trust and has 10 numerous powers, as specified in the bill, for the purpose of 11 carrying out the purpose of the trust. Powers granted the 12 treasurer of state to effectuate the purpose of the trust 13 include entering into agreements with trust participants and 14 employers, investing moneys in the trust, and entering into any 15 agreements or contracts necessary to carry out the purposes of 16 the trust. 17 A participant may cancel participation in the trust at any 18 time. 19 The bill provides that the state, the treasurer of state, 20 and the trust shall not guarantee any rate of return on any 21 contributions to the trust and are not liable for any loss 22 incurred by any person as a result of participating in the 23 trust. An employer is also not liable for a participants 24 investment decisions, the administration of the plan, or the 25 consequences of participation in the plan. The bill requires 26 the treasurer to submit an annual audited financial report on 27 the operations of the trust. 28 For FY 2025-2026, the bill appropriates from the unclaimed 29 property trust fund to the treasurer of state for deposit 30 in the trusts administrative fund an amount not to exceed 31 $200,000 and requires the treasurer of state to reimburse the 32 unclaimed property trust fund from the administrative fund by 33 June 30, 2032. 34 The bill provides that when the requirements of the bill 35 -6- LSB 2993XC (4) 91 sc/ns 6/ 7
S.F. _____ are enacted, the treasurer shall not allow individuals to make 1 contributions to the trust earlier than January 1, 2026. 2 -7- LSB 2993XC (4) 91 sc/ns 7/ 7