Massachusetts 2023-2024 Regular Session

Massachusetts House Bill H998 Compare Versions

Only one version of the bill is available at this time.

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2	2	HOUSE DOCKET, NO. 2719 FILED ON: 1/19/2023
3	3	HOUSE . . . . . . . . . . . . . . . No. 998
4	4	The Commonwealth of Massachusetts
5	5	_________________
6	6	PRESENTED BY:
7	7	Paul J. Donato
8	8	_________________
9	9	To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
10	10	Court assembled:
11	11	The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:
12	12	An Act to encourage retirement planning.
13	13	_______________
14	14	PETITION OF:
15	15	NAME:DISTRICT/ADDRESS :DATE ADDED:Paul J. Donato35th Middlesex1/19/2023Sal N. DiDomenicoMiddlesex and Suffolk1/25/2023 1 of 21
16	16	HOUSE DOCKET, NO. 2719 FILED ON: 1/19/2023
17	17	HOUSE . . . . . . . . . . . . . . . No. 998
18	18	By Representative Donato of Medford, a petition (accompanied by bill, House, No. 998) of Paul
19	19	J. Donato and Sal N. DiDomenico for legislation to encourage retirement planning by
20	20	establishment of a Massachusetts secure choice savings program. Financial Services.
21	21	The Commonwealth of Massachusetts
22	22	_______________
23	23	In the One Hundred and Ninety-Third General Court
24	24	(2023-2024)
25	25	_______________
26	26	An Act to encourage retirement planning.
27	27	Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
28	28	of the same, as follows:
29	29	1 Section 1. Chapter 10 of the Massachusetts General Law is hereby amended by adding
30	30	2after Section 35I the following new Section: “ Section 35I 1⁄2. The Massachusetts Secure Choice
31	31	3Savings Program Act”.
32	32	4 Section 2. Definitions. Unless the context requires a different meaning or as expressly
33	33	5provided in this Section, all terms shall have the same meaning as when used in a comparable
34	34	6context in the Internal Revenue Code. As used in this Act:
35	35	7 "Board" means the Massachusetts Secure Choice Savings Board established under this
36	36	8Act.
37	37	9 "Department" means the Department of Revenue.
38	38	10 "Commissioner" means the Commissioner of Revenue. 2 of 21
39	39	11 "Employee" means any individual who is 18 years of age or older, who is employed by
40	40	12an employer, and who has wages that are allocable to Massachusetts during a calendar year
41	41	13under the provisions of Massachusetts General Laws, Chapter 62.
42	42	14 "Employer" means a person or entity engaged in a business, industry, profession, trade,
43	43	15or other enterprise in the Commonwealth of Massachusetts, whether for profit or not for profit,
44	44	16that (i) has at no time during the previous calendar year employed fewer than 5 employees in the
45	45	17State, (ii) has been in business at least 2 years, and (iii) has not offered a qualified retirement
46	46	18plan, including, but not limited to, a plan qualified under Section 401(a), Section 401(k), Section
47	47	19403(a), Section 403(b), Section 408(k), Section 408(p), or Section 457(b) of the Internal
48	48	20Revenue Code of 1986 in the preceding 2 years.
49	49	21 "Enrollee" means any employee or former employee who is enrolled in the Program.
50	50	22 "Fund" means the Massachusetts Secure Choice Savings Program Fund.
51	51	23 "Internal Revenue Code" means Internal Revenue Code of 1986, or any successor law, in
52	52	24effect for the calendar year.
53	53	25 "IRA" means a Roth IRA (individual retirement account) under Section 408A or a
54	54	26traditional IRA under Section 408 of the Internal Revenue Code.
55	55	27 "Participating employer" means an employer that provides a payroll deposit retirement
56	56	28savings arrangement as provided for by this Act for its employees who are enrolled in the
57	57	29Program.
58	58	30 "Payroll deposit retirement savings arrangement" means an arrangement by which a
59	59	31participating employer allows enrollees to remit payroll deduction contributions to the Program. 3 of 21
60	60	32 "Program" means the Massachusetts Secure Choice Savings Program.
61	61	33 "Wages" means any compensation within the meaning of Section 219(f)(1) of the Internal
62	62	34Revenue Code that is received by an enrollee from a participating employer during the calendar
63	63	35year.
64	64	36 Section 3. Establishment of Massachusetts Secure Choice Savings Program. A retirement
65	65	37savings program in the form of an automatic enrollment payroll deduction IRA, known as the
66	66	38Massachusetts Secure Choice Savings Program, is hereby established and shall be administered
67	67	39by the Board for the purpose of promoting greater retirement savings for private-sector
68	68	40employees in a convenient, low-cost, and portable manner.
69	69	41 Section 4. Massachusetts Secure Choice Savings Program Fund.
70	70	42 (a) The Massachusetts Secure Choice Savings Program Fund is hereby established as a
71	71	43trust outside of the State Treasurer’s Office, with the Board as its trustee. The Fund shall include
72	72	44the individual retirement accounts of enrollees, which shall be accounted for as individual
73	73	45accounts. Moneys in the Fund shall consist of moneys received from enrollees and participating
74	74	46employers pursuant to automatic payroll deductions and contributions to savings made under this
75	75	47Act. The Fund shall be operated in a manner determined by the Board, provided that the Fund is
76	76	48operated so that the accounts of enrollees established under the Program meet the requirements
77	77	49for IRAs under the Internal Revenue Code.
78	78	50 (b) The amounts deposited in the Fund shall not constitute property of the
79	79	51Commonwealth and the Fund shall not be construed to be a department, institution, or agency of
80	80	52the Commonwealth. Amounts on deposit in the Fund shall not be commingled with 4 of 21
81	81	53Commonwealth funds and the Commonwealth shall have no claim to or against, or interest in,
82	82	54such funds.
83	83	55 Section 5. Massachusetts Secure Choice Administrative Fund. The Massachusetts Secure
84	84	56Choice Administrative Fund ("Administrative Fund") is created as a nonappropriated, separate
85	85	57and apart trust fund in the State Treasurer’s Office. The Board shall use moneys in the
86	86	58Administrative Fund to pay for administrative expenses it incurs in the performance of its duties
87	87	59under this Act. The Administrative Fund may receive any grants or other moneys designated for
88	88	60administrative purposes from the State, or any unit of federal or local government, or any other
89	89	61person, firm, partnership, or corporation. Any interest earnings that are attributable to moneys in
90	90	62the Administrative Fund must be deposited into the Administrative Fund.
91	91	63 Section 6. Composition of the Board. There is created the Massachusetts Secure Choice
92	92	64Savings Board.
93	93	65 (a) The Board shall consist of the following 7 members:
94	94	66 (1) the State Treasurer, or his or her designee, who shall serve as chair;
95	95	67 (2) the State Comptroller, or his or her designee;
96	96	68 (3) the Secretary of the Commonwealth, or his or her designee;
97	97	69 (4) two public representatives with expertise in retirement savings plan administration or
98	98	70investment, or both, appointed by the Governor;
99	99	71 (5) one representative of participating employers, appointed by the Governor;
100	100	72 (6) one representative of enrollees, appointed by the Secretary of the Commonwealth. 5 of 21
101	101	73 (b) Members of the Board shall serve without compensation but may be reimbursed for
102	102	74necessary travel expenses incurred in connection with their Board duties from funds appropriated
103	103	75for the purpose.
104	104	76 (c) The initial appointments shall be as follows: one public representative for 4 years; one
105	105	77public representative for 2 years; the representative of participating employers for 3 years; and
106	106	78the representative of enrollees for 1 year. Thereafter, all appointments shall be for terms of 4
107	107	79years.
108	108	80 (d) A vacancy in the term of an appointed Board member shall be filled for the balance of
109	109	81the unexpired term in the same manner as the original appointment.
110	110	82 (e) Each Board member, prior to assuming office, shall take an oath that he or she will
111	111	83diligently and honestly administer the affairs of the Board and that he or she will not knowingly
112	112	84violate or willingly permit to be violated any of the provisions of law applicable to the Program.
113	113	85 The oath shall be certified by the officer before whom it is taken and immediately filed in
114	114	86the office of the Secretary of the Commonwealth.
115	115	87 Section 7. Fiduciary Duty. The Board, the individual members of the Board, the trustee
116	116	88appointed under subsection (b) of Section 8, any other agents appointed or engaged by the
117	117	89Board, and all persons serving as Program staff shall discharge their duties with respect to the
118	118	90Program solely in the interest of the Program's enrollees and beneficiaries as follows:
119	119	91 (1) for the exclusive purposes of providing benefits to enrollees and beneficiaries and
120	120	92defraying reasonable expenses of administering the Program; and 6 of 21
121	121	93 (2) by investing with the care, skill, prudence, and diligence under the prevailing
122	122	94circumstances that a prudent person acting in a like capacity and familiar with those matters
123	123	95would use in the conduct of an enterprise of a like character and with like aims.
124	124	96 Section 8. Duties of the Board. In addition to the other duties and responsibilities stated
125	125	97in this Act, the Board shall:
126	126	98 (a) Cause the Program to be designed, established and operated in a manner that:
127	127	99 (1) accords with best practices for retirement savings vehicles;
128	128	100 (2) maximizes participation, savings, and sound investment practices;
129	129	101 (3) maximizes simplicity, including ease of administration for participating employers
130	130	102and enrollees;
131	131	103 (4) provides an efficient product to enrollees by pooling investment funds; and
132	132	104 (5) ensures the portability of benefits.
133	133	105 (b) Appoint a trustee to the Program Fund in compliance with Section 408 of the Internal
134	134	106Revenue Code.
135	135	107 (c) Explore investment options, subject to Section 11 of this Act, that offer enrollees
136	136	108returns on contributions and the conversion of individual retirement savings account balances to
137	137	109secure retirement income without incurring debt or liabilities to the State.
138	138	110 (d) Make and enter into contracts necessary for the administration of the Program and
139	139	111Fund, including, but not limited to, retaining and contracting with investment managers, private 7 of 21
140	140	112financial institutions, other financial and service providers, consultants, actuaries, counsel,
141	141	113auditors, third-party administrators, and other professionals as necessary.
142	142	114 (e) Conduct a review of the performance of any investment vendors no less frequently
143	143	115than every 4 years, including, but not limited to, a review of returns, fees, and customer service.
144	144	116A copy of reviews conducted under this subsection shall be posted to the Board's Internet
145	145	117website.
146	146	118 (f) Determine the number and duties of staff members needed to administer the Program
147	147	119and assemble such a staff, including, as needed, employing staff, appointing a Program
148	148	120administrator, and entering into contracts with the State Treasurer to make employees of the
149	149	121State Treasurer's Office available to administer the Program.
150	150	122 (g) Cause moneys in the Fund to be held and invested as pooled investments with a view
151	151	123to achieving cost savings through efficiencies and economies of scale.
152	152	124 (h) Evaluate and establish the process by which an enrollee is able to contribute a portion
153	153	125of his or her wages to the Program for automatic deposit of those contributions and the process
154	154	126by which the participating employer provides a payroll deposit retirement savings arrangement to
155	155	127forward those contributions and related information to the Program, including, but not limited to,
156	156	128contracting with financial service companies and third-party administrators with the capability to
157	157	129receive and process employee information and contributions for payroll deposit retirement
158	158	130savings arrangements or similar arrangements.
159	159	131 (i) Design and establish the process for enrollment under Section 14 of this Act, including
160	160	132the default contribution rate, account type, investment option, and automatic escalation rate. The
161	161	133Board shall also design and establish the process by which an employee can: 8 of 21
162	162	134 (1) opt not to participate in the Program; (2) select a contribution rate, account type,
163	163	135investment option, or escalation rate different than the default options set by the Board; or (3)
164	164	136terminate participation in the Program.
165	165	137 (j) Evaluate and establish the process by which an individual may voluntarily enroll in
166	166	138and make contributions to the Program.
167	167	139 (k) Accept any grants, appropriations, or other moneys from the Commonwealth, any unit
168	168	140of federal, State, or local government, or any other person, firm, partnership, or corporation
169	169	141solely for deposit into the Fund, whether for investment or administrative purposes.
170	170	142 (l) Evaluate the need for, and procure as needed, insurance against any and all loss in
171	171	143connection with the property, assets, or activities of the Program, and indemnify as needed each
172	172	144member of the Board from personal loss or liability resulting from a member's action or inaction
173	173	145as a member of the Board.
174	174	146 (m) Make provisions for the payment of administrative costs and expenses for the
175	175	147creation, management, and operation of the Program. Subject to appropriation, the
176	176	148Commonwealth may pay administrative costs associated with the creation and management of
177	177	149the Program until sufficient assets are available in the Fund for that purpose. Thereafter, all
178	178	150administrative costs of the Fund, including repayment of any start-up funds provided by the
179	179	151State, shall be paid only out of moneys on deposit therein. However, private funds or federal
180	180	152funding received in order to implement the Program until the Fund is self-sustaining shall not be
181	181	153repaid unless those funds were offered contingent upon the promise of such repayment. The
182	182	154Board shall keep annual administrative expenses as low as possible and is authorized to charge 9 of 21
183	183	155and collect reasonable administrative fees from enrollees. (n) Allocate administrative fees to
184	184	156individual retirement accounts in the Program on a pro rata basis.
185	185	157 (o) Set minimum and maximum contribution levels in accordance with limits established
186	186	158for IRAs by the Internal Revenue Code.
187	187	159 (p) Facilitate education and outreach to employers and employees. Design and establish
188	188	160an internet website for the Program with details for employers, employees, and enrollees.
189	189	161 (q) Facilitate compliance by the Program with all applicable requirements for the
190	190	162Program under the Internal Revenue Code, including tax qualification requirements or any other
191	191	163applicable law and accounting requirements.
192	192	164 (r) Carry out the duties and obligations of the Program in an effective, efficient, and low-
193	193	165cost manner.
194	194	166 (s) Exercise any and all other powers reasonably necessary for the effectuation of the
195	195	167purposes, objectives, and provisions of this Act pertaining to the Program.
196	196	168 (t) Deposit into the Massachusetts Secure Choice Administrative Fund all grants, gifts,
197	197	169donations, fees, and earnings from investments from the Massachusetts Secure Choice Savings
198	198	170Program Fund that are used to recover administrative costs. All expenses of the Board shall be
199	199	171paid from the Massachusetts Secure Choice Administrative Fund.
200	200	172 Section 9. Risk Management. The Board shall prepare and adopt a written statement of
201	201	173investment policy that includes a risk management and oversight program. This investment
202	202	174policy shall prohibit the Board, Program, and Fund from borrowing for investment purposes. The
203	203	175risk management and oversight program shall be designed to ensure that an effective risk 10 of 21
204	204	176management system is in place to monitor the risk levels of the Program and Fund portfolio, to
205	205	177ensure that the risks taken are prudent and properly
206	206	178 managed, to provide an integrated process for overall risk management, and to assess
207	207	179investment returns as well as risk to determine if the risks taken are adequately compensated
208	208	180compared to applicable performance benchmarks and standards. The Board shall consider the
209	209	181statement of investment policy and any changes in the investment policy at a public hearing.
210	210	182 Section 10. Investment firms.
211	211	183 (a) The Board shall engage, after an open bid process, an investment manager or
212	212	184managers to invest the Fund and any other assets of the Program. Moneys in the Fund may be
213	213	185invested or reinvested by the State Treasurer's Office or may be invested in whole or in part
214	214	186under contract with the State Board of Investment, private investment managers, or both, as
215	215	187selected by the Board. In selecting the investment manager or managers, the Board shall take
216	216	188into consideration and give weight to the investment manager's fees and charges in order to
217	217	189reduce the Program's administrative expenses.
218	218	190 (b) The investment manager or managers shall comply with any and all applicable federal
219	219	191and state laws, rules, and regulations, as well as any and all rules, policies, and guidelines
220	220	192promulgated by the Board with respect to the Program and the investment of the Fund, including,
221	221	193but not limited to, the investment policy.
222	222	194 (c) The investment manager or managers shall provide such reports as the Board deems
223	223	195necessary for the Board to oversee each investment manager's performance and the performance
224	224	196of the Fund. 11 of 21
225	225	197 Section 11. Investment options.
226	226	198 (a) The Board shall establish as an investment option a life-cycle fund with a target date
227	227	199based upon the age of the enrollee. This shall be the default investment option for enrollees who
228	228	200fail to elect an investment option unless and until the Board designates by rule a new investment
229	229	201option as the default.
230	230	202 (b) The Board may also establish additional investment options, including, but not limited
231	231	203to, any of the following:
232	232	204 (1) a conservative principal protection fund;
233	233	205 (2) a growth fund;
234	234	206 (3) a secure return fund whose primary objective is the preservation of the safety of
235	235	207principal and the provision of a stable and low-risk rate of return; if the Board elects to establish
236	236	208a secure return fund, the Board may procure any insurance, annuity, or other product to insure
237	237	209the value of individuals' accounts and guarantee a rate of return; the cost of such funding
238	238	210mechanism shall be paid out of the Fund; under no circumstances shall the Board, Program,
239	239	211Fund, the State, or any participating employer assume any liability for investment or actuarial
240	240	212risk; the Board shall determine whether to establish such investment options based upon an
241	241	213analysis of their cost, risk profile, benefit level, feasibility, and ease of implementation;
242	242	214 (4) an annuity fund.
243	243	215 Section 12. Intergovernmental Collaboration, Data Sharing, and Multistate Agreements.
244	244	216 (a) The Board may enter into an intergovernmental agreement or memorandum of
245	245	217understanding with the State and any agency of the State to receive outreach, technical 12 of 21
246	246	218assistance, enforcement and compliance services, collection or dissemination of information
247	247	219pertinent to the Program (subject to such obligations of confidentiality as may be agreed or
248	248	220required by law), or other services or assistance. The State and any agencies of the State that
249	249	221enter into such agreements or memoranda of understanding shall collaborate to provide the
250	250	222outreach, assistance, information, and compliance or other services or assistance to the Board.
251	251	223The memoranda of understanding may cover the sharing of costs incurred in gathering and
252	252	224disseminating information and the reimbursement of costs for any enforcement activities or
253	253	225assistance.
254	254	226 (b) All agencies of the Commonwealth shall cooperate as requested by the Program in the
255	255	227performance of its duties under this Act, including, unless otherwise prohibited, the sharing of
256	256	228relevant data as the parties shall mutually agree.
257	257	229 (c) The Board shall assess the feasibility of multistate or regional agreements to
258	258	230administer the Program through shared administrative and operational resources and may enter
259	259	231into those agreements if deemed beneficial to the Program.
260	260	232 Section 13. Employer and employee information packets and disclosure forms.
261	261	233 (a) The Board shall design and disseminate an employer information packet and an
262	262	234employee information packet, which shall include background information on the Program,
263	263	235appropriate disclosures for employees, and information regarding the Internet website described
264	264	236in Section 8 of this Act.
265	265	237 (b) The employee information packet shall include a disclosure form. The disclosure
266	266	238form shall explain, but not be limited to, all of the following: 13 of 21
267	267	239 (1) the benefits and risks associated with making contributions to the Program;
268	268	240 (2) the mechanics of how to make contributions to the Program;
269	269	241 (3) how to opt out of the Program;
270	270	242 (4) how to participate in the Program with a level of employee contributions other than
271	271	243the default contribution rate.
272	272	244 (5) the process for withdrawal of retirement savings;
273	273	245 (6) how to obtain additional information about the Program;
274	274	246 (7) that employees seeking financial advice should contact financial advisors, that
275	275	247participating employers are not in a position to provide financial advice, and that participating
276	276	248employers are not liable for decisions employees make pursuant to this Act;
277	277	249 (8) that the Program is not an employer-sponsored retirement plan; and
278	278	250 (9) that the Program Fund is not guaranteed by the Commonwealth.
279	279	251 (c) The employee information packet shall also include a form for an employee to note
280	280	252his or her decision to opt out of participation in the Program or elect to participate with a level of
281	281	253employee contributions other than the default rate set by the Board.
282	282	254 (d) Participating employers shall supply the employee information packet to employees
283	283	255after the employer has registered for the Program. Participating employers shall supply the
284	284	256employee information packet to new employees at the time of hiring, and new employees may
285	285	257opt out of participation in the Program or elect to participate with a level of employee
286	286	258contributions other than the default contribution rate at that time. 14 of 21
287	287	259 Section 14. Program implementation and enrollment. The Program shall be implemented,
288	288	260and enrollment of employees shall begin, within 24 months after the effective date of this Act.
289	289	261The provisions of this Section shall be in force after the Board opens the Program for enrollment.
290	290	262 (a) Each employer shall establish a payroll deposit retirement savings arrangement to
291	291	263allow each employee to participate in the Program on a timeline set by the Board.
292	292	264 (b) Employers shall automatically enroll in the Program each of their employees who has
293	293	265not opted out of participation in the Program and shall provide payroll deduction retirement
294	294	266savings arrangements and deposit, on behalf of such employees, these funds into the Program.
295	295	267 (c) Enrollees shall have the ability to select a contribution level into the Fund. This level
296	296	268may be expressed as a percentage of wages or as a dollar amount up to the deductible amount for
297	297	269the enrollee's taxable year under Section 219(b)(1)(A) of the Internal Revenue Code. Enrollees
298	298	270may change their contribution level at any time, subject to rules promulgated by the Board. If an
299	299	271enrollee fails to select a contribution level using the form prescribed by the Board, then he or she
300	300	272shall contribute the default contribution rate of his or her wages to the Program.
301	301	273 (d) Enrollees may select an investment option from the permitted investment options
302	302	274listed in Section 11 of this Act. Enrollees may change their investment option at any time,
303	303	275subject to rules promulgated by the Board. In the event that an enrollee fails to select an
304	304	276investment option, that enrollee shall be placed in the investment option selected by the Board as
305	305	277the default.
306	306	278 (e) Employers shall retain the option at all times to set up any type of employer-
307	307	279sponsored retirement plan, such as a defined benefit plan or a 401(k), Simplified Employee
308	308	280Pension (SEP) plan, or Savings Incentive Match Plan for Employees (SIMPLE) plan, instead of 15 of 21
309	309	281having a payroll deposit retirement savings arrangement to allow employee participation in the
310	310	282Program.
311	311	283 (f) An enrollee may terminate his or her participation in the Program at any time in a
312	312	284manner prescribed by the Board.
313	313	285 Section 15. Payments. Employee contributions deducted by the participating employer
314	314	286through payroll deduction shall be paid by the participating employer to the Fund using one or
315	315	287more payroll deposit retirement savings arrangements established by the Board, either:
316	316	288 (1) on or before the last day of the month following the month in which the compensation
317	317	289otherwise would have been payable to the employee in cash; or
318	318	290 (2) before such later deadline prescribed by the Board for making such payments, but not
319	319	291later than the due date for the deposit of tax required to be deducted and withheld relating to
320	320	292collection of income tax at source on wages or for the deposit of tax required to be paid under the
321	321	293unemployment insurance system for the payroll period to which such payments relate.
322	322	294 Section 16. Duty and liability of the Commonwealth.
323	323	295 (1) The State, the Board, each member of the Board or other State official, other State
324	324	296boards, commissions, or agencies, any member, officer, or employee thereof, and the Program --
325	325	297 (a) have no responsibility for compliance by individuals with the conditions and other
326	326	298provisions of the Internal Revenue Code that determine which individuals are eligible to make
327	327	299tax-favored contributions to IRAs, in what amount, and in what time frame and manner, 16 of 21
328	328	300 (b) have no duty, responsibility, or liability to any party for the payment of any benefits
329	329	301under the Program, regardless of whether sufficient funds are available under the Program to pay
330	330	302such benefits,
331	331	303 (c) do not and shall not guarantee any interest rate or other rate of return on or investment
332	332	304performance of any contribution or account balance, and
333	333	305 (d) are not and shall not be liable or responsible for any loss, deficiency, failure to realize
334	334	306any gain, or any other adverse consequences, including without limitation any adverse tax
335	335	307consequences or loss of favorable tax treatment, public assistance or other benefits, incurred by
336	336	308any person as a result of participating in the Program.
337	337	309 (2) The debts, contracts, and obligations of the Program or the Board are not the debts,
338	338	310contracts, and obligations of the State, and neither the faith and credit nor the taxing power of the
339	339	311State is pledged directly or indirectly to the payment of the debts, contracts, and obligations of
340	340	312the Program or the Board.
341	341	313 Section 17. Duty and liability of participating employers.
342	342	314 (a) Participating employers shall not have any liability for an employee's decision to
343	343	315participate in, or opt out of, the Program or for the investment decisions of the Board or of any
344	344	316enrollee.
345	345	317 (b) A participating employer shall not be a fiduciary, or considered to be a fiduciary, over
346	346	318the Program. A participating employer shall not bear responsibility for the administration,
347	347	319investment options, or investment performance of the Program. A participating employer shall 17 of 21
348	348	320not be liable with regard to investment returns, Program design, and benefits paid to Program
349	349	321participants.
350	350	322 Section 18. Audit and reports.
351	351	323 (a) The Board shall annually submit:
352	352	324 (1) an audited financial report, prepared in accordance with generally accepted
353	353	325accounting principles, on the operations of the Program during each calendar year by July 1 of
354	354	326the following year to the Comptroller, Secretary of the Commonwealth, and the State Treasurer.
355	355	327 (2) a report prepared by the Board, which shall include, but is not limited to, a summary
356	356	328of the benefits provided by the Program, including the number of enrollees in the Program, the
357	357	329percentage and amounts of investment options and rates of return, and such other information
358	358	330that is relevant to make a full, fair, and effective disclosure of the operations of the Program and
359	359	331the Fund. The annual audit shall be made by an independent certified public accountant and shall
360	360	332include, but is not limited to, direct and indirect costs attributable to the use of outside
361	361	333consultants, independent contractors, and any other persons who are not State employees for the
362	362	334administration of the Program.
363	363	335 (b) In addition to any other statements or reports required by law, the Board shall provide
364	364	336periodic reports at least annually to enrollees, reporting contributions and investment income
365	365	337allocated to, withdrawals from, and balances in their Program accounts for the reporting period.
366	366	338Such reports may include any other information regarding the Program as the Board may
367	367	339determine.
368	368	340 Section 19. Penalties. 18 of 21
369	369	341 (a) An employer who fails without reasonable cause to enroll an employee in the Program
370	370	342within the time prescribed under this Act shall be subject to a penalty equal to:
371	371	343 (1) $250 for each employee for each calendar year or portion of a calendar year during
372	372	344which the employee neither was enrolled in the Program nor had elected out of participation in
373	373	345the Program; and the employee or any appropriate official of the State may bring a civil action to
374	374	346require the employer to enroll the employee and shall recover such costs and reasonable
375	375	347attorney’s fees as may be allowed by the court; and
376	376	348 (2) for each calendar year beginning after the date a penalty has been assessed with
377	377	349respect to an employee, $500 for any portion of that calendar year during which such employee
378	378	350continues to be unenrolled without electing out of participation in the Program.
379	379	351 (3) No penalty shall be imposed under subsection 19(a) on any failure for which it is
380	380	352established that the employer subject to liability for the penalty did not know that the failure
381	381	353existed and exercised reasonable diligence to meet the requirements of this Act.
382	382	354 (4) No penalty shall be imposed under subsection 19(a) on any failure if:
383	383	355 (A) the employer subject to liability for the penalty exercised reasonable diligence to
384	384	356meet those
385	385	357 requirements; and
386	386	358 (B) the employer complies with those requirements with respect to each employee by the
387	387	359end of the 90-day period beginning on the first date the employer knew, or exercising reasonable
388	388	360diligence would have known, that the failure existed. 19 of 21
389	389	361 (5) In the case of a failure that is due to reasonable cause and not to willful neglect, all or
390	390	362part of the penalty may be waived to the extent that the payment of the penalty would be
391	391	363excessive or otherwise inequitable relative to the failure involved.
392	392	364 (6) Provide that, if a participating employer fails to transmit a payroll deduction
393	393	365contribution to the Program on the earliest date the amount withheld from the enrollee’s
394	394	366compensation can reasonably be segregated from the participating employer’s assets, but not
395	395	367later than the 15th day of the month following the month in which the enrollee’s contribution
396	396	368amounts are withheld from his or her paycheck, the failure to remit such contributions on a
397	397	369timely basis shall be subject to the same sanctions as employer misappropriation of employee
398	398	370wage withholdings and to the penalties specified in subsection
399	399	371 19(a) above.
400	400	372 (b) Except as provided in this subsection, all information received by the Department
401	401	373from returns filed by an employer or from any investigation conducted under the provisions of
402	402	374this Act shall be confidential, except for official purposes within the Department or pursuant to
403	403	375official procedures for collection of penalties assessed under this Act. Nothing contained in this
404	404	376subsection shall prevent the Commissioner from publishing or making available to the public
405	405	377reasonable statistics concerning the operation of this Act wherein the contents of returns are
406	406	378grouped into aggregates in such a way that the specific information of any employer shall not be
407	407	379disclosed. Nothing contained in this subsection shall prevent the Commissioner from divulging
408	408	380information to an authorized representative of the employer or to any person pursuant to a
409	409	381request or authorization made by the employer or by an authorized representative of the
410	410	382employer. 20 of 21
411	411	383 (c) Civil penalties collected under this Act and fees collected pursuant to subsection (d)
412	412	384of this Section shall be deposited into the Tax Compliance and Administration Fund. The
413	413	385Department may, subject to appropriation, use moneys in the fund to cover expenses it incurs in
414	414	386the performance of its duties under this Act. Interest attributable to moneys in the Tax
415	415	387Compliance and Administration Fund shall be credited to the Tax Compliance and
416	416	388Administration Fund.
417	417	389 (d) The Department may charge the Board a reasonable fee for its costs in performing its
418	418	390duties under this Section to the extent that such costs have not been recovered from penalties
419	419	391imposed under this Section.
420	420	392 (e) This Section shall go into effect 9 months after the Board notifies the Commissioner
421	421	393that the Program has been implemented. Upon receipt of such notification from the Board, the
422	422	394Department shall immediately post on its Internet website a notice stating that this Section is in
423	423	395effect. This notice shall include a statement that rather than enrolling employees in the Program
424	424	396under this Act, employers may sponsor an alternative arrangement, including, but not limited to,
425	425	397a defined benefit plan, 401(k) plan, a Simplified Employee Pension (SEP) plan, or a Savings
426	426	398Incentive Match Plan for Employees (SIMPLE) plan. The Board shall provide a link to the
427	427	399vendor Internet website.
428	428	400 Section 20. Rules. The Department shall adopt rules and regulations, in accordance with
429	429	401the Massachusetts Administrative Procedure Act (Mass. Gen. Laws Ch. 30A), that may be
430	430	402necessary to
431	431	403 implement this Act. 21 of 21
432	432	404 Section 21. Delayed implementation. If the Board does not obtain adequate funds to
433	433	405implement the Program within the time frame set forth under Section 14 of this Act, the Board
434	434	406may delay the implementation of the Program.
435	435	407 Section 22. Federal considerations. The Board shall request in writing an opinion or
436	436	408ruling from the appropriate entity with jurisdiction over the federal Employee Retirement Income
437	437	409Security Act regarding the applicability of the federal Employee Retirement Income Security Act
438	438	410to the Program. The Board may not implement the Program if the IRA arrangements offered
439	439	411under the Program fail to qualify for the favorable federal income tax treatment ordinarily
440	440	412accorded to IRAs under the Internal Revenue Code or if it is determined that the Program is an
441	441	413employee benefit plan and State or employer liability is established under the federal Employee
442	442	414Retirement Income Security Act.