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Massachusetts Senate Bill S624

Massachusetts 2023-2024 Regular Session

Massachusetts Senate Bill S624 Compare Versions

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22 SENATE DOCKET, NO. 2088 FILED ON: 1/20/2023
33 SENATE . . . . . . . . . . . . . . No. 624
44 The Commonwealth of Massachusetts
55 _________________
66 PRESENTED BY:
77 Sal N. DiDomenico
88 _________________
99 To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
1010 Court assembled:
1111 The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:
1212 An Act to encourage retirement planning.
1313 _______________
1414 PETITION OF:
1515 NAME:DISTRICT/ADDRESS :Sal N. DiDomenicoMiddlesex and Suffolk 1 of 20
1616 SENATE DOCKET, NO. 2088 FILED ON: 1/20/2023
1717 SENATE . . . . . . . . . . . . . . No. 624
1818 By Mr. DiDomenico, a petition (accompanied by bill, Senate, No. 624) of Sal N. DiDomenico
1919 for legislation to encourage retirement planning. Financial Services.
2020 The Commonwealth of Massachusetts
2121 _______________
2222 In the One Hundred and Ninety-Third General Court
2323 (2023-2024)
2424 _______________
2525 An Act to encourage retirement planning.
2626 Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
2727 of the same, as follows:
2828 1 SECTION 1. Chapter 10 of the Massachusetts General Law is hereby amended by adding
2929 2after Section 35I the following new Section: “ Section 35I 1⁄2. The Massachusetts Secure Choice
3030 3Savings Program Act”.
3131 4 SECTION 2. Unless the context requires a different meaning or as expressly provided in
3232 5this Section, all terms shall have the same meaning as when used in a comparable context in the
3333 6Internal Revenue Code. As used in this Act:
3434 7 "Board" means the Massachusetts Secure Choice Savings Board established under this
3535 8Act.
3636 9 "Department" means the Department of Revenue.
3737 10 "Commissioner" means the Commissioner of Revenue. 2 of 20
3838 11 "Employee" means any individual who is 18 years of age or older, who is employed by
3939 12an employer, and who has wages that are allocable to Massachusetts during a calendar year
4040 13under the provisions of Massachusetts General Laws, Chapter 62.
4141 14 "Employer" means a person or entity engaged in a business, industry, profession, trade,
4242 15or other enterprise in the Commonwealth of Massachusetts, whether for profit or not for profit,
4343 16that (i) has at no time during the previous calendar year employed fewer than 5 employees in the
4444 17State, (ii) has been in business at least 2 years, and (iii) has not offered a qualified retirement
4545 18plan, including, but not limited to, a plan qualified under Section 401(a), Section 401(k), Section
4646 19403(a), Section 403(b), Section 408(k), Section 408(p), or Section 457(b) of the Internal
4747 20Revenue Code of 1986 in the preceding 2 years.
4848 21 "Enrollee" means any employee or former employee who is enrolled in the Program.
4949 22 "Fund" means the Massachusetts Secure Choice Savings Program Fund.
5050 23 "Internal Revenue Code" means Internal Revenue Code of 1986, or any successor law, in
5151 24effect for the calendar year.
5252 25 "IRA" means a Roth IRA (individual retirement account) under Section 408A or a
5353 26traditional IRA under Section 408 of the Internal Revenue Code.
5454 27 "Participating employer" means an employer that provides a payroll deposit retirement
5555 28savings arrangement as provided for by this Act for its employees who are enrolled in the
5656 29Program.
5757 30 "Payroll deposit retirement savings arrangement" means an arrangement by which a
5858 31participating employer allows enrollees to remit payroll deduction contributions to the Program. 3 of 20
5959 32 "Program" means the Massachusetts Secure Choice Savings Program.
6060 33 "Wages" means any compensation within the meaning of Section 219(f)(1) of the Internal
6161 34Revenue Code that is received by an enrollee from a participating employer during the calendar
6262 35year.
6363 36 SECTION 3. A retirement savings program in the form of an automatic enrollment
6464 37payroll deduction IRA, known as the Massachusetts Secure Choice Savings Program, is hereby
6565 38established and shall be administered by the Board for the purpose of promoting greater
6666 39retirement savings for private-sector employees in a convenient, low-cost, and portable manner.
6767 40 SECTION 4. (a) The Massachusetts Secure Choice Savings Program Fund is hereby
6868 41established as a trust outside of the State Treasurer’s Office, with the Board as its trustee. The
6969 42Fund shall include the individual retirement accounts of enrollees, which shall be accounted for
7070 43as individual accounts. Moneys in the Fund shall consist of moneys received from enrollees and
7171 44participating employers pursuant to automatic payroll deductions and contributions to savings
7272 45made under this Act. The Fund shall be operated in a manner determined by the Board, provided
7373 46that the Fund is operated so that the accounts of enrollees established under the Program meet the
7474 47requirements for IRAs under the Internal Revenue Code.
7575 48 (b) The amounts deposited in the Fund shall not constitute property of the
7676 49Commonwealth and the Fund shall not be construed to be a department, institution, or agency of
7777 50the Commonwealth. Amounts on deposit in the Fund shall not be commingled with
7878 51Commonwealth funds and the Commonwealth shall have no claim to or against, or interest in,
7979 52such funds. 4 of 20
8080 53 SECTION 5. The Massachusetts Secure Choice Administrative Fund ("Administrative
8181 54Fund") is created as a nonappropriated, separate and apart trust fund in the State Treasurer’s
8282 55Office. The Board shall use moneys in the Administrative Fund to pay for administrative
8383 56expenses it incurs in the performance of its duties under this Act. The Administrative Fund may
8484 57receive any grants or other moneys designated for administrative purposes from the State, or any
8585 58unit of federal or local government, or any other person, firm, partnership, or corporation. Any
8686 59interest earnings that are attributable to moneys in the Administrative Fund must be deposited
8787 60into the Administrative Fund.
8888 61 SECTION 6. There is created the Massachusetts Secure Choice Savings Board.
8989 62 (a) The Board shall consist of the following 7 members:
9090 63 (1) the State Treasurer, or his or her designee, who shall serve as chair;
9191 64 (2) the State Comptroller, or his or her designee;
9292 65 (3) the Secretary of the Commonwealth, or his or her designee;
9393 66 (4) two public representatives with expertise in retirement savings plan administration or
9494 67investment, or both, appointed by the Governor;
9595 68 (5) one representative of participating employers, appointed by the Governor;
9696 69 (6) one representative of enrollees, appointed by the Secretary of the Commonwealth.
9797 70 (b) Members of the Board shall serve without compensation but may be reimbursed for
9898 71necessary travel expenses incurred in connection with their Board duties from funds appropriated
9999 72for the purpose. 5 of 20
100100 73 (c) The initial appointments shall be as follows: one public representative for 4 years; one
101101 74public representative for 2 years; the representative of participating employers for 3 years; and
102102 75the representative of enrollees for 1 year. Thereafter, all appointments shall be for terms of 4
103103 76years.
104104 77 (d) A vacancy in the term of an appointed Board member shall be filled for the balance of
105105 78the unexpired term in the same manner as the original appointment.
106106 79 (e) Each Board member, prior to assuming office, shall take an oath that he or she will
107107 80diligently and honestly administer the affairs of the Board and that he or she will not knowingly
108108 81violate or willingly permit to be violated any of the provisions of law applicable to the Program.
109109 82 The oath shall be certified by the officer before whom it is taken and immediately filed in
110110 83the office of the Secretary of the Commonwealth.
111111 84 SECTION 7. The Board, the individual members of the Board, the trustee appointed
112112 85under subsection (b) of Section 8, any other agents appointed or engaged by the Board, and all
113113 86persons serving as Program staff shall discharge their duties with respect to the Program solely in
114114 87the interest of the Program's enrollees and beneficiaries as follows:
115115 88 (1) for the exclusive purposes of providing benefits to enrollees and beneficiaries and
116116 89defraying reasonable expenses of administering the Program; and
117117 90 (2) by investing with the care, skill, prudence, and diligence under the prevailing
118118 91circumstances that a prudent person acting in a like capacity and familiar with those matters
119119 92would use in the conduct of an enterprise of a like character and with like aims. 6 of 20
120120 93 SECTION 8. In addition to the other duties and responsibilities stated in this Act, the
121121 94Board shall:
122122 95 (a) Cause the Program to be designed, established and operated in a manner that:
123123 96 (1) accords with best practices for retirement savings vehicles;
124124 97 (2) maximizes participation, savings, and sound investment practices;
125125 98 (3) maximizes simplicity, including ease of administration for participating employers
126126 99and enrollees;
127127 100 (4) provides an efficient product to enrollees by pooling investment funds; and
128128 101 (5) ensures the portability of benefits.
129129 102 (b) Appoint a trustee to the Program Fund in compliance with Section 408 of the Internal
130130 103Revenue Code.
131131 104 (c) Explore investment options, subject to Section 11 of this Act, that offer enrollees
132132 105returns on contributions and the conversion of individual retirement savings account balances to
133133 106secure retirement income without incurring debt or liabilities to the State.
134134 107 (d) Make and enter into contracts necessary for the administration of the Program and
135135 108Fund, including, but not limited to, retaining and contracting with investment managers, private
136136 109financial institutions, other financial and service providers, consultants, actuaries, counsel,
137137 110auditors, third-party administrators, and other professionals as necessary.
138138 111 (e) Conduct a review of the performance of any investment vendors no less frequently
139139 112than every 4 years, including, but not limited to, a review of returns, fees, and customer service. 7 of 20
140140 113A copy of reviews conducted under this subsection shall be posted to the Board's Internet
141141 114website.
142142 115 (f) Determine the number and duties of staff members needed to administer the Program
143143 116and assemble such a staff, including, as needed, employing staff, appointing a Program
144144 117administrator, and entering into contracts with the State Treasurer to make employees of the
145145 118State Treasurer's Office available to administer the Program.
146146 119 (g) Cause moneys in the Fund to be held and invested as pooled investments with a view
147147 120to achieving cost savings through efficiencies and economies of scale.
148148 121 (h) Evaluate and establish the process by which an enrollee is able to contribute a portion
149149 122of his or her wages to the Program for automatic deposit of those contributions and the process
150150 123by which the participating employer provides a payroll deposit retirement savings arrangement to
151151 124forward those contributions and related information to the Program, including, but not limited to,
152152 125contracting with financial service companies and third-party administrators with the capability to
153153 126receive and process employee information and contributions for payroll deposit retirement
154154 127savings arrangements or similar arrangements.
155155 128 (i) Design and establish the process for enrollment under Section 14 of this Act, including
156156 129the default contribution rate, account type, investment option, and automatic escalation rate. The
157157 130Board shall also design and establish the process by which an employee can:
158158 131 (1) opt not to participate in the Program; (2) select a contribution rate, account type,
159159 132investment option, or escalation rate different than the default options set by the Board; or (3)
160160 133terminate participation in the Program. 8 of 20
161161 134 (j) Evaluate and establish the process by which an individual may voluntarily enroll in
162162 135and make contributions to the Program.
163163 136 (k) Accept any grants, appropriations, or other moneys from the Commonwealth, any unit
164164 137of federal, State, or local government, or any other person, firm, partnership, or corporation
165165 138solely for deposit into the Fund, whether for investment or administrative purposes.
166166 139 (l) Evaluate the need for, and procure as needed, insurance against any and all loss in
167167 140connection with the property, assets, or activities of the Program, and indemnify as needed each
168168 141member of the Board from personal loss or liability resulting from a member's action or inaction
169169 142as a member of the Board.
170170 143 (m) Make provisions for the payment of administrative costs and expenses for the
171171 144creation, management, and operation of the Program. Subject to appropriation, the
172172 145Commonwealth may pay administrative costs associated with the creation and management of
173173 146the Program until sufficient assets are available in the Fund for that purpose. Thereafter, all
174174 147administrative costs of the Fund, including repayment of any start-up funds provided by the
175175 148State, shall be paid only out of moneys on deposit therein. However, private funds or federal
176176 149funding received in order to implement the Program until the Fund is self-sustaining shall not be
177177 150repaid unless those funds were offered contingent upon the promise of such repayment. The
178178 151Board shall keep annual administrative expenses as low as possible and is authorized to charge
179179 152and collect reasonable administrative fees from enrollees. (n) Allocate administrative fees to
180180 153individual retirement accounts in the Program on a pro rata basis.
181181 154 (o) Set minimum and maximum contribution levels in accordance with limits established
182182 155for IRAs by the Internal Revenue Code. 9 of 20
183183 156 (p) Facilitate education and outreach to employers and employees. Design and establish
184184 157an internet website for the Program with details for employers, employees, and enrollees.
185185 158 (q) Facilitate compliance by the Program with all applicable requirements for the
186186 159Program under the Internal Revenue Code, including tax qualification requirements or any other
187187 160applicable law and accounting requirements.
188188 161 (r) Carry out the duties and obligations of the Program in an effective, efficient, and low-
189189 162cost manner.
190190 163 (s) Exercise any and all other powers reasonably necessary for the effectuation of the
191191 164purposes, objectives, and provisions of this Act pertaining to the Program.
192192 165 (t) Deposit into the Massachusetts Secure Choice Administrative Fund all grants, gifts,
193193 166donations, fees, and earnings from investments from the Massachusetts Secure Choice Savings
194194 167Program Fund that are used to recover administrative costs. All expenses of the Board shall be
195195 168paid from the Massachusetts Secure Choice Administrative Fund.
196196 169 SECTION 9. The Board shall prepare and adopt a written statement of investment policy
197197 170that includes a risk management and oversight program. This investment policy shall prohibit the
198198 171Board, Program, and Fund from borrowing for investment purposes. The risk management and
199199 172oversight program shall be designed to ensure that an effective risk management system is in
200200 173place to monitor the risk levels of the Program and Fund portfolio, to ensure that the risks taken
201201 174are prudent and properly managed, to provide an integrated process for overall risk management,
202202 175and to assess investment returns as well as risk to determine if the risks taken are adequately
203203 176compensated compared to applicable performance benchmarks and standards. The Board shall 10 of 20
204204 177consider the statement of investment policy and any changes in the investment policy at a public
205205 178hearing.
206206 179 SECTION 10. (a) The Board shall engage, after an open bid process, an investment
207207 180manager or managers to invest the Fund and any other assets of the Program. Moneys in the
208208 181Fund may be invested or reinvested by the State Treasurer's Office or may be invested in whole
209209 182or in part under contract with the State Board of Investment, private investment managers, or
210210 183both, as selected by the Board. In selecting the investment manager or managers, the Board shall
211211 184take into consideration and give weight to the investment manager's fees and charges in order to
212212 185reduce the Program's administrative expenses.
213213 186 (b) The investment manager or managers shall comply with any and all applicable federal
214214 187and state laws, rules, and regulations, as well as any and all rules, policies, and guidelines
215215 188promulgated by the Board with respect to the Program and the investment of the Fund, including,
216216 189but not limited to, the investment policy.
217217 190 (c) The investment manager or managers shall provide such reports as the Board deems
218218 191necessary for the Board to oversee each investment manager's performance and the performance
219219 192of the Fund.
220220 193 SECTION 11. (a) The Board shall establish as an investment option a life-cycle fund
221221 194with a target date based upon the age of the enrollee. This shall be the default investment option
222222 195for enrollees who fail to elect an investment option unless and until the Board designates by rule
223223 196a new investment option as the default.
224224 197 (b) The Board may also establish additional investment options, including, but not limited
225225 198to, any of the following: 11 of 20
226226 199 (1) a conservative principal protection fund;
227227 200 (2) a growth fund;
228228 201 (3) a secure return fund whose primary objective is the preservation of the safety of
229229 202principal and the provision of a stable and low-risk rate of return; if the Board elects to establish
230230 203a secure return fund, the Board may procure any insurance, annuity, or other product to insure
231231 204the value of individuals' accounts and guarantee a rate of return; the cost of such funding
232232 205mechanism shall be paid out of the Fund; under no circumstances shall the Board, Program,
233233 206Fund, the State, or any participating employer assume any liability for investment or actuarial
234234 207risk; the Board shall determine whether to establish such investment options based upon an
235235 208analysis of their cost, risk profile, benefit level, feasibility, and ease of implementation;
236236 209 (4) an annuity fund.
237237 210 SECTION 12. (a) The Board may enter into an intergovernmental agreement or
238238 211memorandum of understanding with the State and any agency of the State to receive outreach,
239239 212technical assistance, enforcement and compliance services, collection or dissemination of
240240 213information pertinent to the Program (subject to such obligations of confidentiality as may be
241241 214agreed or required by law), or other services or assistance. The State and any agencies of the
242242 215State that enter into such agreements or memoranda of understanding shall collaborate to provide
243243 216the outreach, assistance, information, and compliance or other services or assistance to the
244244 217Board. The memoranda of understanding may cover the sharing of costs incurred in gathering
245245 218and disseminating information and the reimbursement of costs for any enforcement activities or
246246 219assistance. 12 of 20
247247 220 (b) All agencies of the Commonwealth shall cooperate as requested by the Program in the
248248 221performance of its duties under this Act, including, unless otherwise prohibited, the sharing of
249249 222relevant data as the parties shall mutually agree.
250250 223 (c) The Board shall assess the feasibility of multistate or regional agreements to
251251 224administer the Program through shared administrative and operational resources and may enter
252252 225into those agreements if deemed beneficial to the Program.
253253 226 Section 13. (a) The Board shall design and disseminate an employer information packet
254254 227and an employee information packet, which shall include background information on the
255255 228Program, appropriate disclosures for employees, and information regarding the Internet website
256256 229described in Section 8 of this Act.
257257 230 (b) The employee information packet shall include a disclosure form. The disclosure
258258 231form shall explain, but not be limited to, all of the following:
259259 232 (1) the benefits and risks associated with making contributions to the Program;
260260 233 (2) the mechanics of how to make contributions to the Program;
261261 234 (3) how to opt out of the Program;
262262 235 (4) how to participate in the Program with a level of employee contributions other than
263263 236the default contribution rate.
264264 237 (5) the process for withdrawal of retirement savings;
265265 238 (6) how to obtain additional information about the Program; 13 of 20
266266 239 (7) that employees seeking financial advice should contact financial advisors, that
267267 240participating employers are not in a position to provide financial advice, and that participating
268268 241employers are not liable for decisions employees make pursuant to this Act;
269269 242 (8) that the Program is not an employer-sponsored retirement plan; and
270270 243 (9) that the Program Fund is not guaranteed by the Commonwealth.
271271 244 (c) The employee information packet shall also include a form for an employee to note
272272 245his or her decision to opt out of participation in the Program or elect to participate with a level of
273273 246employee contributions other than the default rate set by the Board.
274274 247 (d) Participating employers shall supply the employee information packet to employees
275275 248after the employer has registered for the Program. Participating employers shall supply the
276276 249employee information packet to new employees at the time of hiring, and new employees may
277277 250opt out of participation in the Program or elect to participate with a level of employee
278278 251contributions other than the default contribution rate at that time.
279279 252 SECTION 14. The Program shall be implemented, and enrollment of employees shall
280280 253begin, within 24 months after the effective date of this Act. The provisions of this Section shall
281281 254be in force after the Board opens the Program for enrollment.
282282 255 (a) Each employer shall establish a payroll deposit retirement savings arrangement to
283283 256allow each employee to participate in the Program on a timeline set by the Board.
284284 257 (b) Employers shall automatically enroll in the Program each of their employees who has
285285 258not opted out of participation in the Program and shall provide payroll deduction retirement
286286 259savings arrangements and deposit, on behalf of such employees, these funds into the Program. 14 of 20
287287 260 (c) Enrollees shall have the ability to select a contribution level into the Fund. This level
288288 261may be expressed as a percentage of wages or as a dollar amount up to the deductible amount for
289289 262the enrollee's taxable year under Section 219(b)(1)(A) of the Internal Revenue Code. Enrollees
290290 263may change their contribution level at any time, subject to rules promulgated by the Board. If an
291291 264enrollee fails to select a contribution level using the form prescribed by the Board, then he or she
292292 265shall contribute the default contribution rate of his or her wages to the Program.
293293 266 (d) Enrollees may select an investment option from the permitted investment options
294294 267listed in Section 11 of this Act. Enrollees may change their investment option at any time,
295295 268subject to rules promulgated by the Board. In the event that an enrollee fails to select an
296296 269investment option, that enrollee shall be placed in the investment option selected by the Board as
297297 270the default.
298298 271 (e) Employers shall retain the option at all times to set up any type of employer-
299299 272sponsored retirement plan, such as a defined benefit plan or a 401(k), Simplified Employee
300300 273Pension (SEP) plan, or Savings Incentive Match Plan for Employees (SIMPLE) plan, instead of
301301 274having a payroll deposit retirement savings arrangement to allow employee participation in the
302302 275Program.
303303 276 (f) An enrollee may terminate his or her participation in the Program at any time in a
304304 277manner prescribed by the Board.
305305 278 SECTION 15. Employee contributions deducted by the participating employer through
306306 279payroll deduction shall be paid by the participating employer to the Fund using one or more
307307 280payroll deposit retirement savings arrangements established by the Board, either: 15 of 20
308308 281 (1) on or before the last day of the month following the month in which the compensation
309309 282otherwise would have been payable to the employee in cash; or
310310 283 (2) before such later deadline prescribed by the Board for making such payments, but not
311311 284later than the due date for the deposit of tax required to be deducted and withheld relating to
312312 285collection of income tax at source on wages or for the deposit of tax required to be paid under the
313313 286unemployment insurance system for the payroll period to which such payments relate.
314314 287 SECTION 16. (1) The State, the Board, each member of the Board or other State official,
315315 288other State boards, commissions, or agencies, any member, officer, or employee thereof, and the
316316 289Program --
317317 290 (a) have no responsibility for compliance by individuals with the conditions and other
318318 291provisions of the Internal Revenue Code that determine which individuals are eligible to make
319319 292tax-favored contributions to IRAs, in what amount, and in what time frame and manner,
320320 293 (b) have no duty, responsibility, or liability to any party for the payment of any benefits
321321 294under the Program, regardless of whether sufficient funds are available under the Program to pay
322322 295such benefits,
323323 296 (c) do not and shall not guarantee any interest rate or other rate of return on or investment
324324 297performance of any contribution or account balance, and
325325 298 (d) are not and shall not be liable or responsible for any loss, deficiency, failure to realize
326326 299any gain, or any other adverse consequences, including without limitation any adverse tax
327327 300consequences or loss of favorable tax treatment, public assistance or other benefits, incurred by
328328 301any person as a result of participating in the Program. 16 of 20
329329 302 (2) The debts, contracts, and obligations of the Program or the Board are not the debts,
330330 303contracts, and obligations of the State, and neither the faith and credit nor the taxing power of the
331331 304State is pledged directly or indirectly to the payment of the debts, contracts, and obligations of
332332 305the Program or the Board.
333333 306 SECTION 17. (a) Participating employers shall not have any liability for an employee's
334334 307decision to participate in, or opt out of, the Program or for the investment decisions of the Board
335335 308or of any enrollee.
336336 309 (b) A participating employer shall not be a fiduciary, or considered to be a fiduciary, over
337337 310the Program. A participating employer shall not bear responsibility for the administration,
338338 311investment options, or investment performance of the Program. A participating employer shall
339339 312not be liable with regard to investment returns, Program design, and benefits paid to Program
340340 313participants.
341341 314 SECTION 18. (a) The Board shall annually submit:
342342 315 (1) an audited financial report, prepared in accordance with generally accepted
343343 316accounting principles, on the operations of the Program during each calendar year by July 1 of
344344 317the following year to the Comptroller, Secretary of the Commonwealth, and the State Treasurer.
345345 318 (2) a report prepared by the Board, which shall include, but is not limited to, a summary
346346 319of the benefits provided by the Program, including the number of enrollees in the Program, the
347347 320percentage and amounts of investment options and rates of return, and such other information
348348 321that is relevant to make a full, fair, and effective disclosure of the operations of the Program and
349349 322the Fund. The annual audit shall be made by an independent certified public accountant and shall
350350 323include, but is not limited to, direct and indirect costs attributable to the use of outside 17 of 20
351351 324consultants, independent contractors, and any other persons who are not State employees for the
352352 325administration of the Program.
353353 326 (b) In addition to any other statements or reports required by law, the Board shall provide
354354 327periodic reports at least annually to enrollees, reporting contributions and investment income
355355 328allocated to, withdrawals from, and balances in their Program accounts for the reporting period.
356356 329Such reports may include any other information regarding the Program as the Board may
357357 330determine.
358358 331 SECTION 19. Penalties.
359359 332 (a) An employer who fails without reasonable cause to enroll an employee in the Program
360360 333within the time prescribed under this Act shall be subject to a penalty equal to:
361361 334 (1) $250 for each employee for each calendar year or portion of a calendar year during
362362 335which the employee neither was enrolled in the Program nor had elected out of participation in
363363 336the Program; and the employee or any appropriate official of the State may bring a civil action to
364364 337require the employer to enroll the employee and shall recover such costs and reasonable
365365 338attorney’s fees as may be allowed by the court; and
366366 339 (2) for each calendar year beginning after the date a penalty has been assessed with
367367 340respect to an employee, $500 for any portion of that calendar year during which such employee
368368 341continues to be unenrolled without electing out of participation in the Program.
369369 342 (3) No penalty shall be imposed under subsection 19(a) on any failure for which it is
370370 343established that the employer subject to liability for the penalty did not know that the failure
371371 344existed and exercised reasonable diligence to meet the requirements of this Act. 18 of 20
372372 345 (4) No penalty shall be imposed under subsection 19(a) on any failure if:
373373 346 (A) the employer subject to liability for the penalty exercised reasonable diligence to
374374 347meet those requirements; and
375375 348 (B) the employer complies with those requirements with respect to each employee by the
376376 349end of the 90-day period beginning on the first date the employer knew, or exercising reasonable
377377 350diligence would have known, that the failure existed.
378378 351 (5) In the case of a failure that is due to reasonable cause and not to willful neglect, all or
379379 352part of the penalty may be waived to the extent that the payment of the penalty would be
380380 353excessive or otherwise inequitable relative to the failure involved.
381381 354 (6) Provide that, if a participating employer fails to transmit a payroll deduction
382382 355contribution to the Program on the earliest date the amount withheld from the enrollee’s
383383 356compensation can reasonably be segregated from the participating employer’s assets, but not
384384 357later than the 15th day of the month following the month in which the enrollee’s contribution
385385 358amounts are withheld from his or her paycheck, the failure to remit such contributions on a
386386 359timely basis shall be subject to the same sanctions as employer misappropriation of employee
387387 360wage withholdings and to the penalties specified in subsection 19(a) above.
388388 361 (b) Except as provided in this subsection, all information received by the Department
389389 362from returns filed by an employer or from any investigation conducted under the provisions of
390390 363this Act shall be confidential, except for official purposes within the Department or pursuant to
391391 364official procedures for collection of penalties assessed under this Act. Nothing contained in this
392392 365subsection shall prevent the Commissioner from publishing or making available to the public
393393 366reasonable statistics concerning the operation of this Act wherein the contents of returns are 19 of 20
394394 367grouped into aggregates in such a way that the specific information of any employer shall not be
395395 368disclosed. Nothing contained in this subsection shall prevent the Commissioner from divulging
396396 369information to an authorized representative of the employer or to any person pursuant to a
397397 370request or authorization made by the employer or by an authorized representative of the
398398 371employer.
399399 372 (c) Civil penalties collected under this Act and fees collected pursuant to subsection (d)
400400 373of this Section shall be deposited into the Tax Compliance and Administration Fund. The
401401 374Department may, subject to appropriation, use moneys in the fund to cover expenses it incurs in
402402 375the performance of its duties under this Act. Interest attributable to moneys in the Tax
403403 376Compliance and Administration Fund shall be credited to the Tax Compliance and
404404 377Administration Fund.
405405 378 (d) The Department may charge the Board a reasonable fee for its costs in performing its
406406 379duties under this Section to the extent that such costs have not been recovered from penalties
407407 380imposed under this Section.
408408 381 (e) This Section shall go into effect 9 months after the Board notifies the Commissioner
409409 382that the Program has been implemented. Upon receipt of such notification from the Board, the
410410 383Department shall immediately post on its Internet website a notice stating that this Section is in
411411 384effect. This notice shall include a statement that rather than enrolling employees in the Program
412412 385under this Act, employers may sponsor an alternative arrangement, including, but not limited to,
413413 386a defined benefit plan, 401(k) plan, a Simplified Employee Pension (SEP) plan, or a Savings
414414 387Incentive Match Plan for Employees (SIMPLE) plan. The Board shall provide a link to the
415415 388vendor Internet website. 20 of 20
416416 389 SECTION 20. The Department shall adopt rules and regulations, in accordance with the
417417 390Massachusetts Administrative Procedure Act (Mass. Gen. Laws Ch. 30A), that may be necessary
418418 391to implement this Act.
419419 392 SECTION 21. If the Board does not obtain adequate funds to implement the Program
420420 393within the time frame set forth under Section 14 of this Act, the Board may delay the
421421 394implementation of the Program.
422422 395 SECTION 22. The Board shall request in writing an opinion or ruling from the
423423 396appropriate entity with jurisdiction over the federal Employee Retirement Income Security Act
424424 397regarding the applicability of the federal Employee Retirement Income Security Act to the
425425 398Program. The Board may not implement the Program if the IRA arrangements offered under the
426426 399Program fail to qualify for the favorable federal income tax treatment ordinarily accorded to
427427 400IRAs under the Internal Revenue Code or if it is determined that the Program is an employee
428428 401benefit plan and State or employer liability is established under the federal Employee Retirement
429429 402Income Security Act.