Massachusetts 2025-2026 Regular Session

Massachusetts House Bill H1226 Compare Versions

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2	2	HOUSE DOCKET, NO. 895 FILED ON: 1/13/2025
3	3	HOUSE . . . . . . . . . . . . . . . No. 1226
4	4	The Commonwealth of Massachusetts
5	5	_________________
6	6	PRESENTED BY:
7	7	Meghan K. Kilcoyne
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 relative to secure choice retirement savings plan.
13	13	_______________
14	14	PETITION OF:
15	15	NAME:DISTRICT/ADDRESS :DATE ADDED:Meghan K. Kilcoyne12th Worcester1/13/2025Paul McMurtry11th Norfolk2/26/2025 1 of 14
16	16	HOUSE DOCKET, NO. 895 FILED ON: 1/13/2025
17	17	HOUSE . . . . . . . . . . . . . . . No. 1226
18	18	By Representative Kilcoyne of Clinton, a petition (accompanied by bill, House, No. 1226) of
19	19	Meghan K. Kilcoyne and Paul McMurtry for legislation to establish secure choice retirement
20	20	savings plans. Financial Services.
21	21	The Commonwealth of Massachusetts
22	22	_______________
23	23	In the One Hundred and Ninety-Fourth General Court
24	24	(2025-2026)
25	25	_______________
26	26	An Act relative to secure choice retirement savings plan.
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 29 of the General Laws, as appearing in the 2016 Official Edition,
30	30	2is hereby amended by inserting after section 64E the following new sections:-
31	31	3 Section 64F. Definitions
32	32	4 For the purposes of this section, the following definitions shall apply:
33	33	5 “Board” means the Secure Choice Retirement Savings Board
34	34	6 “Eligible employee”, a person who is employed by an eligible employer and who for any
35	35	7calendar year has provided (or is expected to provide) 750 or more hours of service to the
36	36	8eligible employer, with eligibility continuing even if service in later years is less than 750 hours.
37	37	9The term does not include: (i) any employee who is an “active participant: as described in IRC
38	38	10Section 219(g)(5), without regard to the exclusions for plans described in IRC Section 457(b);
39	39	11(ii) any employee who is enrolled in a payroll deduction IRA maintained or offered by the 2 of 14
40	40	12employee’s employer; (iii) Any employee who is covered by a collective bargaining agreement
41	41	13that does not provide for participation in the IRAP; (iv) Any employee who has not attained the
42	42	14age of 18 before the beginning of the calendar year.
43	43	15 “Eligible employer”, a person or entity engaged in a specific business, industry,
44	44	16profession, trade, or other enterprise in the Commonwealth, whether for profit or not for profit
45	45	17excluding the federal government, the Commonwealth, any county, any municipality, or any of
46	46	18the Commonwealth’s units or instrumentalities, with the exception that the Commonwealth is
47	47	19deemed an eligible employer with regard to Personal Care Attendants, Family Child Care
48	48	20Providers, and other direct or indirect employees of the Commonwealth, including a joint
49	49	21relationship, who are not eligible to participate in a public employee pension fund within the
50	50	22Commonwealth. The term does not include any employer that has not been in business at all
51	51	23during the preceding calendar year.
52	52	24 “Participating employer”, an eligible employer that provides a payroll deposit retirement
53	53	25savings arrangement provided for by this title for eligible employees.
54	54	26 “Payroll deduction IRA”, an arrangement by which an employer makes contributions on
55	55	27behalf of participating employees by remitting a specified portion of the employee’s pay to an
56	56	28IRA at the same time and manner as other payroll deductions.
57	57	29 “IRAP”, the Secure Choice Individual Retirement Account Program.
58	58	30 “MERP”, the Secure Choice Multiple-Employer Retirement Account Program.
59	59	31 “ERISA”, the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C.
60	60	32§ 1001 et seq. 3 of 14
61	61	33 “Code” or “IRC”, the Internal Revenue Code of 1986, as amended, 26 U.S.C. § 1 et seq.
62	62	34 “PRIM Board”, the Massachusetts Pension Reserves Investment Management Board.
63	63	35 “Qualified Plan”, any plan described in IRC Sections 401(a), 403(a), 403(b), or 457(b).
64	64	36 “IRA”, any account of annuity described in IRC Section 408(a) or 408 (b).
65	65	37 Section 64G. Responsibilities of Eligible Employers and Exemptions
66	66	38 (a) Each eligible employer is required to automatically enroll its eligible employees in the
67	67	39IRAP.
68	68	40 (b) An eligible employer is exempted from subsection a to the extent that it offers each of
69	69	41its eligible employees the opportunity to participate in a qualified plan or a payroll deduction
70	70	42IRA.
71	71	43 Section 64H. IRAP
72	72	44 (a) The Board is responsible for developing and establishing the IRAP.
73	73	45 (b) The IRAP shall:
74	74	46 (i) Allow eligible individuals employed for compensation in this state to contribute to an
75	75	47individual account established under the program through payroll deductions
76	76	48 (ii) Provide for automatic enrollment of employees and allow employees to opt out of the
77	77	49plan.
78	78	50 (iii) Have a default contribution rate set by the Board by rule. 4 of 14
79	79	51 (iv) Offer default escalation and contribution levels that can be increased or decreased
80	80	52within the limits allowed by the IRC.
81	81	53 (v) Pool accounts established under the plan for investment purposes.
82	82	54 (vi) Be professionally managed.
83	83	55 (vii) Allow the use of private sector partnerships to administer and invest the
84	84	56contributions to the plan under the supervision and guidance of the Board. Monies in the IRAP
85	85	57may be invested or reinvested by the Treasurer or may be invested in whole or in part under
86	86	58contract with the PRIM Board or private money managers, or both, as determined by the Board.
87	87	59 (viii) Maintain a separate trust.
88	88	60 (ix) Provide for the program’s administration in an efficient and cost-effective manner.
89	89	61 (x) Be structured so that it is not governed by ERISA.
90	90	62 (xi) Provide the Board with the authority to establish such rules and regulations as it
91	91	63considers appropriate for the administration of the IRAP, including with regard to the selection
92	92	64of investment options, the manner of safeguarding contributions and other plan assets, the
93	93	65payment of administrative expenses, and the purchase of insurance.
94	94	66 (xii) Provide for the manner of the payment of benefits, which may include annuities
95	95	67and/or lump sums.
96	96	68 Section 64I. MERP
97	97	69 (a) The Board is responsible for developing and establishing the MERP. 5 of 14
98	98	70 (b) The MERP shall:
99	99	71 (i) Be qualified under IRC Section 401(a).
100	100	72 (ii) Be a profit sharing plan as described in IRC Section 401(a)(27)(B).
101	101	73 (iii) Be a defined contribution plan as described in IRC Section 414(i).
102	102	74 (iv) Be governed by ERISA.
103	103	75 (v) Be a multiple employer plan permitting the voluntary participation of employers with
104	104	76employees working in the Commonwealth.
105	105	77 (vi) Permit employee contributions, as provided in IRC Section 401(k), through payroll
106	106	78deductions.
107	107	79 (vii) Allow for employer contributions as matching contributions, fixed contributions, or
108	108	80a combination of the two.
109	109	81 (viii) Have a default, automatic contribution rate for both employees and employers.
110	110	82 (ix) Offer default escalation of contribution levels that can be increased or decreased
111	111	83within the limits allowed by the IRC.
112	112	84 (x) Pool accounts established under the plan for investment.
113	113	85 (xi) Be professionally managed.
114	114	86 (xii) Allow the use of private sector partnerships to administer and invest the
115	115	87contributions to the plan under the supervision and guidance of the Board. Monies in the IRAP 6 of 14
116	116	88may be invested or reinvested by the Treasurer or may be invested in whole or in part under
117	117	89contract with the PRIM Board of private money managers, or both, as determined by the Board.
118	118	90 (xiii) Maintain a separate trust.
119	119	91 (xiv) Provide for the Plan’s administration in an efficient and cost-effective manner.
120	120	92 (xv) Designate the Board as the named fiduciary, within the meaning of ERISA Section
121	121	93402(a), and provide that the Board may delegate fiduciary authority as permitted under ERISA.
122	122	94 (xvi) Designate the Board as the plan sponsor and administrator, as defined under ERISA
123	123	95Section (3)(16).
124	124	96 (xvii) Provide the Board with the authority to establish such rules and regulations as it
125	125	97considers appropriate for the administration of the MERP, including with regard to the selection
126	126	98of investment options, the manner of safeguarding contributions and other plan assets, the
127	127	99payment of the administrative expenses, and the purchase of insurance.
128	128	100 (xviii) Provide for the manner of the payment of benefits, which may include annuities
129	129	101and/or lump sums.
130	130	102 Section 64J. Composition of the Board
131	131	103 (a) There is hereby created within the government of the Commonwealth the Secure
132	132	104Choice Retirement Savings Board, which shall initially consist of seven members, with the
133	133	105Treasurer serving as chair, as follows:
134	134	106 i. The Treasurer, or his or her designee
135	135	107 ii. The Secretary of Administration and Finance, or his or her designee 7 of 14
136	136	108 iii. An individual with retirement savings or investment expertise appointed by the Senate
137	137	109President
138	138	110 iv. A small business representative appointed by the governor
139	139	111 v. Two public members appointed by the Treasurer
140	140	112 vi. An employee representative appointed by the Speaker of the House
141	141	113 (b) Within one year of the date the Board opens the IRAP and MERP for participation,
142	142	114the Treasurer will remain as Board member and will conduct elections to elect Representative
143	143	115Board members to represent the interest of participating employers and employees. The
144	144	116Treasurer will conduct an election among participating employees to elect four of their number
145	145	117to be Representative Board members from among themselves to represent the interests of
146	146	118participating employers solely with respect to the MERP. These additional Board members shall
147	147	119be designated as Representative Board Members, and must continue to participate in the Plan in
148	148	120order to serve on the Board. If any such Representative Board members ceases to participate in
149	149	121the Plan, his or her eligibility to continue as a Representative Board member shall cease as well,
150	150	122and the Board shall make arrangements to hold an election to elect a replacement. The terms of
151	151	123Representative Board members shall be for three years.
152	152	124 Section 64K. Risk Management
153	153	125 The Board shall annually prepare and adopt a written statement of investment policy that
154	154	126includes a risk management and oversight program. The investment policy or policies shall
155	155	127mitigate risk by maintaining a balanced investment portfolio that provides assurance that no
156	156	128single investment or class of investments will have a disproportionate impact on the total 8 of 14
157	157	129portfolio. The policy and policies shall also address hedging against longevity risk through the
158	158	130purchase of annuities or other longevity hedging products. The risk management system is in
159	159	131place to monitor the risk levels of the Secure Choice Retirement Savings Plan investment
160	160	132portfolios and ensure that the risks taken are prudent and properly managed. The Board shall be
161	161	133allowed to decide investment policy for each program while making different investment
162	162	134decisions with each program within these guidelines. The Board shall decide whether to offer a
163	163	135choice of investment vehicles to participants.
164	164	136 Section 64L. Benefit Amount
165	165	137 Interest, earnings, and/or losses, and administrative expenses shall be allocated to
166	166	138program accounts as prescribed by the Board. An individual’s retirement savings benefit under
167	167	139the program shall be an amount equal to the balance in the individual’s program account on the
168	168	140date the retirement savings benefit becomes payable. The Commonwealth shall have no liability
169	169	141for the payment of any benefit to any participant in either the IRAP or the MERP.
170	170	142 Section 64M. Board Duties
171	171	143 (a) In addition to any duties described above, the Board shall have the power and the
172	172	144authority to do all of the following:
173	173	145 (1) Establish one or more payroll deposit retirement savings arrangements for use by
174	174	146participating employers.
175	175	147 (2) Employ staff and/or appoint record keeper, investment managers, custodians, trustees,
176	176	148consultants, attorneys, and such other advice and assistance as may necessary or desirable to
177	177	149administer the Plan, and determine the duties of the Plan administer and other staff as necessary 9 of 14
178	178	150and set their compensation. The Board shall have the authority to make rules and regulations not
179	179	151inconsistent with this Act.
180	180	152 (3) Make provisions for the payment of costs of administration and operation of the
181	181	153trusts.
182	182	154 (4) Evaluate and establish the process by which an eligible employee may contribute a
183	183	155portion of his or her salary or wages to the Plan for automatic deposit of those contributions. This
184	184	156may include, but is not limited to, existing processes and arrangements used for the deposit and
185	185	157administration of tax required to be deducted and withheld relating to the collection of income
186	186	158tax at source on wages or for the deposit of tax required to be paid under the unemployment
187	187	159insurance system. This also may include, but is not limited to, financial services companies and
188	188	160their-party administrators with the capability to receive and process employee information and
189	189	161contributions for payroll deposit retirement savings arrangements or other arrangements
190	190	162authorized by this title.
191	191	163 (5) Evaluate and establish the process by which a participating employee is able to
192	192	164contributions for the benefit of its employees to the MERP.
193	193	165 (6) Design and establish the process for the enrollment of Plan participants.
194	194	166 (7) Procure insurance in connection with the property, assets, or activities of the trust,
195	195	167including private underwriting and/or reinsurance, to manage risk and insure the retirement
196	196	168savings rate of return. 10 of 14
197	197	169 (8) The Commonwealth shall procure insurance indemnifying each member of the Board
198	198	170from personal loss or liability resulting from a member’s actions or inaction as a member of the
199	199	171Board, to the extent permitted by ERISA and other governing law.
200	200	172 (9) Set default, minimum and maximum contribution levels as well as auto-escalation
201	201	173policies whereby participating employees’ contributions automatically escalate from year to year
202	202	174until they each a maximum contribution rate unless the employee changes his or her contribution
203	203	175rate. Participants will be immediately bested in their account balances.
204	204	176 (10) Accept contributions from participating employers for the benefit of their
205	205	177employees. These contributions shall be in cash or cash equivalents only; securities shall not be
206	206	178accepted as contributions.
207	207	179 (11) Design and establish the process for the enrollment of those self-employed
208	208	180individuals and employers who do not qualify as eligible employers who choose to voluntarily
209	209	181participate in the MERP.
210	210	182 (12) Arrange for collective, common, and pooled investment of assets of the Plan,
211	211	183including investments in conjunction with other funds with which those assets are permitted to
212	212	184be collectively invested, with a view to savings costs through efficiencies and economies of
213	213	185scale.
214	214	186 (13) Allocate administrative fees to each participating employee’s account balance on a
215	215	187pro rata basis, or such other basis as the Board determines to be fair and equitable. The Board
216	216	188shall keep annual administrative expenses low, but in no event shall they exceed one percent of
217	217	189the total trust balance. 11 of 14
218	218	190 (14) Explore and establish investment options that offer employees ways to secure
219	219	191retirement income without incurring debt or liabilities to the state.
220	220	192 (15) Exercise discretionary authority with regard to:
221	221	193 i. If necessary, making determinations of the eligibility of an employer, employee, or
222	222	194other individual to participate in the Plan;
223	223	195 ii. Making factual determinations regarding the Plan;
224	224	196 iii. Interpreting the Plan’s governing documents; and
225	225	197 iv. Such other matters as are necessary for the administration of the Plan.
226	226	198 (b) The Board shall publish separate annual audited financial reports, prepared in
227	227	199accordance with generally accepted accounting principles, on the operations of the IRAP and the
228	228	200MERP. The annual audit shall be made by an independent certified public accountant and shall
229	229	201include, but not be limited to, direct and indirect costs attributable to the use of outside
230	230	202consultants, independent contractors, and any other persons who are not state employees.
231	231	203 (c) The Board shall ensure that all reports required under the Code and ERISA are
232	232	204properly filed for the IRAP and MERP.
233	233	205 Section 64N. Employee Information Packet
234	234	206 Prior to opening either the IRAP or the MERP for enrollment, the Board shall design and
235	235	207disseminate to employers an employee information packet for such program. The packet shall
236	236	208include background information on the programs and appropriate disclosures for employees.
237	237	209 Section 64O. Disclosure Form 12 of 14
238	238	210 The disclosures shall include, but not be limited to, all of the following:
239	239	211 (1) The benefits and risks associated with participating in the relevant program.
240	240	212 (2) The mechanics of how to join the respective program.
241	241	213 (3) How to opt out of the program.
242	242	214 (4) The process for applying for payment of retirement benefits.
243	243	215 (5) How to obtain additional information.
244	244	216 In addition, the disclosure form shall clearly articulate the following:
245	245	217 (1) Employers are not liable for decision employees make pursuant to this bill.
246	246	218 (2) The Plan fund is not guaranteed by the Commonwealth.
247	247	219 Section 64P. Enforcement
248	248	220 (a) The Massachusetts Attorney General shall have the power to enforce the provisions of
249	249	221this Act.
250	250	222 (b) The Attorney General may impose, after due process, penalties against eligible
251	251	223employers for failure to comply with section 64g of Section 12 of up to $250 per eligible
252	252	224employee. Proceeds for such penalties, after deducting enforcing expenses, shall be deposited for
253	253	225the benefit of the IRAP.
254	254	226 (c) The Attorney General shall impose, after due process, penalties against employers
255	255	227equal to lost earnings and interest on contributions made alter than the deadlines prescribed by
256	256	228the Board. The Attorney General shall prescribe a methodology for calculating such lost earnings 13 of 14
257	257	229and interest. Proceeds for such penalties shall be deposited for the benefit of the Trust and
258	258	230credited to the accounts of the affected employee(s) on a pro rata basis.
259	259	231 Section 64Q. Liability
260	260	232 (a) Employers shall not have any liability for an employee’s decision to participate in, or
261	261	233opt out of, the Secure Choice Retirement Savings Plan.
262	262	234 (b) A participating employer shall not be a fiduciary, or considered a fiduciary, with
263	263	235regard to the operation of the MERP, except with respect to contribution amounts for remitted in
264	264	236a timely fashion. Participating employers shall not bear responsibility for the administration,
265	265	237investment, or investment performance of the IRAP or the MERP. Such employers shall not be
266	266	238liable with regard to investment returns, Plan design, and benefits paid to Plan participants.
267	267	239 Section 64R. Savings Clause
268	268	240 The provision of this Act are severable. In the event that portions of this Act are declared
269	269	241invalid or unenforceable, the remaining terms and provisions that are not affected thereby shall
270	270	242remain in force and effect.
271	271	243 Section 64S. Taxes
272	272	244 The IRAP and MERP are exempt from Massachusetts securities law and are tax exempt
273	273	245under the law of the Commonwealth.
274	274	246 SECTION 2. (a) The effective date of this act shall be January 1, 2020.
275	275	247 (b) Notwithstanding the forgoing, Section 64G shall be effective as follows: 14 of 14
276	276	248 i. For each eligible employer with 100 or more eligible employees, three months after the
277	277	249Board opens the Plan for enrollment.
278	278	250 ii. For each eligible employer with 50 or more but fewer than 100 eligible employees, six
279	279	251months after the Board opens the Plan for enrollment.
280	280	252 iii. For each eligible employer with fewer than 50 eligible employees, nine months after
281	281	253the Board opens the Plan for enrollment.
282	282	254 iv. The Board may delay these effective dates in its discretion for no more than 12
283	283	255additional months.