New Mexico 2023 Regular Session

New Mexico House Bill HB166 Compare Versions

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

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28	28	HOUSE BILL 166
29	29	56
30	30	TH LEGISLATURE
31	31	-
32	32
33	33	STATE
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35	35	OF
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37	37	NEW
38	38
39	39	MEXICO
40	40
41	41	-
42	42	FIRST SESSION
43	43	,
44	44
45	45	2023
46	46	INTRODUCED BY
47	47	Tara L. Lujan and Bill Tallman
48	48	AN ACT
49	49	RELATING TO PRIVATE SECTOR RETIREMENT; ALIGNING PROVISIONS OF
50	50	THE NEW MEXICO WORK AND SAVE ACT TO ENABLE THE FORMATION OF AN
51	51	AUTO-IRA PARTNERSHIP WITH ONE OR MORE OTHER STATES; CLARIFYING
52	52	CERTAIN DEFINITIONS IN THE NEW MEXICO WORK AND SAVE ACT;
53	53	REQUIRING CERTAIN EMPLOYERS TO REGISTER AS PARTICIPATING
54	54	EMPLOYERS AND TO AUTOMATICALLY ENROLL THEIR EMPLOYEES IN THE
55	55	NEW MEXICO WORK AND SAVE IRA PROGRAM; ALLOWING EMPLOYEES TO OPT
56	56	OUT OF AUTOMATIC ENROLLMENT; MAKING AN APPROPRIATION.
57	57	BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:
58	58	SECTION 1. Section 58-33-2 NMSA 1978 (being Laws 2020,
59	59	Chapter 7, Section 2, as amended) is amended to read:
60	60	"58-33-2. DEFINITIONS.--As used in the New Mexico Work
61	61	and Save Act:
62	62	A. "board" means the New Mexico work and save
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90	90	board;
91	91	B. "board member" means a member of the board;
92	92	C. "covered employee" means a person who is at
93	93	least eighteen years of age, [and who ] earns taxable income
94	94	pursuant to the Income Tax Act and for at least one hundred
95	95	eighty days is employed by a covered employer, either full time
96	96	or part time, or a person who is self-employed as a sole
97	97	proprietor or an independent contractor; provided that "covered
98	98	employee" does not include an employee:
99	99	(1) covered under the federal Railway Labor
100	100	Act;
101	101	(2) on whose behalf an employer makes
102	102	contributions to a multi-employer pension trust fund pursuant
103	103	to the federal Taft-Hartley Act; or
104	104	(3) of federal, state or local governments or
105	105	any agency, department, board, commission, institution or
106	106	instrumentality of those governments;
107	107	D. "covered employer" means a person engaged in a
108	108	business, industry, profession, trade, nonprofit or other
109	109	enterprise with its primary place of business physically
110	110	located in New Mexico that employed five or more employees at
111	111	any time during the previous calendar year, has operated for at
112	112	least twelve consecutive months and, in the proceeding two
113	113	calendar years, has not offered all of its employees a
114	114	qualified retirement plan pursuant to the Internal Revenue
115	115	.223878.1
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143	143	Code, including a plan qualified under Section 401(a), 401(k),
144	144	403(a), 403(b), 408(k), 408(p) or 457(b) of the Internal
145	145	Revenue Code, but does not include a federal, state or local
146	146	government or any agency, department, board, commission,
147	147	institution or instrumentality of those governments;
148	148	E. "default investment option" means a Roth
149	149	individual retirement account with a target date fund
150	150	investment and a default contribution rate established by the
151	151	board;
152	152	F. "financial institution" means a duly licensed
153	153	bank, savings and loan association, credit union, broker-
154	154	dealer, asset manager, insurance company, mutual fund or other
155	155	financial entity;
156	156	G. "financial service provider" means a financial
157	157	or investment service provider that, if approved by the board
158	158	as meeting the eligibility criteria, may administer and
159	159	maintain one or more program participant investment accounts or
160	160	one or more marketplace participant accounts for which the
161	161	provider is a fiduciary;
162	162	H. "Internal Revenue Code" means the United States
163	163	Internal Revenue Code of 1986, as amended;
164	164	I. "IRA" means an individual retirement account
165	165	that conforms to the requirements of Section [408(a) ] 408A of
166	166	the Internal Revenue Code;
167	167	J. "marketplace participant" means a covered
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196	196	employer that establishes a plan through the New Mexico
197	197	retirement plan marketplace or a covered employee who
198	198	establishes an investment account through the New Mexico
199	199	retirement plan marketplace;
200	200	K. "New Mexico retirement plan marketplace" means a
201	201	board-approved web-based marketplace that facilitates access to
202	202	retirement savings plans for private sector and nonprofit
203	203	employers and employees, including multiple-employer plans;
204	204	L. "New Mexico work and save IRA program" means the
205	205	retirement savings program, designed and implemented by the
206	206	board, that facilitates payroll deductions of program
207	207	participants in individual retirement accounts without any
208	208	contributions from covered employers;
209	209	M. "New Mexico work and save platform" means the
210	210	online digital service designed and implemented by the board to
211	211	facilitate interaction among covered employers, covered
212	212	employees, program participants, financial service providers
213	213	and other users via the internet;
214	214	N. "participating employer" means a covered
215	215	employer that provides payroll deductions for individual
216	216	retirement accounts through the New Mexico work and save IRA
217	217	program but that does not contribute to those accounts;
218	218	O. "program participant" means a covered employee
219	219	who is contributing to an individual retirement account through
220	220	the New Mexico work and save IRA program or has an individual
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249	249	retirement account balance through the New Mexico work and save
250	250	IRA program;
251	251	P. "Roth individual retirement account" means a
252	252	voluntary payroll deduction Roth individual retirement account
253	253	that conforms to the requirements of Section 408A of the
254	254	Internal Revenue Code; [and ]
255	255	Q. "total fees and expenses" means all fees, costs
256	256	and expenses, including administrative expenses, investment
257	257	expenses of the New Mexico work and save IRA program,
258	258	investment advice expenses, accounting costs, actuarial costs,
259	259	legal costs, marketing expenses, education expenses, trading
260	260	costs, insurance annuitization costs and other operating
261	261	expenses; and
262	262	R. "wages" means compensation, as provided in
263	263	Section 219(f)(1) of the Internal Revenue Code, that is
264	264	received by an employee during a calendar year ."
265	265	SECTION 2. Section 58-33-9 NMSA 1978 (being Laws 2020,
266	266	Chapter 7, Section 9, as amended) is amended to read:
267	267	"58-33-9. NEW MEXICO WORK AND SAVE IRA PROGRAM--CREATED--
268	268	IMPLEMENTATION.--
269	269	A. The New Mexico work and save IRA program
270	270	developed by the board under the New Mexico Work and Save Act
271	271	shall:
272	272	(1) facilitate the establishment of individual
273	273	retirement accounts for program participants that are
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302	302	administered and managed by board-approved financial service
303	303	providers;
304	304	(2) provide that a covered employer [may
305	305	voluntarily choose to participate ] that on or after July 1,
306	306	2023 is not a marketplace participant or does not offer all its
307	307	employees a qualified plan pursuant to the Internal Revenue
308	308	Code, including a plan qualified under Section 401(a), 401(k),
309	309	403(a), 403(b), 408(k), 408(p) or 457(b) of the Internal
310	310	Revenue Code, shall register and become a participating
311	311	employer in the New Mexico work and save IRA program;
312	312	(3) provide that a participating employer
313	313	[may] shall automatically enroll its employees but shall allow
314	314	its employees to opt out;
315	315	(4) allow covered employees to voluntarily
316	316	contribute to an individual retirement account through
317	317	automatic payroll deductions, if allowed pursuant to federal
318	318	law;
319	319	(5) provide that the default investment option
320	320	for program participants shall be a Roth individual retirement
321	321	account with a target date fund investment and a default
322	322	contribution rate established by the board by rule; provided
323	323	that the board may establish a principal protection fund for
324	324	initial savings up to an amount established by the board; and
325	325	provided that a program participant may choose to stop
326	326	participating altogether, choose a different investment from
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355	355	among the options available or choose to contribute at a higher
356	356	or lower contribution rate, subject to the Roth individual
357	357	retirement account contribution dollar limits applicable under
358	358	the Internal Revenue Code;
359	359	(6) offer default escalation of contribution
360	360	rates that can be increased or decreased by program
361	361	participants within the limits allowed by the Internal Revenue
362	362	Code;
363	363	(7) provide for direct deposit of
364	364	contributions into one or more investments approved by the
365	365	board;
366	366	(8) be professionally managed;
367	367	(9) not allow employer contributions by
368	368	[covered] participating employers;
369	369	(10) ensure that each board-approved financial
370	370	service provider submits a report on the status of each program
371	371	participant's account to each program participant at least
372	372	annually and provides annual reports to the board regarding the
373	373	number of program participant accounts maintained by the
374	374	financial service provider and the overall value of those
375	375	accounts;
376	376	(11) when practicable, use existing employer
377	377	and public infrastructure to facilitate contributions,
378	378	recordkeeping and outreach and use pooled or collective
379	379	investment arrangements;
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408	408	(12) provide that each program participant
409	409	owns the contributions to and earnings on amounts contributed
410	410	to the participant's account under the New Mexico work and save
411	411	IRA program and that the state, the board and [covered ]
412	412	participating employers have no proprietary interest, whether
413	413	legal or equitable, in those contributions or earnings;
414	414	(13) not impose any duties on employers
415	415	pursuant to the federal Employee Retirement Income Security Act
416	416	of 1974; and
417	417	(14) [keep] prescribe by rule reasonable total
418	418	fees and expenses [below one percent of the funds invested by a
419	419	program participant in the New Mexico work and save IRA
420	420	program] allowed pursuant to the New Mexico Work and Save Act.
421	421	The board shall review such rules at least annually or as
422	422	necessary to ensure reasonable total fees and expenses are
423	423	maintained.
424	424	B. The board shall ensure that the New Mexico work
425	425	and save IRA program is financially self-sustaining no later
426	426	than five years after the date that it is fully implemented.
427	427	C. If a [covered] participating employer knowingly
428	428	or intentionally fails to transmit a payroll deduction
429	429	contribution to the New Mexico work and save IRA program on the
430	430	earliest date the amount withheld from the covered employee's
431	431	compensation can reasonably be segregated from the [covered ]
432	432	participating employer's assets, but not later than the
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461	461	fifteenth day of the month following the month in which the
462	462	covered employee's contribution amounts are withheld from the
463	463	covered employee's paycheck, the failure to remit those
464	464	contributions on a timely basis shall be subject to the same
465	465	sanctions as employer misappropriation of employee wage
466	466	withholdings."
467	467	SECTION 3. Section 58-33-10 NMSA 1978 (being Laws 2020,
468	468	Chapter 7, Section 10, as amended) is amended to read:
469	469	"58-33-10. POLICIES AND PROCEDURES FOR THE NEW MEXICO
470	470	WORK AND SAVE IRA PROGRAM.--The board shall promulgate rules to
471	471	implement the New Mexico work and save IRA program that:
472	472	A. establish the processes by which a covered
473	473	employer [may choose to voluntarily enroll ] registers in the
474	474	New Mexico work and save IRA program [and become ] as a
475	475	participating employer;
476	476	B. establish the processes for program participants
477	477	to enroll in and contribute to New Mexico work and save IRA
478	478	program payroll deduction individual retirement accounts,
479	479	including elections by covered employees, withholding by
480	480	participating employers of program participants' payroll
481	481	deduction contributions from wages and remittance for deposit
482	482	to the program participants' individual retirement accounts and
483	483	voluntary enrollment and contributions by self-employed
484	484	persons;
485	485	C. establish the processes for withdrawals,
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514	514	rollovers, conversions and direct transfers from individual
515	515	retirement accounts in the interest of facilitating portability
516	516	and maximization of benefits;
517	517	D. establish processes governing the distribution
518	518	of funds from the New Mexico work and save IRA program; and
519	519	E. require education of and outreach to covered
520	520	employers, covered employees and the public regarding the
521	521	New Mexico work and save IRA program. The rules shall specify
522	522	the content, frequency, timing and means of required
523	523	disclosures from the New Mexico work and save IRA program to
524	524	covered employees, covered employers, program participants and
525	525	participating employers and other interested parties. These
526	526	disclosures shall include:
527	527	(1) the benefits associated with tax-favored
528	528	retirement saving;
529	529	(2) the potential advantages and disadvantages
530	530	associated with contributing to individual retirement accounts
531	531	through the New Mexico work and save IRA program;
532	532	(3) the eligibility rules for individual
533	533	retirement accounts;
534	534	(4) that the program participant is solely
535	535	responsible for determining whether and, if so, how much the
536	536	program participant is eligible to contribute on a tax-favored
537	537	basis to an individual retirement account;
538	538	(5) the penalty for excess contributions to
539	539	.223878.1
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567	567	individual retirement accounts and the method of correcting
568	568	excess contributions;
569	569	(6) instructions for enrolling, making
570	570	elections to contribute or to decline to contribute and making
571	571	elections regarding contribution rates, types of individual
572	572	retirement accounts and investments;
573	573	(7) instructions for implementing and for
574	574	changing the elections;
575	575	(8) the potential availability of a program
576	576	participant's tax credit, including the eligibility conditions
577	577	for the credit and instructions on how to claim it;
578	578	(9) statements that the New Mexico work and
579	579	save IRA program, the board, board members or board employees,
580	580	a covered employer or the state does not offer tax, investment
581	581	or other financial advice, and that the program participant
582	582	should contact appropriate professional advisors, and that only
583	583	the program participant is liable for decisions the program
584	584	participant makes in relation to the New Mexico work and save
585	585	IRA program;
586	586	(10) statements that payroll deduction
587	587	individual retirement accounts are not intended to be employer-
588	588	sponsored retirement plans and that the New Mexico work and
589	589	save IRA program is not an employer-sponsored retirement plan;
590	590	(11) the potential implications of account
591	591	balances in the New Mexico work and save IRA program for the
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620	620	application of asset limits under certain public assistance
621	621	programs;
622	622	(12) that the program participant is solely
623	623	responsible for investment performance, including market gains
624	624	and losses, and that individual retirement accounts and rates
625	625	of return are not guaranteed by the New Mexico work and save
626	626	IRA program, the board, individual board members, board
627	627	employees, covered employers or the state or any of its
628	628	officers or employees;
629	629	(13) additional information and tools designed
630	630	to promote financial literacy and capability, which may take
631	631	the form of links to or explanations of how to obtain such
632	632	information; and
633	633	(14) how to obtain additional information
634	634	about the New Mexico work and save IRA program."
635	635	SECTION 4. Section 58-33-11 NMSA 1978 (being Laws 2020,
636	636	Chapter 7, Section 11, as amended) is amended to read:
637	637	"58-33-11. PROTECTION FOR [COVERED ] PARTICIPATING
638	638	EMPLOYERS.--
639	639	A. The New Mexico work and save IRA program is not
640	640	an employer-sponsored plan. A [covered ] participating employer
641	641	does not bear responsibility for:
642	642	(1) the decision by a covered employee to
643	643	participate or not to participate in the New Mexico work and
644	644	save IRA program;
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673	673	(2) the performance of a specific savings
674	674	option selection made by a program participant and facilitated
675	675	through the New Mexico work and save IRA program;
676	676	(3) investment decisions made by a program
677	677	participant;
678	678	(4) the administration, investment, investment
679	679	returns or investment performance of an IRA savings option
680	680	facilitated through the New Mexico work and save IRA program,
681	681	including interest rate or other rate of return on a
682	682	contribution or individual retirement account balance;
683	683	(5) the design or administration of the New
684	684	Mexico work and save IRA program or the benefits paid to or the
685	685	earnings or losses of program participants;
686	686	(6) a program participant's awareness of or
687	687	compliance with the conditions and other provisions of the tax
688	688	laws that determine which persons are eligible to make tax-
689	689	favored contributions to individual retirement accounts, in
690	690	what amount and in what time frame and manner; or
691	691	(7) loss, failure to realize gain or other
692	692	adverse consequences, including adverse tax consequences or
693	693	loss of favorable tax treatment, public assistance or other
694	694	benefits incurred by a program participant as a result of
695	695	participating in the New Mexico work and save IRA program.
696	696	B. No [covered] participating employer shall be or
697	697	shall be considered to be a fiduciary under the New Mexico work
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712	712	12
713	713	13
714	714	14
715	715	15
716	716	16
717	717	17
718	718	18
719	719	19
720	720	20
721	721	21
722	722	22
723	723	23
724	724	24
725	725	25
726	726	and save IRA program."
727	727	SECTION 5. APPROPRIATION.--Two hundred fifty thousand
728	728	dollars ($250,000) is appropriated from the general fund to the
729	729	office of the state treasurer for expenditure in fiscal year
730	730	2024 to fund two additional full-time-equivalent positions to
731	731	administer the provisions of the New Mexico Work and Save Act.
732	732	Any unexpended or unencumbered balance remaining at the end of
733	733	fiscal year 2024 shall revert to the general fund.
734	734	SECTION 6. EFFECTIVE DATE.--The effective date of the
735	735	provisions of this act is July 1, 2023.
736	736	- 14 -
737	737	.223878.1