OK
Oklahoma House Bill HB2302

Oklahoma 2022 Regular Session

Oklahoma House Bill HB2302 Compare Versions

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2828 STATE OF OKLAHOMA
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3030 1st Session of the 58th Legislature (2021)
3131
3232 HOUSE BILL 2302 By: Roberts (Dustin)
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3838 AS INTRODUCED
3939
4040 An Act relating to public finance; creating the
4141 Oklahoma Prosperity Act; subjecting implementation of
4242 act to certain appropriation; defi ning terms;
4343 requiring State Treasurer to develop and operate the
4444 Oklahoma Prosperity Act Program; authorizing
4545 Treasurer to collect administrative fees and enter
4646 into certain contracts; authorizing Treasurer to hire
4747 third-party service providers for certain purpose;
4848 authorizing Treasurer to determine terms of program;
4949 authorizing Treasurer to provide certain information
5050 to employees; authorizing Treasurer to promulgate
5151 rules; authorizing Treasurer to contract with other
5252 states for certain purpose; establishi ng certain
5353 persons as fiduciary for accounts established under
5454 program; specifying fiduciary duty to program;
5555 requiring employers to provide certain information to
5656 employees; establishing terms of program;
5757 establishing opt-out requirement for program;
5858 establishing the minimum contribution rate of covered
5959 employees to program; establishing terms of employers
6060 depositing contributions into funds under the
6161 program; providing that certain program accounts
6262 shall receive favorable federal income tax treatment;
6363 requiring program information be available on
6464 website; requiring audited financial reports be
6565 submitted to Governor and Legislature; specifying
6666 program information required to be sent to covered
6767 employees; requiring program information be sent in
6868 certain manner; specifying program is not a certain
6969 employee benefit plan; creating the Oklahoma
7070 Prosperity Act Administrative Fund; specifying terms
7171 of the fund; creating the Oklahoma Prosperity Act
7272 Trust; authorizing Treasurer to appoint certain
7373 persons as trustee o r custodian; requiring assets of
7474 certain IRAs be allocated to trust and managed for
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101101 certain purpose; requiring establishment of at least
102102 one investment fund within the trust; establishing
103103 terms of investment funds; authorizing Treasurer to
104104 hire investment advisers for certain purpose;
105105 specifying terms of trust maintenance and
106106 investments; requiring trust assets be held separate
107107 from state assets; prohibiting liability of state for
108108 trust; exempting trust monies from state income tax;
109109 authorizing trust to be established by adoption of
110110 fund of other state in certain circumstances;
111111 requiring program be established in certain time
112112 frame; authorizing Treasurer to extend time frame;
113113 authorizing Treasurer to establish pilot program or
114114 rollouts for implementing act; providing for
115115 codification; and providing an effective date.
116116
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118118
119119 BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
120120 SECTION 1. NEW LAW A new section of law to be codified
121121 in the Oklahoma Statutes as Section 3600 of Title 62, unles s there
122122 is created a duplication in numbering, reads as follows:
123123 This act shall be known and may be cited as the "Oklahoma
124124 Prosperity Act".
125125 SECTION 2. NEW LAW A new section of law to be codified
126126 in the Oklahoma Statutes as Section 3 601 of Title 62, unless there
127127 is created a duplication in numbering, reads as follows:
128128 A. Implementation of this act shall be subject to the receipt
129129 of appropriations sufficient to establish the Oklahoma Prosperity
130130 Act Program, as defined in this section.
131131 B. As used in this act:
132132 1. "Administrative fund" shall mean the Oklahoma Prosperity Act
133133 administrative fund established under this act;
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160160 2. "Contribution rate" means the percentage of the wages of a
161161 covered employee that is withheld from his or her wage s and paid to
162162 the IRA established for the covered employee under the Program;
163163 3. "Covered employee" means any individual who is eighteen (18)
164164 years of age or older, who is employed by a covered employer and who
165165 has wages that are allocable to the state. For purposes of the
166166 investment, withdrawal, transfer, rollover or other distribution of
167167 an IRA, the term covered employee also includes the beneficiary of a
168168 deceased covered employee;
169169 4. "Covered employer" means an employer that either:
170170 a. satisfies the following requirements:
171171 (1) has at no time during the previous calendar year
172172 employed fewer than ten (10) employees in this
173173 state,
174174 (2) has been in business for at least two (2) years,
175175 and
176176 (3) has not been a participating or contributing
177177 employer in a retire ment plan under Section
178178 401(a), 401(k), 403(a), 403(b), 408(k), or 408(p)
179179 of Title 26 of Internal Revenue Code at any time
180180 during the preceding two (2) calendar years, or
181181 b. elects to be a covered employer if and as permitted in
182182 accordance with rules and p rocedures established by
183183 the Oklahoma Prosperity Act Program;
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210210 5. "Employer" means a person or entity engaged in a business,
211211 profession, trade or other enterprise in the state, whether for
212212 profit or not-for-profit, that employs one or more individuals in
213213 the state; provided, that a federal or state entity, agency or
214214 instrumentality or any political subdivision thereof, shall not be
215215 an employer;
216216 6. "Enrollee" means any covered employee enrolled in the
217217 Oklahoma Prosperity Act Program;
218218 7. "Internal Revenue Code" means the federal Internal Revenue
219219 Code of 1986, as amended;
220220 8. "Investment adviser" means either:
221221 a. an investment adviser registered as such under the
222222 U.S. Investment Advisers Act of 1940, or
223223 b. a bank or other institution exempt from registration
224224 under the U.S. Investment Advisers Act of 1940;
225225 9. "Investment fund" means each investment portfolio
226226 established within the trust for investment purposes;
227227 10. "IRA" means either an individual retirement account or
228228 individual retirement annuity establishe d under Section 408 or 408A
229229 of Title 26 of the Internal Revenue Code;
230230 11. "Program" means the Oklahoma Prosperity Act Program
231231 established under this act;
232232 12. "State" means the State of Oklahoma;
233233 13. "State Treasurer" means the Oklahoma State Treasurer;
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260260 14. "Trust" means the IRA retirement trust or annuity contract
261261 established under Section 7 of this act;
262262 15. "Trustee" means the trustee of the trust, including an
263263 insurance company issuing an annuity contract, selected under
264264 Section 4 of this act; and
265265 16. "Wages" means compensation within the meaning of Section
266266 219(f)(1) of Title 26 the Internal Revenue Code that is received by
267267 a covered employee from a covered employer.
268268 SECTION 3. NEW LAW A new section of law to be codified
269269 in the Oklahoma Statutes as Section 3602 of Title 62, unless there
270270 is created a duplication in numbering, reads as follows:
271271 The State Treasurer shall have the following powers and duties
272272 in implementing the provisions of this act:
273273 1. To design, establish and o perate the Oklahoma Prosperity Act
274274 Program in accordance with the requirements established in this act;
275275 2. To collect fees to defray the costs of administering the
276276 Program;
277277 3. To enter into contracts necessary or desirable for the
278278 establishment and admin istration of the Program;
279279 4. To hire, retain and terminate third -party service providers
280280 for the Program, including, but not limited to, consultants,
281281 investment managers or advisors, trustees, custodians, insurance
282282 companies, record keepers, administrator s, actuaries, counsel,
283283 auditors and other professionals; provided, that each service
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310310 provider shall be authorized to do business in this state. For
311311 purposes of selecting a third -party service provider, the Office of
312312 the State Treasurer shall be exempt fro m the Oklahoma Central
313313 Purchasing Act; provided, that a competitive process shall be
314314 developed and utilized to select service providers;
315315 5. To determine the type or types of IRAs to be offered;
316316 6. To employ a program administrator and any other individua ls
317317 necessary to administer the Program and the administrative fund;
318318 7. To develop and implement an outreach plan and disseminate
319319 information regarding the Program and retirement and financial
320320 education in general, to employees, employers and other constit uents
321321 in the state;
322322 8. Determine the number of days by which an eligible employer
323323 must make the Program available to a covered employee upon first
324324 becoming an eligible employer or covered employee;
325325 9. To adopt rules and procedures for the establishment a nd
326326 operation of the Program and to take such other actions as necessary
327327 to operate the Program in accordance with the provisions of this
328328 act. Any guidelines or procedures affecting the Program may be
329329 implemented after reasonable notice to the public and a public
330330 comment period, in a manner similar to the requirements of the
331331 Administrative Procedures Act. However, the Administrative
332332 Procedures Act shall not apply for purposes of this section; and
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359359 10. To establish and maintain the Program by contracting wi th
360360 another state, partnering with one or more states to create a joint
361361 auto-IRA Program, allowing states to participate in the Program or
362362 forming a consortium with one or more other states in which certain
363363 aspects of the Program of each state are combined for administrative
364364 convenience and efficiency.
365365 SECTION 4. NEW LAW A new section of law to be codified
366366 in the Oklahoma Statutes as Section 3603 of Title 62, unless there
367367 is created a duplication in numbering, reads as follows:
368368 A. The trustee and each investment adviser shall be a fiduciary
369369 with respect to the trust and IRAs established and maintained under
370370 the Oklahoma Prosperity Act Program.
371371 B. Each covered employer shall be required to provide covered
372372 employees with such informati on as required by the Program. No
373373 employer acting as such shall be considered a fiduciary with respect
374374 to the trust or an IRA or have fiduciary responsibilities under the
375375 act.
376376 C. Each fiduciary shall discharge its duties with respect to
377377 the Program solely in the interests of covered employees and with
378378 the care, skill, prudence and diligence under the circumstances then
379379 prevailing that a prudent person acting in a similar capacity and
380380 familiar with those matters would use in the conduct of an
381381 enterprise of like character and aims.
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408408 SECTION 5. NEW LAW A new section of law to be codified
409409 in the Oklahoma Statutes as Section 3604 of Title 62, unless there
410410 is created a duplication in numbering, reads as follows:
411411 A. The Oklahoma Prosperity Act Program shall be designed,
412412 established and operated in accordance with the following
413413 provisions:
414414 1. Each covered employer shall be required to offer to each
415415 covered employee an opportunity to contribute to an IRA established
416416 under the Program for the benefit of the covered employee through
417417 withholding from his or her wages. No employer shall be permitted
418418 to contribute to the Program;
419419 2. Unless the covered employee elects not to participate in the
420420 Program, he or she shall be automatically enrolled in the Program
421421 and contributions shall be withheld from the wages of the covered
422422 employee;
423423 3. The minimum contribution rate of each covered employee shall
424424 be three percent (3%); the minimum contribution rate shall be the
425425 default contribution rate;
426426 4. The IRAs shall qualify for favorable federal income tax
427427 treatment under Sections 408 and 408A of Title 26, as appropriate,
428428 of the Internal Revenue Code;
429429 5. Each covered employer shall deposit withheld contributions
430430 of the covered employee under the Program wit h the trustee in such
431431 manner as is determined by the State Treasurer, provided that the
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458458 employer shall deliver the amounts withheld to the trustee within
459459 ten (10) business days after the date the amounts otherwise would
460460 have been paid to the covered employ ee;
461461 6. Additional rules and procedures may be adopted in
462462 conjunction with established IRS regulations for withdrawals,
463463 distributions, transfers and rollovers of IRAs and for the
464464 designation of IRA beneficiaries;
465465 7. Information regarding the Program shall be made available to
466466 the public on a website maintained for the Program;
467467 8. Audited financial reports shall be submitted to the Governor
468468 and Legislature;
469469 9. Each covered employer shall be provided information
470470 regarding the Program and disclosures includ ing:
471471 a. a description of the benefits and risks associated
472472 with investments offered in the Program,
473473 b. instructions about how to obtain additional
474474 information about the Program,
475475 c. a description of the federal and state income tax
476476 consequences of an IRA, w hich may consist of or
477477 include the disclosure statement required to be
478478 distributed under the Internal Revenue Code and the
479479 Treasury Regulations thereunder,
480480 d. a statement that covered employees seeking financial
481481 advice should contact their own financial ad visors,
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508508 that covered employers shall not provide financial
509509 advice and that covered employers are not liable for
510510 decisions covered employees make under the act,
511511 e. a statement that the Program is not an employer -
512512 sponsored retirement plan,
513513 f. a statement that neither the Program nor the IRA of
514514 the covered employee established under the Program is
515515 guaranteed by the state,
516516 g. a statement that neither a covered employer nor the
517517 state will monitor or has an obligation to monitor the
518518 eligibility of the covered em ployee under the Internal
519519 Revenue Code to make contributions to an IRA or to
520520 monitor whether the contributions of the covered
521521 employee to the IRA established for the covered
522522 employee under the Program exceeds the maximum
523523 permissible IRA contribution; it sh all be the
524524 responsibility of the covered employee, and
525525 h. a statement that neither the s tate nor the covered
526526 employer will have any liability with respect to any
527527 failure of the covered employee to be eligible to make
528528 IRA contributions or any contribution i n excess of the
529529 maximum IRA contribution;
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556556 10. Any information, forms or instructions to be furnished to
557557 covered employees that provide the covered employee with the
558558 procedures for:
559559 a. making contributions to the IRA of the covered
560560 employee established und er the Program, including a
561561 description of the minimum contribution rate and the
562562 right to elect to make no contribution or to change
563563 the contribution rate under the Program,
564564 b. making an investment election with respect to the IRA
565565 of the covered employee e stablished under the Program,
566566 including a description of the default investment
567567 fund, and
568568 c. making transfers, rollovers, withdrawals and other
569569 distributions from the IRA of the covered employee;
570570 11. Each covered employer shall deliver or facilitate the
571571 delivery of the information about the Program to each covered
572572 employee at the time and in the manner as established by Program
573573 guidelines; and
574574 12. The Program shall be designed and operated in a manner that
575575 will cause it not to be an employee benefit plan within the meaning
576576 of Section 3(3) of the Employee Retirement Income Security Act of
577577 1974.
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604604 SECTION 6. NEW LAW A new section of law to be codified
605605 in the Oklahoma Statutes as Section 3605 of Title 62, unless there
606606 is created a duplication in numbering, reads as follows:
607607 There is hereby created in the Office of the State Treasurer a
608608 fund to be designated as the "Oklahoma Prosperity Act Administrative
609609 Fund". The fund shall be a continuing fund, not subject to fiscal
610610 year limitations, and shall consist of monies appropriated for the
611611 administration of the Oklahoma Prosperity Act Program, all
612612 administrative fees collected and any other monies designated to the
613613 fund by law. All monies accruing to the credit of the fund are
614614 hereby appropriated and may be budgeted and expended by the State
615615 Treasurer for expenses related to the administration and support of
616616 the Program. Expenditures from the fund shall be made upon warrants
617617 issued by the State Treasurer against claims filed as prescribed by
618618 law with the Director of the Office of Management of Enterprise
619619 Services for approval and payment.
620620 SECTION 7. NEW LAW A new section of law to be codified
621621 in the Oklahoma Statutes as Section 3606 of Title 62, unless there
622622 is created a duplication in numbering, reads as follows:
623623 A. There is hereby created as an instrumentality of the state a
624624 trust to be known as the "Oklahoma Prosperity Act Trust ".
625625 B. The State Treasurer may appoint qualified financial
626626 institutions to act as trustee o r custodian of the IRA accounts.
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653653 C. The assets of IRAs established for covered employees shall
654654 be allocated to the trust and combined for investment purposes.
655655 Trust assets shall be managed and administered for the purposes of
656656 providing services to covere d employees and defraying reasonable
657657 administrative expenses of the Oklahoma Prosperity Act Program.
658658 D. There shall be established within the trust one or more
659659 investment funds. The first One Thousand Dollars ($1,000.00) in
660660 contributions made by, or on b ehalf of, an enrollee may be deposited
661661 into a default capital preservation investment fund and the enrollee
662662 may be provided an account revocation period during which, if the
663663 enrollee chooses to end participation in the Program, the enrollee
664664 may withdraw the deposited amounts from the default investment
665665 without penalty.
666666 E. Covered employees may allocate assets of their IRAs among
667667 investment funds and a default investment fund may be designated for
668668 the IRAs of covered employees who do not select an investmen t fund.
669669 F. The State Treasurer may retain investment advisers to select
670670 and manage the investments of investment funds on a discretionary
671671 basis, subject to ongoing review and oversight.
672672 G. The assets of the trust shall be maintained, invested and
673673 expended solely for the purposes of the trust and no property rights
674674 therein shall exist in favor of the state or any covered employer.
675675 Trust assets shall not be transferred or used by the state for any
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702702 purposes other than the purposes of the trust or funding th e
703703 expenses of operating the Program.
704704 H. The assets of the trust shall be held separate and apart
705705 from the assets of the state.
706706 I. There shall be no liability for the state, the Program, the
707707 State Treasurer, or any employer for investment losses incurred by
708708 any covered employee as a result of participating in the Program.
709709 J. The trust and each investment fund shall not be subject to
710710 income tax of this state.
711711 K. If the Program is established by using the auto -IRA Program
712712 of another state, a joint Program or a consortium with one or more
713713 other states, then the trust may be established by adopting the
714714 trust established under the Program of the other state or states or
715715 as a master trust or similar arrangement with the other state or
716716 states; provided, that the trust, master trust or similar
717717 arrangement satisfies the requirements of this section.
718718 SECTION 8. NEW LAW A new section of law to be codified
719719 in the Oklahoma Statutes as Section 3607 of Title 62, unless there
720720 is created a duplicati on in numbering, reads as follows:
721721 The Oklahoma Prosperity Act Program shall be established so that
722722 covered employees may begin making contributions within twenty -four
723723 (24) months of the effective date of this act; provided, that the
724724 State Treasurer may ex tend the time period within which the Program
725725 is implemented by twelve (12) months. The State Treasurer may
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752752 establish a pilot program for certain covered employers, may provide
753753 for a staggered rollout of the Program so that covered employers are
754754 initially required to offer the Program to covered employees in
755755 stages based on employee headcount or other criteria, or both.
756756 SECTION 9. This act shall become effective November 1, 20 21.
757757
758758 58-1-6266 MAH 01/08/21
759759