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STATE OF OKLAHOMA
1st Session of the 58th Legislature (2021)
HOUSE BILL 2302 By: Roberts (Dustin)
AS INTRODUCED
An Act relating to public finance; creating the
Oklahoma Prosperity Act; subjecting implementation of
act to certain appropriation; defi ning terms;
requiring State Treasurer to develop and operate the
Oklahoma Prosperity Act Program; authorizing
Treasurer to collect administrative fees and enter
into certain contracts; authorizing Treasurer to hire
third-party service providers for certain purpose;
authorizing Treasurer to determine terms of program;
authorizing Treasurer to provide certain information
to employees; authorizing Treasurer to promulgate
rules; authorizing Treasurer to contract with other
states for certain purpose; establishi ng certain
persons as fiduciary for accounts established under
program; specifying fiduciary duty to program;
requiring employers to provide certain information to
employees; establishing terms of program;
establishing opt-out requirement for program;
establishing the minimum contribution rate of covered
employees to program; establishing terms of employers
depositing contributions into funds under the
program; providing that certain program accounts
shall receive favorable federal income tax treatment;
requiring program information be available on
website; requiring audited financial reports be
submitted to Governor and Legislature; specifying
program information required to be sent to covered
employees; requiring program information be sent in
certain manner; specifying program is not a certain
employee benefit plan; creating the Oklahoma
Prosperity Act Administrative Fund; specifying terms
of the fund; creating the Oklahoma Prosperity Act
Trust; authorizing Treasurer to appoint certain
persons as trustee o r custodian; requiring assets of
certain IRAs be allocated to trust and managed for
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certain purpose; requiring establishment of at least
one investment fund within the trust; establishing
terms of investment funds; authorizing Treasurer to
hire investment advisers for certain purpose;
specifying terms of trust maintenance and
investments; requiring trust assets be held separate
from state assets; prohibiting liability of state for
trust; exempting trust monies from state income tax;
authorizing trust to be established by adoption of
fund of other state in certain circumstances;
requiring program be established in certain time
frame; authorizing Treasurer to extend time frame;
authorizing Treasurer to establish pilot program or
rollouts for implementing act; providing for
codification; and providing an effective date.
BE IT ENACTED BY THE PEOPLE OF THE STATE OF OKLAHOMA:
SECTION 1. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 3600 of Title 62, unles s there
is created a duplication in numbering, reads as follows:
This act shall be known and may be cited as the "Oklahoma
Prosperity Act".
SECTION 2. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 3 601 of Title 62, unless there
is created a duplication in numbering, reads as follows:
A. Implementation of this act shall be subject to the receipt
of appropriations sufficient to establish the Oklahoma Prosperity
Act Program, as defined in this section.
B. As used in this act:
1. "Administrative fund" shall mean the Oklahoma Prosperity Act
administrative fund established under this act;
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2. "Contribution rate" means the percentage of the wages of a
covered employee that is withheld from his or her wage s and paid to
the IRA established for the covered employee under the Program;
3. "Covered employee" means any individual who is eighteen (18)
years of age or older, who is employed by a covered employer and who
has wages that are allocable to the state. For purposes of the
investment, withdrawal, transfer, rollover or other distribution of
an IRA, the term covered employee also includes the beneficiary of a
deceased covered employee;
4. "Covered employer" means an employer that either:
a. satisfies the following requirements:
(1) has at no time during the previous calendar year
employed fewer than ten (10) employees in this
state,
(2) has been in business for at least two (2) years,
and
(3) has not been a participating or contributing
employer in a retire ment plan under Section
401(a), 401(k), 403(a), 403(b), 408(k), or 408(p)
of Title 26 of Internal Revenue Code at any time
during the preceding two (2) calendar years, or
b. elects to be a covered employer if and as permitted in
accordance with rules and p rocedures established by
the Oklahoma Prosperity Act Program;
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5. "Employer" means a person or entity engaged in a business,
profession, trade or other enterprise in the state, whether for
profit or not-for-profit, that employs one or more individuals in
the state; provided, that a federal or state entity, agency or
instrumentality or any political subdivision thereof, shall not be
an employer;
6. "Enrollee" means any covered employee enrolled in the
Oklahoma Prosperity Act Program;
7. "Internal Revenue Code" means the federal Internal Revenue
Code of 1986, as amended;
8. "Investment adviser" means either:
a. an investment adviser registered as such under the
U.S. Investment Advisers Act of 1940, or
b. a bank or other institution exempt from registration
under the U.S. Investment Advisers Act of 1940;
9. "Investment fund" means each investment portfolio
established within the trust for investment purposes;
10. "IRA" means either an individual retirement account or
individual retirement annuity establishe d under Section 408 or 408A
of Title 26 of the Internal Revenue Code;
11. "Program" means the Oklahoma Prosperity Act Program
established under this act;
12. "State" means the State of Oklahoma;
13. "State Treasurer" means the Oklahoma State Treasurer;
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14. "Trust" means the IRA retirement trust or annuity contract
established under Section 7 of this act;
15. "Trustee" means the trustee of the trust, including an
insurance company issuing an annuity contract, selected under
Section 4 of this act; and
16. "Wages" means compensation within the meaning of Section
219(f)(1) of Title 26 the Internal Revenue Code that is received by
a covered employee from a covered employer.
SECTION 3. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 3602 of Title 62, unless there
is created a duplication in numbering, reads as follows:
The State Treasurer shall have the following powers and duties
in implementing the provisions of this act:
1. To design, establish and o perate the Oklahoma Prosperity Act
Program in accordance with the requirements established in this act;
2. To collect fees to defray the costs of administering the
Program;
3. To enter into contracts necessary or desirable for the
establishment and admin istration of the Program;
4. To hire, retain and terminate third -party service providers
for the Program, including, but not limited to, consultants,
investment managers or advisors, trustees, custodians, insurance
companies, record keepers, administrator s, actuaries, counsel,
auditors and other professionals; provided, that each service
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provider shall be authorized to do business in this state. For
purposes of selecting a third -party service provider, the Office of
the State Treasurer shall be exempt fro m the Oklahoma Central
Purchasing Act; provided, that a competitive process shall be
developed and utilized to select service providers;
5. To determine the type or types of IRAs to be offered;
6. To employ a program administrator and any other individua ls
necessary to administer the Program and the administrative fund;
7. To develop and implement an outreach plan and disseminate
information regarding the Program and retirement and financial
education in general, to employees, employers and other constit uents
in the state;
8. Determine the number of days by which an eligible employer
must make the Program available to a covered employee upon first
becoming an eligible employer or covered employee;
9. To adopt rules and procedures for the establishment a nd
operation of the Program and to take such other actions as necessary
to operate the Program in accordance with the provisions of this
act. Any guidelines or procedures affecting the Program may be
implemented after reasonable notice to the public and a public
comment period, in a manner similar to the requirements of the
Administrative Procedures Act. However, the Administrative
Procedures Act shall not apply for purposes of this section; and
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10. To establish and maintain the Program by contracting wi th
another state, partnering with one or more states to create a joint
auto-IRA Program, allowing states to participate in the Program or
forming a consortium with one or more other states in which certain
aspects of the Program of each state are combined for administrative
convenience and efficiency.
SECTION 4. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 3603 of Title 62, unless there
is created a duplication in numbering, reads as follows:
A. The trustee and each investment adviser shall be a fiduciary
with respect to the trust and IRAs established and maintained under
the Oklahoma Prosperity Act Program.
B. Each covered employer shall be required to provide covered
employees with such informati on as required by the Program. No
employer acting as such shall be considered a fiduciary with respect
to the trust or an IRA or have fiduciary responsibilities under the
act.
C. Each fiduciary shall discharge its duties with respect to
the Program solely in the interests of covered employees and with
the care, skill, prudence and diligence under the circumstances then
prevailing that a prudent person acting in a similar capacity and
familiar with those matters would use in the conduct of an
enterprise of like character and aims.
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SECTION 5. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 3604 of Title 62, unless there
is created a duplication in numbering, reads as follows:
A. The Oklahoma Prosperity Act Program shall be designed,
established and operated in accordance with the following
provisions:
1. Each covered employer shall be required to offer to each
covered employee an opportunity to contribute to an IRA established
under the Program for the benefit of the covered employee through
withholding from his or her wages. No employer shall be permitted
to contribute to the Program;
2. Unless the covered employee elects not to participate in the
Program, he or she shall be automatically enrolled in the Program
and contributions shall be withheld from the wages of the covered
employee;
3. The minimum contribution rate of each covered employee shall
be three percent (3%); the minimum contribution rate shall be the
default contribution rate;
4. The IRAs shall qualify for favorable federal income tax
treatment under Sections 408 and 408A of Title 26, as appropriate,
of the Internal Revenue Code;
5. Each covered employer shall deposit withheld contributions
of the covered employee under the Program wit h the trustee in such
manner as is determined by the State Treasurer, provided that the
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employer shall deliver the amounts withheld to the trustee within
ten (10) business days after the date the amounts otherwise would
have been paid to the covered employ ee;
6. Additional rules and procedures may be adopted in
conjunction with established IRS regulations for withdrawals,
distributions, transfers and rollovers of IRAs and for the
designation of IRA beneficiaries;
7. Information regarding the Program shall be made available to
the public on a website maintained for the Program;
8. Audited financial reports shall be submitted to the Governor
and Legislature;
9. Each covered employer shall be provided information
regarding the Program and disclosures includ ing:
a. a description of the benefits and risks associated
with investments offered in the Program,
b. instructions about how to obtain additional
information about the Program,
c. a description of the federal and state income tax
consequences of an IRA, w hich may consist of or
include the disclosure statement required to be
distributed under the Internal Revenue Code and the
Treasury Regulations thereunder,
d. a statement that covered employees seeking financial
advice should contact their own financial ad visors,
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that covered employers shall not provide financial
advice and that covered employers are not liable for
decisions covered employees make under the act,
e. a statement that the Program is not an employer -
sponsored retirement plan,
f. a statement that neither the Program nor the IRA of
the covered employee established under the Program is
guaranteed by the state,
g. a statement that neither a covered employer nor the
state will monitor or has an obligation to monitor the
eligibility of the covered em ployee under the Internal
Revenue Code to make contributions to an IRA or to
monitor whether the contributions of the covered
employee to the IRA established for the covered
employee under the Program exceeds the maximum
permissible IRA contribution; it sh all be the
responsibility of the covered employee, and
h. a statement that neither the s tate nor the covered
employer will have any liability with respect to any
failure of the covered employee to be eligible to make
IRA contributions or any contribution i n excess of the
maximum IRA contribution;
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10. Any information, forms or instructions to be furnished to
covered employees that provide the covered employee with the
procedures for:
a. making contributions to the IRA of the covered
employee established und er the Program, including a
description of the minimum contribution rate and the
right to elect to make no contribution or to change
the contribution rate under the Program,
b. making an investment election with respect to the IRA
of the covered employee e stablished under the Program,
including a description of the default investment
fund, and
c. making transfers, rollovers, withdrawals and other
distributions from the IRA of the covered employee;
11. Each covered employer shall deliver or facilitate the
delivery of the information about the Program to each covered
employee at the time and in the manner as established by Program
guidelines; and
12. The Program shall be designed and operated in a manner that
will cause it not to be an employee benefit plan within the meaning
of Section 3(3) of the Employee Retirement Income Security Act of
1974.
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SECTION 6. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 3605 of Title 62, unless there
is created a duplication in numbering, reads as follows:
There is hereby created in the Office of the State Treasurer a
fund to be designated as the "Oklahoma Prosperity Act Administrative
Fund". The fund shall be a continuing fund, not subject to fiscal
year limitations, and shall consist of monies appropriated for the
administration of the Oklahoma Prosperity Act Program, all
administrative fees collected and any other monies designated to the
fund by law. All monies accruing to the credit of the fund are
hereby appropriated and may be budgeted and expended by the State
Treasurer for expenses related to the administration and support of
the Program. Expenditures from the fund shall be made upon warrants
issued by the State Treasurer against claims filed as prescribed by
law with the Director of the Office of Management of Enterprise
Services for approval and payment.
SECTION 7. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 3606 of Title 62, unless there
is created a duplication in numbering, reads as follows:
A. There is hereby created as an instrumentality of the state a
trust to be known as the "Oklahoma Prosperity Act Trust ".
B. The State Treasurer may appoint qualified financial
institutions to act as trustee o r custodian of the IRA accounts.
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C. The assets of IRAs established for covered employees shall
be allocated to the trust and combined for investment purposes.
Trust assets shall be managed and administered for the purposes of
providing services to covere d employees and defraying reasonable
administrative expenses of the Oklahoma Prosperity Act Program.
D. There shall be established within the trust one or more
investment funds. The first One Thousand Dollars ($1,000.00) in
contributions made by, or on b ehalf of, an enrollee may be deposited
into a default capital preservation investment fund and the enrollee
may be provided an account revocation period during which, if the
enrollee chooses to end participation in the Program, the enrollee
may withdraw the deposited amounts from the default investment
without penalty.
E. Covered employees may allocate assets of their IRAs among
investment funds and a default investment fund may be designated for
the IRAs of covered employees who do not select an investmen t fund.
F. The State Treasurer may retain investment advisers to select
and manage the investments of investment funds on a discretionary
basis, subject to ongoing review and oversight.
G. The assets of the trust shall be maintained, invested and
expended solely for the purposes of the trust and no property rights
therein shall exist in favor of the state or any covered employer.
Trust assets shall not be transferred or used by the state for any
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purposes other than the purposes of the trust or funding th e
expenses of operating the Program.
H. The assets of the trust shall be held separate and apart
from the assets of the state.
I. There shall be no liability for the state, the Program, the
State Treasurer, or any employer for investment losses incurred by
any covered employee as a result of participating in the Program.
J. The trust and each investment fund shall not be subject to
income tax of this state.
K. If the Program is established by using the auto -IRA Program
of another state, a joint Program or a consortium with one or more
other states, then the trust may be established by adopting the
trust established under the Program of the other state or states or
as a master trust or similar arrangement with the other state or
states; provided, that the trust, master trust or similar
arrangement satisfies the requirements of this section.
SECTION 8. NEW LAW A new section of law to be codified
in the Oklahoma Statutes as Section 3607 of Title 62, unless there
is created a duplicati on in numbering, reads as follows:
The Oklahoma Prosperity Act Program shall be established so that
covered employees may begin making contributions within twenty -four
(24) months of the effective date of this act; provided, that the
State Treasurer may ex tend the time period within which the Program
is implemented by twelve (12) months. The State Treasurer may
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establish a pilot program for certain covered employers, may provide
for a staggered rollout of the Program so that covered employers are
initially required to offer the Program to covered employees in
stages based on employee headcount or other criteria, or both.
SECTION 9. This act shall become effective November 1, 20 21.
58-1-6266 MAH 01/08/21