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| 4 | 4 | | |
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| 5 | 5 | | 2023 -- H 5417 |
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| 6 | 6 | | ======== |
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| 7 | 7 | | LC001400 |
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| 8 | 8 | | ======== |
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| 9 | 9 | | S TATE OF RHODE IS LAND |
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| 10 | 10 | | IN GENERAL ASSEMBLY |
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| 11 | 11 | | JANUARY SESSION, A.D. 2023 |
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| 12 | 12 | | ____________ |
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| 13 | 13 | | |
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| 14 | 14 | | A N A C T |
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| 15 | 15 | | RELATING TO PUBLIC FINANCE -- RHODE ISLAND SECURE CHOICE RETIREMENT |
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| 16 | 16 | | SAVINGS PROGRAM ACT |
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| 17 | 17 | | Introduced By: Representatives Shanley, Craven, Carson, Abney, Donovan, Serpa, |
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| 18 | 18 | | Edwards, McEntee, Slater, and Diaz |
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| 19 | 19 | | Date Introduced: February 08, 2023 |
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| 20 | 20 | | Referred To: House Corporations |
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| 21 | 21 | | |
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| 22 | 22 | | |
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| 23 | 23 | | It is enacted by the General Assembly as follows: |
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| 24 | 24 | | SECTION 1. Title 35 of the General Laws entitled "PUBLIC FINANCE" is hereby 1 |
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| 25 | 25 | | amended by adding thereto the following chapter: 2 |
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| 26 | 26 | | CHAPTER 23 3 |
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| 27 | 27 | | RHODE ISLAND SECURE CHOICE RETIREMENT SAVINGS PROGRAM ACT 4 |
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| 28 | 28 | | 35-23-1. Short title. 5 |
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| 29 | 29 | | This chapter shall be known and may be cited as the "Rhode Island Secure Choice 6 |
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| 30 | 30 | | Retirement Savings Program Act." 7 |
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| 31 | 31 | | 35-23-2. Definitions. 8 |
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| 32 | 32 | | As used in this chapter: 9 |
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| 33 | 33 | | (1) "Board" means the Rhode Island secure choice retirement savings board. 10 |
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| 34 | 34 | | (2) "Eligible employee" means a person age eighteen (18) years or older who is employed 11 |
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| 35 | 35 | | by an eligible employer. "Eligible employee" does not include: 12 |
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| 36 | 36 | | (i) Any employee covered under the federal Railway Labor Act (45 U.S.C. §§ 151-164 and 13 |
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| 37 | 37 | | 45 U.S.C §§ 181-188), or any employee engaged in interstate commerce not subject to the 14 |
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| 38 | 38 | | legislative powers of the state, except insofar as application of this chapter is authorized under the 15 |
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| 39 | 39 | | United States Constitution or laws of the United States; or 16 |
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| 40 | 40 | | (ii) Any employee on whose behalf an employer makes contributions to a Taft-Hartley 17 |
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| 41 | 41 | | pension trust fund. 18 |
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| 42 | 42 | | |
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| 43 | 43 | | |
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| 44 | 44 | | LC001400 - Page 2 of 14 |
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| 45 | 45 | | (3) "Eligible employer" means a person or entity engaged in a business, industry, 1 |
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| 46 | 46 | | profession, trade, or other enterprise in the state, whether for-profit or not-for-profit, excluding the 2 |
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| 47 | 47 | | federal government, the state, any county, any municipal corporation, or any of the state's units or 3 |
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| 48 | 48 | | instrumentalities, that has five (5) or more employees and that satisfies the requirements to establish 4 |
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| 49 | 49 | | or participate in a payroll deposit retirement savings arrangement. "Eligible employer" does not 5 |
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| 50 | 50 | | include an employer that provides a tax-qualified retirement savings program as described in § 35-6 |
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| 51 | 51 | | 23-10. 7 |
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| 52 | 52 | | (4) "IRA" means an individual retirement account or individual retirement annuity under 8 |
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| 53 | 53 | | 26 U.S.C §§ 408 or 408A (the federal Internal Revenue Code). 9 |
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| 54 | 54 | | (5) "Participating employer" means an eligible employer that provides a payroll deposit 10 |
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| 55 | 55 | | retirement savings arrangement provided for by this chapter for eligible employees. 11 |
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| 56 | 56 | | (6) "Payroll deposit retirement savings arrangement" means an arrangement by which an 12 |
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| 57 | 57 | | employer allows employees to remit payroll deduction contributions to the RISavers retirement 13 |
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| 58 | 58 | | savings program. 14 |
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| 59 | 59 | | (7) "RISavers retirement savings program" or "program" means a retirement savings 15 |
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| 60 | 60 | | program offered by the Rhode Island secure choice retirement savings program. 16 |
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| 61 | 61 | | (8) "State investment commission" or "commission" means the state investment 17 |
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| 62 | 62 | | commission as defined in § 35-10-1. 18 |
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| 63 | 63 | | 35-23-3. Creation, membership, and terms of the Rhode Island secure choice 19 |
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| 64 | 64 | | retirement savings board. 20 |
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| 65 | 65 | | (a) There is authorized, created, and established in the office of the general treasurer, a 21 |
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| 66 | 66 | | public corporation of the state, with the politic and corporate powers set forth in this chapter, to be 22 |
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| 67 | 67 | | known as the Rhode Island secure choice retirement savings board (the "board"), to carry out the 23 |
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| 68 | 68 | | provisions of this chapter. The board is constituted as a public instrumentality and agency 24 |
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| 69 | 69 | | exercising public and essential governmental functions, and the exercise by the board of the powers 25 |
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| 70 | 70 | | conferred by this chapter shall be deemed and held to be the performance of an essential 26 |
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| 71 | 71 | | governmental function of the state. 27 |
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| 72 | 72 | | (b) It is the intent of the general assembly by the passage of this chapter to create and 28 |
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| 73 | 73 | | establish a public corporation and instrumentality and agency of the state for the purpose of the 29 |
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| 74 | 74 | | activities authorized by this chapter, and to vest the corporation with all powers, authority, rights, 30 |
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| 75 | 75 | | privileges, and titles that may be necessary to enable it to accomplish those purposes. This chapter 31 |
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| 76 | 76 | | shall be liberally construed in conformance with the purpose expressed in this section. 32 |
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| 77 | 77 | | (c) The powers of the corporation shall be vested in seven (7) members, appointed by the 33 |
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| 78 | 78 | | governor subject to advice and consent of the senate. One member shall be a current or former 34 |
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| 79 | 79 | | |
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| 80 | 80 | | |
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| 81 | 81 | | LC001400 - Page 3 of 14 |
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| 82 | 82 | | member of the office of the general treasurer appointed with the advice and consent of the senate, 1 |
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| 83 | 83 | | who shall act as chairperson and shall serve for an initial term of three (3) years; one member shall 2 |
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| 84 | 84 | | be a current or former member of the department of business regulation, appointed with the advice 3 |
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| 85 | 85 | | and consent of the senate and shall serve for an initial term of three (3) years; two (2) members of 4 |
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| 86 | 86 | | the public shall be appointed by the governor with the advice and consent of the senate, one of 5 |
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| 87 | 87 | | whom shall serve for an initial term of two (2) years, and one of whom shall serve for an initial 6 |
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| 88 | 88 | | term of one year; one member shall be an individual with small business administration experience 7 |
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| 89 | 89 | | appointed by the governor after consultation with the general treasurer with the advice and consent 8 |
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| 90 | 90 | | of the senate, for an initial term of two (2) years; one member shall be an individual with expertise 9 |
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| 91 | 91 | | in retirement planning to be appointed by the governor after consultation with the general treasurer 10 |
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| 92 | 92 | | with the advice and consent of the senate, who shall serve for an initial term of one year; and one 11 |
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| 93 | 93 | | member of the public shall be appointed by the governor after consultation with the general 12 |
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| 94 | 94 | | treasurer with the advice and consent of the senate, who shall serve for an initial term of two (2) 13 |
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| 95 | 95 | | years. 14 |
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| 96 | 96 | | (d) After the initial term, all appointed members shall serve staggered three (3) year terms 15 |
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| 97 | 97 | | or until their respective successors are appointed and qualified after expiration of the appointed 16 |
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| 98 | 98 | | term. 17 |
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| 99 | 99 | | (e) Any vacancy occurring in the office of a member by death, resignation, or otherwise 18 |
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| 100 | 100 | | shall be filled in the same manner as the original appointment. 19 |
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| 101 | 101 | | (f) Members shall receive no compensation for the performance of their duties; however, 20 |
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| 102 | 102 | | they may be reimbursed necessary expenses. 21 |
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| 103 | 103 | | (g) The members of the board shall at regular intervals at least four (4) times a year conduct 22 |
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| 104 | 104 | | business meetings for the purpose of carrying out its general business. The board shall be 23 |
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| 105 | 105 | | considered a "public body" for purposes of, and shall be subject to, the provisions of chapter 46 of 24 |
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| 106 | 106 | | title 42 ("open meetings") and to the provisions of title 38 concerning public records. 25 |
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| 107 | 107 | | (h) The board shall continue until its existence is terminated by law. 26 |
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| 108 | 108 | | (i) The state shall indemnify and hold harmless every past, present, or future member, 27 |
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| 109 | 109 | | officer, or employee of the board who is made a party to or is required to testify in any action, 28 |
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| 110 | 110 | | investigation, or other proceeding in connection with or arising out of the performance or alleged 29 |
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| 111 | 111 | | lack of performance of that person's duties on behalf of the corporation. These persons shall be 30 |
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| 112 | 112 | | indemnified and held harmless, whether they are sued individually or in their capacities as 31 |
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| 113 | 113 | | members, officers, or employees of the board, for all expenses, legal fees and/or costs incurred by 32 |
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| 114 | 114 | | them during or resulting from the proceedings, and for any award or judgment arising out of their 33 |
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| 115 | 115 | | service to the corporation that is not paid by the board and is sought to be enforced against a person 34 |
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| 116 | 116 | | |
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| 117 | 117 | | |
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| 118 | 118 | | LC001400 - Page 4 of 14 |
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| 119 | 119 | | individually, as expenses, legal fees, costs, awards or judgments occur. Provided, however, that 1 |
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| 120 | 120 | | neither the state nor the corporation shall indemnify any member, officer, or employee: 2 |
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| 121 | 121 | | (1) For acts or omissions not in good faith or which involve intentional misconduct or a 3 |
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| 122 | 122 | | knowing violation of law; 4 |
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| 123 | 123 | | (2) For any transaction from which the member derived an improper personal benefit; or 5 |
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| 124 | 124 | | (3) For any malicious act. 6 |
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| 125 | 125 | | (j) No person shall be eligible for appointment to the board unless they are a resident of the 7 |
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| 126 | 126 | | state. 8 |
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| 127 | 127 | | 35-23-4. Rhode Island secure choice retirement savings program. 9 |
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| 128 | 128 | | (a) There is hereby established a retirement savings program known as the Rhode Island 10 |
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| 129 | 129 | | secure choice retirement savings program to be administered by the board for the purpose of 11 |
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| 130 | 130 | | promoting greater retirement savings for Rhode Island private sector employees in a convenient, 12 |
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| 131 | 131 | | voluntary, low-cost, and portable manner. 13 |
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| 132 | 132 | | (b) The secure choice retirement savings program is a plan in which retirement savings are 14 |
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| 133 | 133 | | accumulated in individual accounts for the exclusive benefit of the participants or their 15 |
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| 134 | 134 | | beneficiaries. The program is established effective upon receipt of funds pursuant to the provisions 16 |
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| 135 | 135 | | of this chapter. 17 |
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| 136 | 136 | | 35-23-5. Investments. 18 |
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| 137 | 137 | | (a) The board may select an appropriate third-party administrator for the program and shall 19 |
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| 138 | 138 | | adopt such plan, trust and/or custodial documents, with such features and attributes as the board 20 |
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| 139 | 139 | | determines necessary or advisable in its discretion to effectuate the provisions of this chapter in 21 |
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| 140 | 140 | | accordance with the following: 22 |
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| 141 | 141 | | (1) The board may select one or more firm(s) or company(ies) to provide retirement 23 |
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| 142 | 142 | | program investments, program administration, and communication services to employees who 24 |
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| 143 | 143 | | participate in the retirement savings program. The program shall provide for appropriate long-term 25 |
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| 144 | 144 | | retirement-oriented investments and shall include investment options as determined by the state 26 |
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| 145 | 145 | | investment commission. In determining the firm or the company to provide these services, the 27 |
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| 146 | 146 | | board shall consider the following: 28 |
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| 147 | 147 | | (i) The financial stability of the company or firm; 29 |
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| 148 | 148 | | (ii) The cost of the investments, program administration, and services to the members; 30 |
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| 149 | 149 | | (iii) The experience of the company or firm in administering retirement savings plans; 31 |
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| 150 | 150 | | (iv) The experience of the company or firm in providing education, counseling, and advice 32 |
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| 151 | 151 | | to participants of retirement savings plans; and 33 |
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| 152 | 152 | | (v) Any criminal convictions, securities or antitrust law violations, material civil or 34 |
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| 153 | 153 | | |
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| 154 | 154 | | |
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| 155 | 155 | | LC001400 - Page 5 of 14 |
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| 156 | 156 | | regulatory fines or judgments against the company or firm which the company or firm shall be 1 |
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| 157 | 157 | | required to disclose to the board and the commission as part of the selection process. 2 |
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| 158 | 158 | | (2) The program shall provide education, counseling, and objective employee-specific plan 3 |
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| 159 | 159 | | advice to participants. 4 |
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| 160 | 160 | | (3) The program shall include a limited number of investment options which shall include 5 |
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| 161 | 161 | | either: 6 |
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| 162 | 162 | | (i) Investment portfolio options that are constructed to reflect different risk profiles such 7 |
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| 163 | 163 | | as conservative, moderate and aggressive; and/or 8 |
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| 164 | 164 | | (ii) Options constructed to reflect different risk profiles that automatically reallocate and 9 |
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| 165 | 165 | | rebalance contributions as an employee ages. There shall be investment options that prioritize the 10 |
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| 166 | 166 | | securities of companies that demonstrate good governance, efficient use of environmental resources 11 |
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| 167 | 167 | | and thoughtful management of social impact. All investment offerings shall be approved by the 12 |
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| 168 | 168 | | state investment commission. 13 |
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| 169 | 169 | | (b) The Rhode Island secure choice retirement savings program is an instrumentality of the 14 |
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| 170 | 170 | | state. Any security issued, managed, or invested by the state investment commission within the 15 |
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| 171 | 171 | | Rhode Island secure choice retirement savings program on behalf of an individual participating 16 |
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| 172 | 172 | | within the RISavers retirement savings program shall be state income tax deferred for investment 17 |
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| 173 | 173 | | earnings to include interest, dividends and capital gains until such time as withdrawal pursuant to 18 |
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| 174 | 174 | | the terms of this chapter. 19 |
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| 175 | 175 | | (c) The state investment commission shall adopt a written statement of investment policy 20 |
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| 176 | 176 | | that includes a risk management and oversight program. The commission shall consider the 21 |
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| 177 | 177 | | statement of investment policy and any changes in the investment policy at a public meeting. 22 |
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| 178 | 178 | | 35-23-6. Payroll deduction. 23 |
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| 179 | 179 | | The RISavers retirement savings program shall include, as determined by the board, one 24 |
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| 180 | 180 | | or more payroll deduction IRA arrangements. 25 |
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| 181 | 181 | | 35-23-7. Powers of the board. 26 |
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| 182 | 182 | | (a) The board shall have the power and authority to do all of the following: 27 |
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| 183 | 183 | | (1) Adopt a seal and change and amend it from time to time; 28 |
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| 184 | 184 | | (2) The general treasurer shall, on behalf of the board, appoint an executive director, who 29 |
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| 185 | 185 | | shall not be a member of the board and who shall serve at the pleasure of the board. The general 30 |
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| 186 | 186 | | treasurer shall determine the duties of the executive director and other staff as appropriate and set 31 |
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| 187 | 187 | | their compensation. The board may authorize the executive director to enter into contracts on behalf 32 |
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| 188 | 188 | | of the board or conduct any business necessary for the efficient operation of the board; 33 |
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| 189 | 189 | | (3) Make provisions for the payment of costs of administration and operation of the 34 |
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| 190 | 190 | | |
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| 191 | 191 | | |
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| 192 | 192 | | LC001400 - Page 6 of 14 |
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| 193 | 193 | | program; 1 |
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| 194 | 194 | | (4) Employ staff; 2 |
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| 195 | 195 | | (5) Retain and contract with a Rhode Island public retirement system, consultants, 3 |
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| 196 | 196 | | actuaries, counsel, auditors, and other professionals as necessary; 4 |
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| 197 | 197 | | (6) Procure insurance against any loss in connection with the property, assets, or activities 5 |
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| 198 | 198 | | of the program; 6 |
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| 199 | 199 | | (7) Procure insurance indemnifying each member of the board from personal loss or 7 |
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| 200 | 200 | | liability resulting from a member's action or inaction as a member of the board; 8 |
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| 201 | 201 | | (8) Set minimum and maximum contribution levels in accordance with contribution limits 9 |
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| 202 | 202 | | set for IRAs by the Internal Revenue Code; 10 |
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| 203 | 203 | | (9) Collaborate and cooperate with a public retirement system, private financial 11 |
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| 204 | 204 | | institutions, service providers, and business, financial, trade, membership, and other organizations 12 |
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| 205 | 205 | | to the extent necessary or desirable for the effective and efficient design, implementation, and 13 |
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| 206 | 206 | | administration of the program and to maximize outreach to eligible employers and eligible 14 |
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| 207 | 207 | | employees; 15 |
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| 208 | 208 | | (10) Collaborate with, and evaluate the role of, licensed insurance agents and financial 16 |
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| 209 | 209 | | advisors in assisting and providing guidance for eligible employees; 17 |
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| 210 | 210 | | (11) Cause expenses incurred to initiate, implement, maintain, and administer the program 18 |
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| 211 | 211 | | to be paid from contributions to, or investment returns or assets of, the program or arrangements 19 |
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| 212 | 212 | | established under the program, to the extent permitted under state and federal law; 20 |
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| 213 | 213 | | (12) Facilitate compliance by the retirement savings program or arrangements established 21 |
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| 214 | 214 | | under the program with all applicable requirements for the program under the Internal Revenue 22 |
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| 215 | 215 | | Code of 1986, including tax qualification requirements or any other applicable law and accounting 23 |
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| 216 | 216 | | requirements, including providing or arranging for assistance to program sponsors and individua ls 24 |
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| 217 | 217 | | in complying with applicable law and tax qualification requirements in a cost-effective manner; 25 |
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| 218 | 218 | | and 26 |
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| 219 | 219 | | (13) Carry out the duties and obligations of the Rhode Island secure choice retirement 27 |
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| 220 | 220 | | savings program pursuant to this title and exercise any and all other powers as appropriate for the 28 |
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| 221 | 221 | | effectuation of the purposes, objectives, and provisions of this title pertaining to the program. 29 |
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| 222 | 222 | | (14)(i) Enter into intergovernmental agreements with any state agency to further the 30 |
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| 223 | 223 | | successful implementation and operation of the program and all such agencies and instrumentalities 31 |
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| 224 | 224 | | shall cooperate with the board. 32 |
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| 225 | 225 | | (ii) All state agencies shall cooperate as requested by the program in the performance of its 33 |
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| 226 | 226 | | duties under this chapter, including, unless otherwise prohibited, the sharing of relevant data as the 34 |
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| 227 | 227 | | |
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| 228 | 228 | | |
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| 229 | 229 | | LC001400 - Page 7 of 14 |
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| 230 | 230 | | parties shall mutually agree. 1 |
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| 231 | 231 | | (15) Make and enter into contracts, agreements, memoranda of understanding, 2 |
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| 232 | 232 | | arrangements, partnerships, or other arrangements to collaborate, cooperate, coordinate, contract, 3 |
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| 233 | 233 | | or combine resources, investments, or administrative functions with other governmental entities, 4 |
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| 234 | 234 | | including any states or their agencies or instrumentalities that maintain or are establishing 5 |
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| 235 | 235 | | retirement savings programs compatible with the program, including collective, common, or pooled 6 |
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| 236 | 236 | | investments with other funds of other states’ programs with which the assets of the program and 7 |
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| 237 | 237 | | trust are permitted by law to be collectively invested, to the extent necessary or desirable for the 8 |
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| 238 | 238 | | effective and efficient design, administration, and implementation of the program consistent with 9 |
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| 239 | 239 | | the purposes set forth in this title, including the purpose of achieving economies of scale and other 10 |
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| 240 | 240 | | efficiencies designed to minimize costs for the program and its participants. 11 |
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| 241 | 241 | | (16) Develop and implement an investment policy that defines the program’s investment 12 |
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| 242 | 242 | | objectives, consistent with the objectives of the program, and that provides for policies and 13 |
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| 243 | 243 | | procedures consistent with those investment objectives. The board shall designate appropriate 14 |
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| 244 | 244 | | default investments that include a mix of asset classes, such as target date and balanced funds. The 15 |
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| 245 | 245 | | board shall seek to minimize participant fees and expenses of investment and administration. The 16 |
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| 246 | 246 | | board shall strive to design and implement investment options available to holders of accounts 17 |
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| 247 | 247 | | established as part of the program and other program features that are intended to achieve maximum 18 |
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| 248 | 248 | | possible income replacement balanced with an appropriate level of risk in an IRA-based 19 |
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| 249 | 249 | | environment consistent with the investment objectives under the policy. The investment options 20 |
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| 250 | 250 | | may encompass a range of risk and return opportunities and allow for a rate of return commensurate 21 |
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| 251 | 251 | | with an appropriate level of risk in view of the investment objectives under the policy. The menu 22 |
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| 252 | 252 | | of investment options shall be determined taking into account the nature and objectives of the 23 |
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| 253 | 253 | | program, the desirability (based on behavioral research findings) of limiting investment choices 24 |
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| 254 | 254 | | under the program to a reasonable number, and the extensive investment choices available to 25 |
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| 255 | 255 | | participants in the event that they roll over to an IRA outside the program. 26 |
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| 256 | 256 | | (b) The board shall adopt regulations it deems necessary to implement this chapter 27 |
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| 257 | 257 | | consistent with the Internal Revenue Code and regulations issued pursuant to that code to ensure 28 |
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| 258 | 258 | | that the program meets all criteria for federal tax-deferral or tax-exempt benefits, or both. 29 |
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| 259 | 259 | | 35-23-8. Additional authority of the board. 30 |
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| 260 | 260 | | In addition to the powers and authority granted to the board pursuant to § 35-23-7, the 31 |
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| 261 | 261 | | board shall have the power and authority to do the following: 32 |
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| 262 | 262 | | (1) Cause the retirement savings program or arrangements established under the program 33 |
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| 263 | 263 | | to be designed, established, and operated, in a manner consistent with all of the following: 34 |
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| 264 | 264 | | |
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| 265 | 265 | | |
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| 266 | 266 | | LC001400 - Page 8 of 14 |
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| 267 | 267 | | (i) In accordance with best practices for retirement savings vehicles; 1 |
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| 268 | 268 | | (ii) To encourage participation, saving, and sound investment practices; and 2 |
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| 269 | 269 | | (iii) With simplicity, ease of administration for participating employers, and portability of 3 |
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| 270 | 270 | | benefits. 4 |
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| 271 | 271 | | (2) Disseminate educational information designed to educate participants about the benefits 5 |
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| 272 | 272 | | of planning and saving for retirement and information to help them decide the level of RISavers 6 |
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| 273 | 273 | | retirement savings program participation and savings strategies that may be appropriate for them; 7 |
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| 274 | 274 | | (3) Disseminate information concerning state and federal tax credits available to small 8 |
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| 275 | 275 | | business owners for allowing their employees to participate in the program, and any relevant state 9 |
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| 276 | 276 | | or federal tax credits available for participating employees; 10 |
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| 277 | 277 | | (4) Submit progress and status reports to participating employers and eligible employees; 11 |
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| 278 | 278 | | (5) If necessary, determine the eligibility of an employer, employee, or other individual to 12 |
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| 279 | 279 | | participate in the program; 13 |
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| 280 | 280 | | (6) Evaluate and establish the process by which an eligible employee of an eligible 14 |
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| 281 | 281 | | employer is able to contribute a portion of their salary or wages to the program for automatic deposit 15 |
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| 282 | 282 | | of those contributions and the participating employer provides a payroll deposit retirement savings 16 |
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| 283 | 283 | | arrangement to forward the employee contribution and related information to the program or its 17 |
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| 284 | 284 | | agents. This evaluation and process may include, but is not limited to, financial services companies 18 |
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| 285 | 285 | | and third-party administrators with the capability to receive and process employee information and 19 |
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| 286 | 286 | | contributions for payroll deposit retirement savings arrangements or other arrangements authorized 20 |
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| 287 | 287 | | by this chapter; 21 |
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| 288 | 288 | | (7) Design and establish the process for the enrollment of program participants; 22 |
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| 289 | 289 | | (8) Allow participating employers to use the program to remit employees' contributions to 23 |
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| 290 | 290 | | their IRAs on their employees' behalf; 24 |
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| 291 | 291 | | (9) Allow participating employers to make their own contributions to their employees' 25 |
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| 292 | 292 | | IRAs; provided that, the contributions would be permitted under the Internal Revenue Code and 26 |
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| 293 | 293 | | would not cause the program to be treated as an employee benefit plan under the federal Employee 27 |
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| 294 | 294 | | Retirement Income Security Act; and 28 |
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| 295 | 295 | | (10) Evaluate and establish the process by which an individual or an employee of a 29 |
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| 296 | 296 | | nonparticipating employer may enroll in and make contributions to the program. 30 |
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| 297 | 297 | | 35-23-9. Disclosure of information. 31 |
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| 298 | 298 | | (a) Prior to opening the RISavers retirement savings program for enrollment, the board 32 |
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| 299 | 299 | | shall design and disseminate to employers an employee information packet that shall also be made 33 |
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| 300 | 300 | | available in an electronic format. The packet shall include background information on the program 34 |
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| 301 | 301 | | |
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| 302 | 302 | | |
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| 303 | 303 | | LC001400 - Page 9 of 14 |
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| 304 | 304 | | and appropriate disclosures for employees. 1 |
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| 305 | 305 | | (b) The disclosure form shall include, but not be limited to, all of the following: 2 |
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| 306 | 306 | | (1) The benefits and risks associated with making contributions to the program; 3 |
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| 307 | 307 | | (2) The mechanics of how to make contributions to the program; 4 |
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| 308 | 308 | | (3) How to opt out of the program; 5 |
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| 309 | 309 | | (4) The process for withdrawal of retirement savings; and 6 |
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| 310 | 310 | | (5) How to obtain additional information on the program. 7 |
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| 311 | 311 | | (c) In addition, the disclosure form shall clearly articulate the following: 8 |
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| 312 | 312 | | (1) Employees seeking financial advice should contact financial advisors in that employers 9 |
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| 313 | 313 | | do not provide financial advice, that employees are not to contact their employers for financial 10 |
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| 314 | 314 | | advice, and that employers are not liable for employee investment decisions; 11 |
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| 315 | 315 | | (2) This retirement program is not sponsored by the employer, and therefore, the employer 12 |
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| 316 | 316 | | is not responsible for the program or liable as a program sponsor; and 13 |
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| 317 | 317 | | (3) The program fund is not guaranteed by the state. 14 |
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| 318 | 318 | | (d) The disclosure form shall include a method for the employee to acknowledge that the 15 |
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| 319 | 319 | | employee has read all of the disclosures and understands their content. 16 |
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| 320 | 320 | | (e) The employee information packet shall also include an opt-out form for an eligible 17 |
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| 321 | 321 | | employee to note their decision to opt out of participation in the program. The opt-out form shall 18 |
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| 322 | 322 | | be simple and concise and drafted in a manner that the board deems necessary to appropriately 19 |
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| 323 | 323 | | evidence the employee's understanding that they are choosing not to automatically deduct earnings 20 |
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| 324 | 324 | | to save for retirement. 21 |
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| 325 | 325 | | (f) The employee information packet with the disclosure and opt-out forms shall be made 22 |
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| 326 | 326 | | available to eligible employees by the RISavers retirement savings program and supplied to 23 |
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| 327 | 327 | | employees at the time of hiring. All new employees shall review the packet and acknowledge 24 |
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| 328 | 328 | | having received it. 25 |
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| 329 | 329 | | (g) The employee information packet with the disclosure and opt-out forms shall be 26 |
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| 330 | 330 | | supplied to existing employees when the program is initially launched for a participating employer. 27 |
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| 331 | 331 | | 35-23-10. Employer participation. 28 |
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| 332 | 332 | | (a) After the board opens the RISavers retirement savings program for enrollment, eligible 29 |
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| 333 | 333 | | employers shall have a payroll deposit retirement savings arrangement to allow employee 30 |
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| 334 | 334 | | participation in the program under the terms and conditions prescribed by the board. 31 |
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| 335 | 335 | | (b) Within twelve (12) months after the board opens the program for enrollment, eligible 32 |
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| 336 | 336 | | employers with more than one hundred (100) eligible employees and that do not offer a retirement 33 |
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| 337 | 337 | | savings program pursuant to subsection (g) of this section shall have a payroll deposit retirement 34 |
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| 338 | 338 | | |
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| 339 | 339 | | |
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| 340 | 340 | | LC001400 - Page 10 of 14 |
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| 341 | 341 | | savings arrangement to allow employee participation in the program. 1 |
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| 342 | 342 | | (c) Within twenty-four (24) months after the board opens the program for enrollment, 2 |
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| 343 | 343 | | eligible employers with more than fifty (50) eligible employees and that do not offer a retirement 3 |
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| 344 | 344 | | savings program pursuant to subsection (g) of this section shall have a payroll deposit retirement 4 |
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| 345 | 345 | | savings arrangement to allow employee participation in the program. 5 |
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| 346 | 346 | | (d) Within thirty-six (36) months after the board opens the program for enrollment, all other 6 |
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| 347 | 347 | | eligible employers that do not offer a retirement savings program pursuant to subsection (g) of this 7 |
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| 348 | 348 | | section shall have a payroll deposit retirement savings arrangement to allow employee participation 8 |
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| 349 | 349 | | in the program. 9 |
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| 350 | 350 | | (e) The board, in its discretion, may extend the time limits defined in subsections (b) 10 |
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| 351 | 351 | | through (d) of this section. 11 |
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| 352 | 352 | | (f)(1) Each eligible employee shall be enrolled in the program unless the employee elects 12 |
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| 353 | 353 | | not to participate in the program. An eligible employee may elect to opt out of the program at any 13 |
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| 354 | 354 | | time by making a notation on the opt-out form. 14 |
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| 355 | 355 | | (2) Following initial implementation of the program pursuant to this section, at least once 15 |
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| 356 | 356 | | every year, the board shall designate an open enrollment period during which eligible employees 16 |
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| 357 | 357 | | that previously opted out of the program may enroll in the program. 17 |
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| 358 | 358 | | (3) An employee who elects to opt out of the program who subsequently wishes to 18 |
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| 359 | 359 | | participate through the employer's payroll deposit retirement savings arrangement may enroll at 19 |
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| 360 | 360 | | any time. 20 |
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| 361 | 361 | | (g)(1) An employer that provides an employer-sponsored retirement plan, such as a defined 21 |
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| 362 | 362 | | benefit plan or a 401(k), 403(b), 457(b), simplified employee pension (SEP) plan, or savings 22 |
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| 363 | 363 | | incentive match plan for employees (SIMPLE) plan, or that offers an automatic enrollment payroll 23 |
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| 364 | 364 | | deduction IRA, shall be exempt from the requirements of the RISavers retirement savings program, 24 |
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| 365 | 365 | | if the plan or IRA qualifies for favorable federal income tax treatment under the federal Internal 25 |
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| 366 | 366 | | Revenue Code. 26 |
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| 367 | 367 | | (2) An employer shall retain the option at all times to set up and offer a tax-qualified 27 |
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| 368 | 368 | | retirement plan, instead of facilitating employee participation in the RISavers retirement savings 28 |
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| 369 | 369 | | program. 29 |
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| 370 | 370 | | (h) By regulation, the board may set a default contribution rate which, unless otherwise 30 |
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| 371 | 371 | | specified by the employee, shall be the amount of the employee’s annual salary or wages 31 |
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| 372 | 372 | | contributed to the program. Employees shall have the ability to elect to change their contribution 32 |
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| 373 | 373 | | rate at any time with thirty (30) days’ notice provided to the program administrator. 33 |
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| 374 | 374 | | (i) The board may implement annual automatic escalation of employee contributions. 34 |
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| 375 | 375 | | |
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| 376 | 376 | | |
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| 377 | 377 | | LC001400 - Page 11 of 14 |
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| 378 | 378 | | (j) Employee contributions subject to automatic escalation shall not exceed eight percent 1 |
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| 379 | 379 | | (8%) of salary. 2 |
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| 380 | 380 | | (1) Automatic escalation shall result in no more than a one-percent-of-salary (1%) increase 3 |
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| 381 | 381 | | in employee contributions per calendar year. 4 |
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| 382 | 382 | | (2) A participating employee may elect to opt out of automatic escalation and may set his 5 |
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| 383 | 383 | | or her contribution percentage rate at a level determined by the participating employee. 6 |
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| 384 | 384 | | 35-23-11. Employer liability protection. 7 |
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| 385 | 385 | | (a) Employers shall not have any liability for an employee's decision to participate in, or 8 |
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| 386 | 386 | | opt out of, the RISavers retirement savings program, or for the investment decisions of employees 9 |
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| 387 | 387 | | whose assets are deposited in the program. 10 |
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| 388 | 388 | | (b) Employers shall not be a fiduciary, or considered to be a fiduciary, over the Rhode 11 |
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| 389 | 389 | | Island secure choice retirement savings program. The program is a state-administered program, not 12 |
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| 390 | 390 | | an employer-sponsored program. If the program is subsequently found to be preempted by any 13 |
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| 391 | 391 | | federal law or regulation, employers shall not be liable as program sponsors. An employer shall not 14 |
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| 392 | 392 | | bear responsibility for the administration, investment, or investment performance of the program. 15 |
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| 393 | 393 | | An employer shall not be liable with regard to investment returns, program design, and benefits 16 |
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| 394 | 394 | | paid to program participants. 17 |
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| 395 | 395 | | (c) An employer's voluntary contribution pursuant to § 35-23-8(10) shall not in any way 18 |
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| 396 | 396 | | contradict the provisions of this section or change the employer's relationship to the program or an 19 |
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| 397 | 397 | | employer's obligations to employees. 20 |
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| 398 | 398 | | (d) An employer shall not have civil liability, and no cause of action shall arise against an 21 |
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| 399 | 399 | | employer, for acting pursuant to the regulations prescribed by the board defining the roles and 22 |
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| 400 | 400 | | responsibilities of employers that have a payroll deposit retirement savings arrangement to allow 23 |
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| 401 | 401 | | employee participation in the program. 24 |
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| 402 | 402 | | 35-23-12. State immunity. 25 |
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| 403 | 403 | | The state shall not have any liability for the payment of the retirement savings benefit 26 |
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| 404 | 404 | | earned by program participants pursuant to this chapter. The state, and any of the funds of the state, 27 |
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| 405 | 405 | | shall have no obligation for payment of the benefits arising from this chapter. 28 |
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| 406 | 406 | | 35-23-13. Annual audited financial report. 29 |
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| 407 | 407 | | (a) The board shall submit no later than December 31 an annual audited financial report, 30 |
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| 408 | 408 | | prepared in accordance with generally accepted accounting principles, on the operations of the 31 |
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| 409 | 409 | | Rhode Island secure choice retirement savings program to the governor, and the finance committees 32 |
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| 410 | 410 | | of the house and senate. The annual audit shall be made by an independent certified public 33 |
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| 411 | 411 | | accountant and shall include, but not be limited to, direct and indirect costs attributable to the use 34 |
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| 412 | 412 | | |
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| 413 | 413 | | |
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| 414 | 414 | | LC001400 - Page 12 of 14 |
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| 415 | 415 | | of outside consultants, independent contractors, and any other persons who are not state employees. 1 |
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| 416 | 416 | | (b) The annual audit shall be supplemented by the following information prepared by the 2 |
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| 417 | 417 | | board: 3 |
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| 418 | 418 | | (1) Any studies or evaluations prepared in the preceding year; 4 |
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| 419 | 419 | | (2) A summary of the benefits provided by the program including the number of 5 |
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| 420 | 420 | | participants in the program; and 6 |
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| 421 | 421 | | (3) Any other information that is relevant in order to make a full, fair, and effective 7 |
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| 422 | 422 | | disclosure of the operations of the Rhode Island secure choice retirement savings program. 8 |
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| 423 | 423 | | 35-23-14. Required favorable federal tax treatment. 9 |
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| 424 | 424 | | (a) The board shall not implement the program if the IRA arrangements offered fail to 10 |
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| 425 | 425 | | qualify for the favorable federal income tax treatment ordinarily accorded to IRAs under the 11 |
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| 426 | 426 | | Internal Revenue Code, or if it is determined that the program is an employee benefit plan under 12 |
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| 427 | 427 | | the federal Employee Retirement Income Security Act. 13 |
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| 428 | 428 | | (b) Prior to opening the program for enrollment, the board shall report to the governor and 14 |
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| 429 | 429 | | the finance committees of the house and senate the specific date on which the program will start to 15 |
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| 430 | 430 | | enroll program participants and that the following prerequisites and requirements for the program 16 |
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| 431 | 431 | | have been met: 17 |
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| 432 | 432 | | (1) The program is structured in a manner to keep the program from being classified as an 18 |
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| 433 | 433 | | employee benefit plan subject to the federal Employee Retirement Income Security Act; 19 |
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| 434 | 434 | | (2) The payroll deduction IRA arrangements offered by the program qualify for the 20 |
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| 435 | 435 | | favorable federal income tax treatment ordinarily accorded to IRA arrangements under the Internal 21 |
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| 436 | 436 | | Revenue Code; 22 |
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| 437 | 437 | | (3) The board has defined in regulation the roles and responsibilities of employers in a 23 |
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| 438 | 438 | | manner to keep the program from being classified as an employee benefit plan subject to the federal 24 |
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| 439 | 439 | | Employee Retirement Income Security Act; and 25 |
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| 440 | 440 | | (4) The board has adopted a third-party administrator operational model that limits 26 |
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| 441 | 441 | | employer interaction and transactions with the employee to the extent feasible. 27 |
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| 442 | 442 | | 35-23-15. Prohibited conduct. 28 |
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| 443 | 443 | | A board member, program administrator, and other staff of the board shall not do any of 29 |
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| 444 | 444 | | the following: 30 |
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| 445 | 445 | | (1) Directly or indirectly have any interest in the making of any investment made for the 31 |
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| 446 | 446 | | program, or in the gains or profits accruing from any investment made for the program; 32 |
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| 447 | 447 | | (2) Borrow any funds or deposits of the program, or use those funds or deposits in any 33 |
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| 448 | 448 | | manner, for themselves or as an agent or partner of others; or 34 |
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| 449 | 449 | | |
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| 450 | 450 | | |
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| 451 | 451 | | LC001400 - Page 13 of 14 |
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| 452 | 452 | | (3) Become an endorser, surety, or obligor on investments by the board. 1 |
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| 453 | 453 | | 35-23-16. Duties of board and staff. 2 |
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| 454 | 454 | | The board, commission, and the program administrator and staff, including contracted 3 |
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| 455 | 455 | | administrators and consultants, shall discharge their duties as fiduciaries with respect to the 4 |
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| 456 | 456 | | program. 5 |
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| 457 | 457 | | For the exclusive purposes of providing benefits to program participants and defraying 6 |
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| 458 | 458 | | reasonable expenses of administering the program. 7 |
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| 459 | 459 | | 35-23-17. Penalties. 8 |
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| 460 | 460 | | (a) The board shall have the power and duties necessary to administer the enforcement of 9 |
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| 461 | 461 | | employer compliance with this chapter, including the ability to impose penalties. 10 |
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| 462 | 462 | | (b)(1) The board shall issue a notice of noncompliance to each employer that fails to allow 11 |
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| 463 | 463 | | its eligible employees to participate in the Rhode Island secure choice savings retirement program 12 |
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| 464 | 464 | | pursuant to this title. 13 |
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| 465 | 465 | | (2) Each eligible employer that, without good cause, fails to allow its eligible employees 14 |
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| 466 | 466 | | to participate in the program within thirty (30) days from the date the notice of penalty was issued, 15 |
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| 467 | 467 | | shall be subject to a penalty of two hundred fifty dollars ($250) per eligible employee. Proceeds of 16 |
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| 468 | 468 | | such penalties, after deducting enforcement expenses, shall be deposited for the benefit of the 17 |
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| 469 | 469 | | program. 18 |
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| 470 | 470 | | (c) The director of labor and training shall assist the board in its enforcement of this chapter. 19 |
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| 471 | 471 | | 35-23-18. Rules and regulations. 20 |
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| 472 | 472 | | (a) The board may adopt rules and regulations to implement this chapter. 21 |
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| 473 | 473 | | (b) The tax administrator in consultation with the board shall adopt rules and regulations 22 |
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| 474 | 474 | | regarding the reporting and the deferral of taxes in accordance with the provisions of this chapter. 23 |
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| 475 | 475 | | 35-23-19. Effect on benefit means test. 24 |
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| 476 | 476 | | A payroll deposit IRA arrangement offered pursuant to the RISavers retirement savings 25 |
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| 477 | 477 | | program shall have the same status as, and be treated consistently with, any other IRA for the 26 |
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| 478 | 478 | | purpose of determining eligibility or benefit level for a program that uses a means test. 27 |
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| 479 | 479 | | 35-23-20. Liberal Construction. 28 |
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| 480 | 480 | | This chapter shall be construed liberally in order to effectuate its purpose. The purposes of 29 |
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| 481 | 481 | | this chapter and all of its provisions with respect to the powers granted shall be broadly interpreted 30 |
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| 482 | 482 | | to effectuate that intent and purposes and not as to any limitation of powers. 31 |
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| 483 | 483 | | SECTION 2. This act shall take effect upon passage. 32 |
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| 484 | 484 | | ======== |
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| 485 | 485 | | LC001400 |
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| 486 | 486 | | ======== |
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| 487 | 487 | | |
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| 488 | 488 | | |
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| 489 | 489 | | LC001400 - Page 14 of 14 |
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| 490 | 490 | | EXPLANATION |
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| 491 | 491 | | BY THE LEGISLATIVE COUNCIL |
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| 492 | 492 | | OF |
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| 493 | 493 | | A N A C T |
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| 494 | 494 | | RELATING TO PUBLIC FINANCE -- RHODE ISLAND SECURE CHOICE RETIREMENT |
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| 495 | 495 | | SAVINGS PROGRAM ACT |
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| 496 | 496 | | *** |
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| 497 | 497 | | This act would establish the Rhode Island secure choice retirement savings program 1 |
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| 498 | 498 | | administered by a newly established public corporation charged with promoting greater retirement 2 |
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| 499 | 499 | | savings for Rhode Island private sector employees in a convenient, voluntary, low-cost, and 3 |
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| 500 | 500 | | portable manner. The board of this corporation would be charged with collecting contributions 4 |
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| 501 | 501 | | through payroll deductions and investing these funds in accordance best practice for retirement 5 |
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| 502 | 502 | | savings vehicles. The board would also be responsible for encouraging employee participation and 6 |
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| 503 | 503 | | ensuring ease of administration for participating employers and portability of retirement benefits 7 |
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| 504 | 504 | | for participating employees. Eligible employers who do not participate and do not otherwise offer 8 |
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| 505 | 505 | | a retirement savings program as defined herein shall be subject to fines but only after the expiration 9 |
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| 506 | 506 | | of thirty (30) days following written notice of noncompliance. The act would take effect upon 10 |
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| 507 | 507 | | passage and become effective for all eligible employers within thirty-six (36) months of the board 11 |
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| 508 | 508 | | opening the program enrollment. 12 |
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| 509 | 509 | | This act would take effect upon passage. 13 |
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| 510 | 510 | | ======== |
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| 511 | 511 | | LC001400 |
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| 512 | 512 | | ======== |
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