Tennessee 2025-2026 Regular Session

Tennessee House Bill HB0017 Compare Versions

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

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2	2	<BillNo> <Sponsor>
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4	4	HOUSE BILL 17
5	5	By Baum
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8	8	HB0017
9	9	000489
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12	12	AN ACT to amend Tennessee Code Annotated, Title 4;
13	13	Title 8; Title 9 and Title 50, relative to retirement.
14	14
15	15	BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF TENNESSEE:
16	16	SECTION 1. Tennessee Code Annotated, Title 8, Chapter 5, is amended by adding the
17	17	following as a new part:
18	18	8-5-301. This part is known and may be cited as the "Tennessee Retirement
19	19	Savings Plan Act."
20	20	8-5-302.
21	21	(a) There is created a Tennessee retirement savings board consisting of
22	22	seven (7) members as follows:
23	23	(1) The state treasurer or the treasurer's designee;
24	24	(2) The following members, appointed by the governor:
25	25	(A) A representative of employers;
26	26	(B) A representative with experience in the field of
27	27	investments;
28	28	(C) A representative of an association representing
29	29	employees; and
30	30	(D) A member of the public who is retired;
31	31	(3) A member of the senate, appointed by the speaker of the
32	32	senate to be a nonvoting advisory member of the board; and
33	33	(4) A member of the house of representatives, appointed by the
34	34	speaker of the house of representatives to be a nonvoting advisory
35	35	member of the board.
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40	40	(b)
41	41	(1) The governor and the speakers of the senate and the house
42	42	of representatives shall first make appointments to the Tennessee
43	43	retirement savings board for terms of office beginning on January 1,
44	44	2026.
45	45	(2) Notwithstanding the term of office specified by subsection (c),
46	46	of the members first appointed to the Tennessee retirement savings
47	47	board by the governor:
48	48	(A) The representative of employers shall serve for a term
49	49	ending December 31, 2027;
50	50	(B) The representative of an association representing
51	51	employees shall serve for a term ending December 31, 2028; and
52	52	(C) The two (2) other members shall serve for a term
53	53	ending December 31, 2029.
54	54	(c) The term of office of each member of the board appointed by the
55	55	governor is four (4) years, but a member serves at the pleasure of the governor.
56	56	A member is eligible for reappointment. If there is a vacancy for any cause, then
57	57	the governor shall make an appointment to become immediately effective for the
58	58	unexpired term.
59	59	(d) Each legislative member serves at the pleasure of the appointing
60	60	authority and may serve as long as the member remains in the chamber of the
61	61	general assembly from which the member was appointed.
62	62	(e) The state treasurer or the treasurer's designee appointed to the board
63	63	under subdivision (a)(1) shall serve as chair of the board.
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68	68	(f) A majority of the voting members of the board constitutes a quorum
69	69	for the transaction of business.
70	70	(g)
71	71	(1) The members of the board who are not governmental
72	72	employees or public officials shall be paid a per diem of seventy-five
73	73	dollars ($75.00) for attending board meetings.
74	74	(2) Each member is entitled to reimbursement for travel and other
75	75	necessary expenses incurred in the performance of official duties in
76	76	accordance with the state comprehensive travel regulations as
77	77	promulgated by the commissioner of finance and administration and
78	78	approved by the attorney general and reporter.
79	79	(h) The board is administratively attached to the department of treasury,
80	80	and department staff shall provide administrative support to the board.
81	81	8-5-303.
82	82	(a) The Tennessee retirement savings board shall develop a defined
83	83	contribution retirement plan for residents of this state who are employed for
84	84	compensation in this state. The board shall conduct a market and legal analysis
85	85	of the plan.
86	86	(b) The board has the following powers:
87	87	(1) To establish, implement, and maintain the plan developed
88	88	under this section;
89	89	(2) To promulgate rules as are necessary to carry out the purpose
90	90	and intent of this part, and to ensure that the plan complies with
91	91	applicable federal and state laws, rules, regulations, notices, and
92	92
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96	96	interpretations. All rules must be promulgated in accordance with the
97	97	Uniform Administrative Procedures Act, compiled in title 4, chapter 5;
98	98	(3) To direct the investment of the funds contributed to accounts
99	99	in the plan consistent with the investment restrictions established by the
100	100	board. The investment restrictions must be consistent with the objectives
101	101	of the plan, and the board shall exercise the judgment and care then
102	102	prevailing that persons of prudence, discretion, and intelligence exercise
103	103	in the management of their own affairs with due regard to the probable
104	104	income and level of risk from certain types of investments of money, in
105	105	accordance with the policies established by the board;
106	106	(4) To collect application, account, or administrative fees to defray
107	107	the costs of administering the plan;
108	108	(5)
109	109	(A) To make or enter into contracts or agreements with:
110	110	(i) Financial institutions, depositories, consultants,
111	111	actuaries, auditors, investment advisers, investment
112	112	managers, third-party administrators, or other consultants
113	113	and professionals as necessary to carry out the duties and
114	114	responsibilities under this part and the plan established by
115	115	the board;
116	116	(ii) Individuals or entities providing research,
117	117	technical assistance, or technology; and
118	118	(iii) State agencies to assist the board in the
119	119	fulfilment of its duties;
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124	124	(B) All expenses and fees incidental to the services
125	125	described in subdivision (b)(5)(A) must be charged to and paid
126	126	from participant accounts;
127	127	(6) To evaluate the need for, and procure as needed, pooled
128	128	private insurance of the plan;
129	129	(7) To develop and implement an outreach plan to gain input and
130	130	disseminate information regarding the plan and retirement savings in
131	131	general; and
132	132	(8) To delegate to the state treasurer the day-to-day
133	133	administration, operations, and responsibilities of the plan, including, but
134	134	not limited to:
135	135	(A) Exercising the duties and responsibilities contained in
136	136	this part to implement the purpose of this part;
137	137	(B) Assigning duties and responsibilities to the state
138	138	treasurer's staff, private vendors, or contractors, as the state
139	139	treasurer deems necessary and proper;
140	140	(C) Consulting with professionals as necessary about the
141	141	administration of the plan; and
142	142	(D) Establishing policies, guidelines, and operating
143	143	procedures in accordance with this part.
144	144	8-5-304.
145	145	(a) The plan developed and established by the Tennessee retirement
146	146	savings board under § 8-5-303 must:
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151	151	(1) Allow eligible individuals employed for compensation in this
152	152	state to contribute to an account established under the plan through
153	153	payroll deduction;
154	154	(2) Require an employer with more than five (5) employees to
155	155	offer its employees the opportunity to contribute to the plan through
156	156	payroll deductions unless the employer offers a qualified retirement plan,
157	157	including, but not limited to, a plan qualified under Section 401(a), 401(k),
158	158	403(a), 403(b), 408(k), 408(p), or 457(b) of the Internal Revenue Code
159	159	(U.S.C. title 26);
160	160	(3) Provide for automatic enrollment of employees and allow
161	161	employees to opt out of the plan;
162	162	(4) Have a default contribution rate of five percent (5%) of wages
163	163	or salary;
164	164	(5) Offer default escalation of contribution levels that can be
165	165	increased or decreased within the limits allowed by the Internal Revenue
166	166	Code (U.S.C. title 26);
167	167	(6) Provide for contributions to the plan to be deposited directly
168	168	with the investment administrator for the plan;
169	169	(7) Whenever possible, use existing employer and public
170	170	infrastructure to facilitate contributions to the plan, recordkeeping, and
171	171	outreach;
172	172	(8) Require no employer contributions to employee accounts;
173	173	(9) Require the maintenance of separate records and accounting
174	174	for each plan account;
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179	179	(10) Provide for reports on the status of plan accounts to be
180	180	provided to plan participants at least annually;
181	181	(11) Allow for account owners to maintain an account regardless
182	182	of place of employment and to roll over funds into other retirement
183	183	accounts;
184	184	(12) Pool accounts established under the plan for investment;
185	185	(13) Be professionally managed;
186	186	(14) Provide that the state of Tennessee and employers that
187	187	participate in the plan have no proprietary interest in the contributions to
188	188	or earnings on amounts contributed to accounts established under the
189	189	plan;
190	190	(15) Provide that the investment administrator for the plan is the
191	191	trustee of all contributions and earnings on amounts contributed to
192	192	accounts established under the plan;
193	193	(16) Not impose any duties under the Employee Retirement
194	194	Income Security Act of 1974 (29 U.S.C. § 1001 et seq.) on employers;
195	195	(17) Keep administration fees in the plan low;
196	196	(18) Allow the use of private sector partnerships to administer and
197	197	invest the contributions to the plan under the supervision and guidance of
198	198	the board; and
199	199	(19) Allow employers to establish an alternative retirement plan
200	200	for some or all employees.
201	201	(b) The plan, the board, each board member, and the state of Tennessee
202	202	shall not guarantee any rate of return or any interest rate on any contribution.
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207	207	The plan, the board, each board member, and the state of Tennessee are not
208	208	liable for any loss incurred by any person as a result of participating in the plan.
209	209	8-5-305. The Tennessee retirement savings board shall adopt rules that:
210	210	(1) Establish the process for voluntary enrollment in the plan developed
211	211	under § 8-5-303, including procedures for automatic enrollment of employees
212	212	and for employees to opt out of the plan;
213	213	(2) Establish the process for participants to make the default
214	214	contributions to plan accounts and to adjust the contribution levels;
215	215	(3) Establish the process for employers to withhold employee
216	216	contributions to plan accounts from employees' wages and send the contributions
217	217	to the investment administrator for the plan;
218	218	(4) Establish the process for allowing employees to opt out of enrollment
219	219	in the plan;
220	220	(5) Set minimum, maximum, and default contribution levels in
221	221	accordance with limits established by the Internal Revenue Code (U.S.C. title
222	222	26);
223	223	(6) Establish the process for withdrawals from plan accounts;
224	224	(7) Establish the process and requirements for an employer to obtain an
225	225	exemption from offering the plan if the employer offers a qualified retirement
226	226	plan, including, but not limited to, a plan qualified under Section 401(a), 401(k),
227	227	403(a), 403(b), 408(k), 408(p), or 457(b) of the Internal Revenue Code (U.S.C.
228	228	title 26);
229	229	(8) Mandate the contents and frequency of required disclosures to
230	230	employees, employers, and other plan participants. These disclosures must
231	231	include, but need not be limited to:
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236	236	(A) The benefits and risks associated with making contributions to
237	237	the plan;
238	238	(B) Instructions for making contributions to the plan;
239	239	(C) How to opt out of the plan;
240	240	(D) How to participate in the plan with a level of contributions
241	241	other than the default rate;
242	242	(E) The process for withdrawal of retirement savings;
243	243	(F) How to obtain additional information about the plan;
244	244	(G) That employees seeking financial advice should contact
245	245	financial advisers, that participating employers are not in a position to
246	246	provide financial advice, and that participating employers are not liable for
247	247	decisions employees make pursuant to this part;
248	248	(H) That the plan is not an employer-sponsored retirement plan;
249	249	and
250	250	(I) That the plan accounts and rate of return are not guaranteed
251	251	by the state; and
252	252	(9) Establish civil penalties for the employer's noncompliance with its
253	253	participation in the plan as provided in this part.
254	254	8-5-306.
255	255	(a) Notwithstanding another law to the contrary, the state shall not
256	256	disclose personal information about a participant or beneficiary of a participant
257	257	obtained in connection with an account established under this part, except under
258	258	the following circumstances:
259	259	(1) To an individual or entity authorized by the respective
260	260	participant or beneficiary;
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265	265	(2) In compliance with a subpoena or a court order;
266	266	(3) To the comptroller of the treasury or the comptroller's
267	267	designee for the purpose of an audit;
268	268	(4) To the internal revenue service or the United States
269	269	department of treasury;
270	270	(5) To the participant's employer as may be necessary to
271	271	administer the plan; or
272	272	(6) In an administrative proceeding or court action involving the
273	273	state, the department of treasury, the state treasurer, or the board relative
274	274	to an account established under this part.
275	275	(b) As used in this section, "personal information" includes, but is not
276	276	limited to:
277	277	(1) Social security numbers;
278	278	(2) Bank account numbers;
279	279	(3) Transit routing numbers;
280	280	(4) Credit card numbers;
281	281	(5) Debit card numbers;
282	282	(6) Business or residential addresses;
283	283	(7) Telephone numbers;
284	284	(8) Email addresses;
285	285	(9) Amounts contributed; and
286	286	(10) Earnings on amounts contributed.
287	287	(c) Notwithstanding a law to the contrary and except as provided in
288	288	subsection (d):
289	289
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293	293	(1) All assets, income, and distributions of the plan are protected
294	294	against the claims of creditors of the state, plan administrator, and plan
295	295	participants, and are not subject to execution, attachment, garnishment,
296	296	the operation of bankruptcy, the insolvency laws, or other processes; and
297	297	(2) An assignment of the items described in subdivision (c)(1) is
298	298	not enforceable in a court.
299	299	(d) The board may adopt rules as provided in § 8-5-303(b)(2) to permit
300	300	the plan to honor claims under a qualified domestic relations order. As used in
301	301	this subsection (d), "qualified domestic relations order" has the same meaning as
302	302	provided in § 414(p) of the Internal Revenue Code of 1986 (26 U.S.C. § 414(p)).
303	303	However, such an order may only relate to the provision of marital property rights
304	304	relating to the plan for the benefit of a plan participant's former spouse.
305	305	8-5-307.
306	306	(a) The Tennessee retirement savings plan administrative fund is
307	307	established in the state treasury, separate and distinct from the general fund.
308	308	Interest earned by the Tennessee retirement savings plan administrative fund
309	309	must be credited to the fund. Moneys in the fund are continuously appropriated
310	310	to the Tennessee retirement savings board.
311	311	(b) The Tennessee retirement savings plan administrative fund consists
312	312	of:
313	313	(1) Moneys appropriated to the fund by the general assembly;
314	314	(2) Moneys transferred to the fund from the federal government,
315	315	other state agencies, or local governments;
316	316	(3) Moneys from the payment of fees and the payment of other
317	317	moneys due the board;
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322	322	(4) Any gifts or donations made to the state of Tennessee for
323	323	deposit in the fund; and
324	324	(5) Earnings on moneys in the fund.
325	325	(c) The board may use the moneys in the fund to pay the administrative
326	326	costs and expenses of the board and the plan developed under § 8-5-303 and for
327	327	any other purpose described in this part.
328	328	8-5-308.
329	329	(a) Before establishing a plan developed under § 8-5-303, the
330	330	Tennessee retirement savings board shall:
331	331	(1) Conduct a market analysis to determine:
332	332	(A) The feasibility of the plan; and
333	333	(B) Whether and to what extent plans with the
334	334	characteristics described in § 8-5-304 currently exist in the private
335	335	market;
336	336	(2) Obtain legal advice regarding the applicability of the Employee
337	337	Retirement Income Security Act of 1974 (29 U.S.C. § 1001 et seq.) and
338	338	the Internal Revenue Code (U.S.C. title 26) to the plan;
339	339	(3) Investigate whether employers that are not required to
340	340	participate in the plan can make the plan available to their employees;
341	341	(4) Investigate whether individuals who are self-employed as
342	342	independent contractors can participate in the plan; and
343	343	(5) Investigate how to allow individuals who are not automatically
344	344	enrolled in the plan to opt in to the plan and make contributions to an
345	345	account, either through payroll contributions or another method of
346	346	contribution.
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351	351	(b) The board shall coordinate with the efforts of other states as those
352	352	states pursue legal guidance for similar retirement savings programs.
353	353	8-5-309.
354	354	The Tennessee retirement savings board shall report no later than
355	355	February 1 each year to the governor and to the finance, ways and means
356	356	committees of the house of representatives and the senate detailing the board's
357	357	activities.
358	358	8-5-310.
359	359	(a) Except for retirement plans offered by a local government to its
360	360	independent contractors on the effective date of this act, a local government shall
361	361	not establish or offer a retirement plan for persons not employed by a
362	362	governmental entity.
363	363	(b) As used in this section, "local government" means a Tennessee local
364	364	governmental entity, including, but not limited to, a municipality, metropolitan
365	365	government, county, utility district, school district, public building authority, and
366	366	development district created and existing pursuant to the laws of this state, or an
367	367	instrumentality of government created by one (1) or more of the local
368	368	governmental entities described in this subsection (b) or by an act of the general
369	369	assembly.
370	370	8-5-311.
371	371	Each state agency that enters into an interagency agreement with the
372	372	Tennessee retirement savings board to provide outreach, technical assistance,
373	373	or compliance services shall collaborate with other state agencies to develop a
374	374	plan to provide these services to the board. This plan must be provided to the
375	375	board no later than July 1, 2026.
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380	380	8-5-312.
381	381	The Tennessee retirement savings board shall report to the finance, ways
382	382	and means committees of the house of representatives and the senate no later
383	383	than July 1, 2026. The report must include:
384	384	(1) The results of the market analysis sought by the board under
385	385	§ 8-5-308(a)(1);
386	386	(2) The findings from legal advice obtained by the board under §
387	387	8-5-308(a)(2);
388	388	(3) An analysis of potential costs to employers, including
389	389	administrative costs, associated with providing automatic payroll
390	390	deductions for participation in the plan, and recommendations on how to
391	391	eliminate or reduce those costs through incentives, tax credits, or other
392	392	means;
393	393	(4) A draft of the request for proposals to solicit bids from plan
394	394	administrators;
395	395	(5) A timeline for implementation of the plan developed under § 8-
396	396	5-303;
397	397	(6) An overview of any contracts entered into by the board in the
398	398	performance of its duties; and
399	399	(7) Recommendations to the general assembly regarding ways to
400	400	increase financial literacy in this state.
401	401	8-5-313.
402	402	(a) Except as provided in subsection (b), the Tennessee retirement
403	403	savings board shall establish the retirement plan developed under § 8-5-303 so
404	404
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408	408	that individuals may begin making contributions to the plan no later than January
409	409	1, 2028.
410	410	(b) If the board determines that the plan developed by the board under §
411	411	8-5-303 would qualify as an employee benefit plan under the Employee
412	412	Retirement Income Security Act of 1974 (29 U.S.C. § 1001 et seq.), then the
413	413	board shall not establish the plan.
414	414	(c) Subject to this part:
415	415	(1) Beginning January 1, 2028, a resident of this state employed
416	416	for compensation in this state with a private employer employing more
417	417	than one hundred (100) employees is eligible to participate in a defined
418	418	contribution retirement plan established by the Tennessee retirement
419	419	savings board under this part;
420	420	(2) Beginning January 1, 2029, a resident of this state employed
421	421	for compensation in this state with a private employer employing between
422	422	twenty-five (25) and one hundred (100) employees is eligible to
423	423	participate in a defined contribution retirement plan established by the
424	424	Tennessee retirement savings board under this part;
425	425	(3) Beginning January 1, 2030, a resident of this state employed
426	426	for compensation in this state with a private employer that has between
427	427	five (5) and twenty-four (24) employees is eligible to participate in a
428	428	defined contribution retirement plan established by the Tennessee
429	429	retirement savings board under this part; and
430	430	(4) Prior to an employer's participation in the plan, the employer
431	431	shall register with the board to determine whether the employer is
432	432	required to participate in the plan.
433	433
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437	437	SECTION 2. Tennessee Code Annotated, Section 4-29-246(a), is amended by adding
438	438	the following as a new subdivision:
439	439	( ) Tennessee retirement savings board, created by § 8-5-302;
440	440	SECTION 3. This act takes effect upon becoming a law, the public welfare requiring it.