2020 -- H 7461 | |
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LC003219 | |
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STATE OF RHODE ISLAND | |
IN GENERAL ASSEMBLY | |
JANUARY SESSION, A.D. 2020 | |
____________ | |
A N A C T | |
RELATING TO PUBLIC FINANCE -- ESTABLISHING RHODE ISLAND SECURE CHOICE | |
RETIREMENT SAVINGS TRUST ACT | |
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Introduced By: Representatives Shanley, Shekarchi, Barros, Vella-Wilkinson, and | |
Date Introduced: February 06, 2020 | |
Referred To: House Finance | |
It is enacted by the General Assembly as follows: | |
1 | SECTION 1. Title 35 of the General Laws entitled "PUBLIC FINANCE" is hereby |
2 | amended by adding thereto the following chapter: |
3 | CHAPTER 23 |
4 | RHODE ISLAND SECURE CHOICE RETIREMENT SAVINGS TRUST ACT |
5 | 35-23-1. Short title. |
6 | This chapter shall be known and may be cited as the "Rhode Island Secure Choice |
7 | Retirement Savings Trust Act." |
8 | 35-23-2. Definitions. |
9 | As used in this chapter: |
10 | (1) "Board" means the Rhode Island secure choice retirement savings investment board. |
11 | (2) "RISavers retirement savings program" or "program" means a retirement savings |
12 | program offered by the Rhode Island secure choice retirement savings trust. |
13 | (3) "Eligible employee" means a person who is employed by an eligible employer. |
14 | "Eligible employee" does not include: |
15 | (i) Any employee covered under the federal Railway Labor Act (45 U.S.C. Sec. 151), or |
16 | any employee engaged in interstate commerce not subject to the legislative powers of the state, |
17 | except insofar as application of this chapter is authorized under the United States Constitution or |
18 | laws of the United States; or |
| |
1 | (ii) Any employee on whose behalf an employer makes contributions to a Taft-Hartley |
2 | pension trust fund. |
3 | (4) "Eligible employer" means a person or entity engaged in a business, industry, |
4 | profession, trade, or other enterprise in the state, whether for-profit or not-for-profit, excluding |
5 | the federal government, the state, any county, any municipal corporation, or any of the state's |
6 | units or instrumentalities, that has five (5) or more employees and that satisfies the requirements |
7 | to establish or participate in a payroll deposit retirement savings arrangement or an employer of a |
8 | provider of in-home supportive services. "Eligible employer" does not include an employer that |
9 | provides a retirement savings program as described in § 35-23-16. |
10 | (5) "IRA" means an individual retirement account or individual retirement annuity under |
11 | Section 408(a), 408(b), or 408A of Title 26 of the United States Code. |
12 | (6) "Participating employer" means an eligible employer that provides a payroll deposit |
13 | retirement savings arrangement provided for by this chapter for eligible employees. |
14 | (7) "Payroll deposit retirement savings arrangement" means an arrangement by which an |
15 | employer allows employees to remit payroll deduction contributions to a retirement savings |
16 | program, which may include an IRA, and in the case of a payroll deduction IRA arrangement, to |
17 | remit specifically to an IRA. |
18 | (8) "Trust" means the Rhode Island secure choice retirement savings trust established by |
19 | this chapter. |
20 | (9) "Vendor" means an investment company registered or exempt from registration |
21 | pursuant to the provisions of the general laws or a life insurance company qualified to do business |
22 | in Rhode Island that provides retirement investment products. "Vendor" also includes a company |
23 | that is registered to do business in Rhode Island that provides payroll services or recordkeeping |
24 | services and offers retirement plans or payroll deduction IRA arrangements using products of |
25 | regulated investment companies and insurance companies qualified to do business in Rhode |
26 | Island. "Vendor" shall include individual registered representatives, brokers, financial planners, |
27 | or agents. |
28 | 35-23-3. Creation, membership, and terms of the Rhode Island secure choice |
29 | retirement savings investment board. |
30 | (a) There is authorized, created, and established a public corporation of the state, having a |
31 | distinct legal existence from the state and not constituting a department of the state government, |
32 | with the politic and corporate powers set forth in this chapter, to be known as the Rhode Island |
33 | secure choice retirement savings investment board (the "board"), to carry out the provisions of |
34 | this chapter. The board is constituted as a public instrumentality and agency exercising public and |
| LC003219 - Page 2 of 18 |
1 | essential governmental functions, and the exercise by the board of the powers conferred by this |
2 | chapter shall be deemed and held to be the performance of an essential governmental function of |
3 | the state. |
4 | (b) It is the intent of the general assembly by the passage of this chapter to create and |
5 | establish a public corporation and instrumentality and agency of the state for the purpose of the |
6 | activities authorized by this chapter, and to vest the corporation with all powers, authority, rights, |
7 | privileges, and titles that may be necessary to enable it to accomplish those purposes. This |
8 | chapter shall be liberally construed in conformance with the purpose expressed in this section. |
9 | (c) The powers of the corporation shall be vested in nine (9) members, consisting of the |
10 | general treasurer, or designee, who shall act as chairperson; the director of administration, or |
11 | designee; the director of the department of business regulation, or designee; an individual with |
12 | retirement and investment expertise to be appointed by the governor with advice and consent of |
13 | the senate for an initial term of two (2) years; a member of the public to be appointed by the |
14 | governor with advice and consent of the senate for an initial term of one year; an individual with |
15 | small business administration experience to be appointed by the governor with the advice and |
16 | consent of the senate, for an initial term of two (2) years; an individual with expertise in finances |
17 | or investments to be appointed by the governor with the advice and consent of the senate, for an |
18 | initial term of three (3) years; a certified public accountant to be appointed by the governor with |
19 | the advice and consent of the senate, for an initial term of three (3) years; and an individual with |
20 | expertise in retirement planning to be appointed by the governor with the advice and consent of |
21 | the senate, for an initial term of one year. |
22 | (d) After the initial term, all appointed members shall serve staggered three (3) year terms |
23 | or until their respective successors are appointed and qualified after expiration of the appointed |
24 | term. |
25 | (e) Any vacancy occurring in the office of a member by death, resignation, or otherwise |
26 | shall be filled in the same manner as the original appointment. |
27 | (f) Members shall receive no compensation for the performance of their duties but may |
28 | be reimbursed reasonable expenses. |
29 | (g) The members of the board shall at regular intervals at least eight (8) times a year |
30 | conduct business meetings for the purpose of carrying out its general business. The meetings shall |
31 | be open to the public and all records and minutes will be a matter of public record. The board |
32 | shall be considered a "public body" and shall be subject to the provisions of chapter 46 of title 42 |
33 | ("open meetings") and to the provisions of title 38 concerning public records. |
34 | (h) The board shall continue until its existence is terminated by law. |
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1 | (i) The state shall indemnify and hold harmless every past, present, or future member, |
2 | officer, or employee of the board who is made a party to or is required to testify in any action, |
3 | investigation, or other proceeding in connection with or arising out of the performance or alleged |
4 | lack of performance of that person's duties on behalf of the corporation. These persons shall be |
5 | indemnified and held harmless, whether they are sued individually or in their capacities as |
6 | members, officers, or employees of the board, for all expenses, legal fees and/or costs incurred by |
7 | them during or resulting from the proceedings, and for any award or judgment arising out of their |
8 | service to the corporation that is not paid by the board and is sought to be enforced against a |
9 | person individually, as expenses, legal fees, costs, awards or judgments occur. Provided, |
10 | however, that neither the state nor the corporation shall indemnify any member, officer, or |
11 | employee: |
12 | (1) For acts or omissions not in good faith or which involve intentional misconduct or a |
13 | knowing violation of law; |
14 | (2) For any transaction from which the member derived an improper personal benefit; or |
15 | (3) For any malicious act. |
16 | (j) No one shall be eligible for appointment unless they are a resident of the state. |
17 | 35-23-4. Rhode Island secure choice retirement savings trust. |
18 | (a) There is hereby established a retirement savings trust known as the Rhode Island |
19 | secure choice retirement savings trust to be administered by the board for the purpose of |
20 | promoting greater retirement savings for Rhode Island private employees in a convenient, |
21 | voluntary, low-cost, and portable manner. After sufficient funds are made available for this |
22 | chapter to be operative, the Rhode Island secure choice retirement savings trust, as a self- |
23 | sustaining trust, shall pay all costs of administration only out of monies on deposit therein. |
24 | (b) The board shall segregate monies received by the Rhode Island secure choice |
25 | retirement savings trust into two (2) funds, which shall be identified as the program fund and the |
26 | administrative fund. Monies in the trust may be hereby continuously appropriated, without regard |
27 | to fiscal years, to the board for the purposes of this chapter. |
28 | (c) Monies in the program fund may be invested or reinvested by the treasurer or may be |
29 | invested in whole or in part under contract with the board of a Rhode Island public retirement |
30 | system, with private money managers, or a combination thereof, as determined by the board. |
31 | (d) Transfers may be made from the program fund to the administrative fund for the |
32 | purpose of paying operating costs associated with administering the trust and as required by this |
33 | chapter, including, but not limited to, board operations, program administrator and investment |
34 | expenses, and enforcement and compliance costs. On and after six (6) years from the date the |
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1 | program is implemented, on an annual basis, expenditures from the administrative fund shall not |
2 | exceed more than one percent (1%) of the total program fund. All costs of administration of the |
3 | trust shall be paid out of the administrative fund. |
4 | (e) Any contributions paid by employees and employers into the trust shall be used |
5 | exclusively for the purpose of paying benefits to the participants of the RISavers retirement |
6 | savings program, for the cost of administration of the program, and for investments made for the |
7 | benefit of the program. |
8 | (f) The Rhode Island secure choice retirement savings trust is an instrumentality of the |
9 | state. Any security issued, managed, or invested by the Rhode Island secure choice retirement |
10 | savings investment board within the Rhode Island secure choice retirement savings trust on |
11 | behalf of an individual participating within the RISavers retirement savings program shall be state |
12 | income tax deferred for investment earnings to include interest, dividends and capital gains until |
13 | such time as withdrawal pursuant to the terms of this chapter. |
14 | 35-23-5. Payroll deduction. |
15 | The RISavers retirement savings program shall include, as determined by the board, one |
16 | or more payroll deduction IRA arrangements. |
17 | 35-23-6. Powers of the board. |
18 | (a) The board shall have the power and authority to do all of the following: |
19 | (1) Make and enter into contracts necessary for the administration of the trust; |
20 | (2) Adopt a seal and change and amend it from time to time; |
21 | (3) Cause monies in the program fund to be held and invested and reinvested; |
22 | (4) Accept any grants, gifts, legislative appropriation, and other monies from the state, |
23 | any unit of federal, state, or local government or any other person, firm, partnership, or |
24 | corporation for deposit to the administrative fund or the program fund; |
25 | (5) Contract with a program administrator and determine the duties of the program |
26 | administrator. The treasurer shall, on behalf of the board, appoint an executive director, who shall |
27 | not be a member of the board and who shall serve at the pleasure of the board. The treasurer shall |
28 | determine the duties of the executive director and other staff as appropriate and set their |
29 | compensation. The board may authorize the executive director to enter into contracts on behalf of |
30 | the board or conduct any business necessary for the efficient operation of the board; |
31 | (6) Make provisions for the payment of costs of administration and operation of the trust; |
32 | (7) Employ staff; |
33 | (8) Retain and contract with the board of a Rhode Island public retirement system, private |
34 | financial institutions, other financial and service providers, consultants, actuaries, counsel, |
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1 | auditors, third-party administrators, and other professionals as necessary; |
2 | (9) Procure insurance against any loss in connection with the property, assets, or |
3 | activities of the trust; |
4 | (10) Procure insurance indemnifying each member of the board from personal loss or |
5 | liability resulting from a member's action or inaction as a member of the board; |
6 | (11) Set minimum and maximum investment levels in accordance with contribution |
7 | limits set for IRAs by the Internal Revenue Code; |
8 | (12) Collaborate and cooperate with the board of a Rhode Island public retirement |
9 | system, private financial institutions, service providers, and business, financial, trade, |
10 | membership, and other organizations to the extent necessary or desirable for the effective and |
11 | efficient design, implementation, and administration of the program and to maximize outreach to |
12 | eligible employers and eligible employees; |
13 | (13) Collaborate with, and evaluate the role of, licensed insurance agents and financial |
14 | advisors in assisting and providing guidance for eligible employees; |
15 | (14) Cause expenses incurred to initiate, implement, maintain, and administer the |
16 | program to be paid from contributions to, or investment returns or assets of, the program or |
17 | arrangements established under the program, to the extent permitted under state and federal law; |
18 | (15) Facilitate compliance by the retirement savings program or arrangements established |
19 | under the program with all applicable requirements for the program under the Internal Revenue |
20 | Code of 1986, including tax qualification requirements or any other applicable law and |
21 | accounting requirements, including providing or arranging for assistance to program sponsors and |
22 | individuals in complying with applicable law and tax qualification requirements in a cost- |
23 | effective manner; and |
24 | (16) Carry out the duties and obligations of the Rhode Island secure choice retirement |
25 | savings trust pursuant to this title and exercise any and all other powers as appropriate for the |
26 | effectuation of the purposes, objectives, and provisions of this title pertaining to the trust. |
27 | (b) The board shall adopt regulations it deems necessary to implement this chapter |
28 | consistent with the Internal Revenue Code and regulations issued pursuant to that code to ensure |
29 | that the program meets all criteria for federal tax-deferral or tax-exempt benefits, or both. |
30 | 35-23-7. Additional authority of the board. |
31 | In addition to the powers and authority granted to the board pursuant to § 35-23-6, the |
32 | board shall have the power and authority to do the following: |
33 | (1) Cause the retirement savings program or arrangements established under the program |
34 | to be designed, established, and operated, in a manner consistent with all of the following: |
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1 | (i) In accordance with best practices for retirement savings vehicles; |
2 | (ii) To encourage participation, saving, and sound investment practices, and appropriate |
3 | selection of default investments; and |
4 | (iii) With simplicity, ease of administration for participating employers, and portability of |
5 | benefits. |
6 | (2) Arrange for collective, common, and pooled investment of assets of the retirement |
7 | savings program or arrangements, including investments in conjunction with other funds with |
8 | which those assets are permitted to be collectively invested, with a view to saving costs through |
9 | efficiencies and economies of scale; |
10 | (3) Disseminate educational information designed to educate participants about the |
11 | benefits of planning and saving for retirement and information to help them decide the level of |
12 | RISavers retirement savings program participation and savings strategies that may be appropriate |
13 | for them; |
14 | (4) Disseminate information concerning tax credits available to small business owners for |
15 | allowing their employees to participate in the program, and the federal Retirement Savings |
16 | Contribution Credit (Saver's Credit) available to low- and moderate-income households for |
17 | qualified savings contributions; |
18 | (5) Submit progress and status reports to participating employers and eligible employees; |
19 | (6) If necessary, determine the eligibility of an employer, employee, or other individual to |
20 | participate in the program; |
21 | (7) Evaluate and establish the process by which an eligible employee of an eligible |
22 | employer is able to contribute a portion of their salary or wages to the program for automatic |
23 | deposit of those contributions and the participating employer provides a payroll deposit |
24 | retirement savings arrangement to forward the employee contribution and related information to |
25 | the program or its agents. This evaluation and process may include, but is not limited to, financial |
26 | services companies and third-party administrators with the capability to receive and process |
27 | employee information and contributions for payroll deposit retirement savings arrangements or |
28 | other arrangements authorized by this chapter; |
29 | (8) Design and establish the process for the enrollment of program participants; |
30 | (9) Allow participating employers to use the program to remit employees' contributions |
31 | to their IRAs on their employees' behalf; |
32 | (10) Allow participating employers to make their own contributions to their employees' |
33 | IRAs, provided that the contributions would be permitted under the Internal Revenue Code and |
34 | would not cause the program to be treated as an employee benefit plan under the federal |
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1 | Employee Retirement Income Security Act; and |
2 | (11) Evaluate and establish the process by which an individual or an employee of a |
3 | nonparticipating employer may enroll in and make contributions to the program. |
4 | 35-23-8. Disclosure of information. |
5 | (a) Prior to opening the RISavers retirement savings program for enrollment, the board |
6 | shall design and disseminate to employers an employee information packet that shall be available |
7 | in an electronic format. The packet shall include background information on the program and |
8 | appropriate disclosures for employees. |
9 | (b) The disclosure form shall include, but not be limited to, all of the following: |
10 | (1) The benefits and risks associated with making contributions to the program; |
11 | (2) The mechanics of how to make contributions to the program; |
12 | (3) How to opt out of the program; |
13 | (4) The process for withdrawal of retirement savings; and |
14 | (5) How to obtain additional information on the program. |
15 | (c) In addition, the disclosure form shall clearly articulate the following: |
16 | (1) Employees seeking financial advice should contact financial advisors in that |
17 | employers do not provide financial advice, that employees are not to contact their employers for |
18 | financial advice, and that employers are not liable for employee investment decisions; |
19 | (2) This retirement program is not sponsored by the employer, and therefore the employer |
20 | is not responsible for the plan or liable as a plan sponsor; and |
21 | (3) The program fund is not guaranteed by the state. |
22 | (d) The disclosure form shall include a method for the employee to acknowledge that the |
23 | employee has read all of the disclosures and understands their content. |
24 | (e) The employee information packet shall also include an opt-out form for an eligible |
25 | employee to note their decision to opt out of participation in the program. The opt-out form shall |
26 | be simple and concise and drafted in a manner that the board deems necessary to appropriately |
27 | evidence the employee's understanding that they are choosing not to automatically deduct |
28 | earnings to save for retirement. |
29 | (f) The employee information packet with the disclosure and opt-out forms shall be made |
30 | available to eligible employees by the RISavers retirement savings program and supplied to |
31 | employees at the time of hiring. All new employees shall review the packet and acknowledge |
32 | having received it. |
33 | (g) The employee information packet with the disclosure and opt-out forms shall be |
34 | supplied to existing employees when the program is initially launched for a participating |
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1 | employer. |
2 | 35-23-9. Vendor participation. |
3 | (a) Prior to opening the RISavers retirement savings program for enrollment, if there is |
4 | sufficient interest by vendors to participate and provide the necessary funding, the board shall |
5 | establish both of the following: |
6 | (1) A retirement investments clearinghouse on its Internet website; and |
7 | (2) A vendor registration process through which information about employer-sponsored |
8 | retirement plans, and payroll deduction IRAs offered by private sector providers is made |
9 | available for consideration by eligible employers. |
10 | (b) Vendors that would like to participate in the board's retirement investments |
11 | clearinghouse and be listed on the board's Internet website as a registered vendor shall provide all |
12 | of the following information: |
13 | (1) A statement of experience in Rhode Island and in other states in providing employer- |
14 | sponsored retirement plans, and payroll deduction IRAs; |
15 | (2) A description by the vendor of the types of retirement investment products offered; |
16 | (3) A disclosure of all expenses paid directly or indirectly by retirement plan participants, |
17 | including, but not limited to, penalties for early withdrawals, declining or fixed withdrawal |
18 | charges, surrender or deposit charges, management fees, and annual fees, supported by |
19 | documentation as required for prospectus disclosure by the National Association of Securities |
20 | Dealers and the Securities and Exchange Commission. Vendors shall be required to provide |
21 | information regarding the impact of product fees upon a hypothetical investment; |
22 | (4) The types of products, product features, services offered to participants, and |
23 | information about how to access product prospectuses or other relevant product information; |
24 | (5) A discussion of the ability, experience, and commitment of the vendor to provide |
25 | retirement counseling and education services, including, but not limited to, access to group |
26 | meetings and individual counseling by various means, including telephone and |
27 | telecommunications devices for the deaf (TDD), Internet, and face-to-face consultations by |
28 | registered representatives; |
29 | (6) A statement of the financial strength of the vendor by identifying its ratings assigned |
30 | by nationally recognized rating services that evaluate the financial strength of similar companies; |
31 | (7) The location of offices and counselors, individual registered representatives, brokers, |
32 | financial planners, agents, or other methods of distribution, of the vendor that would serve |
33 | employers and their employees in Rhode Island; |
34 | (8) A description of the ability of the vendor to comply with all applicable provisions of |
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1 | federal and state law governing retirement plans, including minimum distribution requirements |
2 | and contribution limits; |
3 | (9) To the extent applicable, the demonstrated ability of the vendor to offer an |
4 | appropriate array of accumulation funding options, including, but not limited to, investment |
5 | options that offer guaranteed returns on contributions and the conversion of retirement savings |
6 | account balances to secure retirement income, a diversified mix of value, growth, growth and |
7 | income, hybrid, and index funds or accounts across large, medium, and small capitalization asset |
8 | classes, both domestic and international; |
9 | (10) A discussion of the range of administrative and customer services provided, |
10 | including asset allocation, accounting and administration of benefits for individual participants, |
11 | recordkeeping for individual participants, asset purchase, control, and safekeeping, execution of a |
12 | participant's instructions as to asset and contribution allocation, calculation of daily net asset |
13 | values, direct access for participants to their account information, periodic reporting that is not |
14 | less than quarterly to active participants on their account balances and transactions, and |
15 | compliance with the standard of care consistent with federal law and applicable to the provision |
16 | of investment services; and |
17 | (11) Certification by the vendor that the information provided to the board accurately |
18 | reflects the provisions of the retirement investment products it registers. |
19 | (c) Vendors shall supply information and data in the format prescribed by the board. |
20 | 35-23-10. Registration. |
21 | Registration shall be offered to vendors once annually, and renewal of registration shall |
22 | be required at least once every five (5) years thereafter for vendors that elect to continue to |
23 | participate in the retirement investments clearinghouse. The board shall provide public notice |
24 | prior to the initial registration, annual registration, and registration renewal periods. |
25 | 35-23-11. Vendor removal. |
26 | (a) The board may remove a vendor from the registry if the vendor submits materially |
27 | inaccurate information to the board, does not remit assessed fees within sixty (60) days, or fails to |
28 | submit notice of material changes to its registered investment products. Vendors found to have |
29 | submitted materially inaccurate information to the board shall be allowed sixty (60) days to |
30 | correct the information. |
31 | (b) The board shall remove a vendor from the registry if investments offered by the |
32 | vendor are products of a regulated investment company or insurance company that is not licensed |
33 | or has had its license revoked by the department of business regulation for engaging in conduct |
34 | prohibited by those entities. |
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1 | (c) Vendors that are denied registration or removed from the registry may appeal and |
2 | have the denial or removal reviewed pursuant to the provisions of chapter 35 of title 42, |
3 | ("administrative procedures act"). |
4 | 35-23-12. Retirement investments clearinghouse. |
5 | (a) The board shall maintain the retirement investments clearinghouse containing the |
6 | information required in § 35-23-9 about the retirement investment products offered by each |
7 | registered vendor and objective comparisons of vendors and types of products. |
8 | (b) The clearinghouse shall include information on investment performance based upon |
9 | the investment's average annual total return as measured by a nationally recognized rating service |
10 | selected by the board for standard periods of time of not less than one year. |
11 | (c) The board's Internet website shall include a table showing, for each registered fund, |
12 | the total fee cost in dollars incurred by a shareholder who initially invested five thousand dollars |
13 | ($5,000), earned a five percent (5%) rate of return for one-, five (5)-, ten (10)-, fifteen (15)-, and |
14 | twenty (20)-year time periods. This table shall be accompanied by a disclaimer that the rate of |
15 | return is for purposes of illustrating the respective impacts of different fee amounts on each |
16 | investment, and is not to predict future investment returns. |
17 | (d) The board shall include a notice of the existence of, and the Internet website address |
18 | for, the retirement investments clearinghouse in a notice disseminated to eligible employers. |
19 | 35-23-13. Failure to disclose fee. |
20 | A vendor may not charge a fee associated with a registered product that is not disclosed. |
21 | 35-23-14. Cost of vendor registration system. |
22 | (a) The actual cost of establishing the vendor registration system and the retirement |
23 | investments clearinghouse shall be borne equally by registered vendors, based on the total |
24 | number of registered vendors. Each registered vendor shall pay a one-time establishment fee |
25 | equal to a pro rata share of the establishment costs charged to vendors that register with the board |
26 | prior to the close of the initial registration period, as determined by the board. The one-time |
27 | establishment fee charged to vendors that register with the board after the completion of the |
28 | initial registration period shall be distributed equally among registered vendors that have paid the |
29 | establishment fee and credited toward subsequent maintenance and administrative fees charged to |
30 | each vendor. |
31 | (b) The actual cost of maintaining the vendor registration system and the retirement |
32 | investments clearinghouse, and the costs associated with publicizing the availability of the |
33 | clearinghouse to eligible employers, shall be borne equally by registered vendors, based on the |
34 | total number of registered vendors. Each registered vendor shall pay a renewal fee equal to a pro |
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1 | rata share of the maintenance costs, as determined by the board. |
2 | (c) Each registered vendor shall pay an administrative fee for each retirement investment |
3 | product it offers to employers, which shall represent the actual costs associated with processing |
4 | the information related to the investment option and presenting it on the retirement investments |
5 | clearinghouse, as determined by the board. |
6 | (d) The board shall not divert Rhode Island secure choice retirement savings trust funds |
7 | to establish or maintain the vendor registration system or the retirement investments |
8 | clearinghouse. |
9 | 35-23-15. Board not responsible for inaccurate information. |
10 | (a) The board and the program, and its officers and employees, are not responsible for, |
11 | and shall not be held liable for, the adequacy of the information provided by the participating |
12 | vendors and contained in the clearinghouse. The clearinghouse maintained by the board serves |
13 | only to provide information supplied by the participating vendors for the consideration of the |
14 | selection of retirement investment products. |
15 | (b) Participating vendors shall not utilize the program's logo, or claim or infer |
16 | endorsement or recommendation by the board or the program with respect to products and |
17 | services identified by the vendors in the clearinghouse. At the discretion of the board, a violation |
18 | of this section may lead to removal from the registry. |
19 | (c) The board and the program shall not be held liable for the actions of registered |
20 | vendors. |
21 | 35-23-16. Employer participation. |
22 | (a) After the board opens the RISavers retirement savings program for enrollment, any |
23 | employer may choose to have a payroll deposit retirement savings arrangement to allow |
24 | employee participation in the program under the terms and conditions prescribed by the board. |
25 | (b) Within twelve (12) months after the board opens the program for enrollment, eligible |
26 | employers with more than one hundred (100) eligible employees and that do not offer a |
27 | retirement savings program pursuant to subsection (g) of this section shall have a payroll deposit |
28 | retirement savings arrangement to allow employee participation in the program. |
29 | (c) Within twenty-four (24) months after the board opens the program for enrollment, |
30 | eligible employers with more than fifty (50) eligible employees and that do not offer a retirement |
31 | savings program pursuant to subsection (g) of this section shall have a payroll deposit retirement |
32 | savings arrangement to allow employee participation in the program. |
33 | (d) Within thirty-six (36) months after the board opens the program for enrollment, all |
34 | other eligible employers that do not offer a retirement savings program pursuant to subsection (g) |
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1 | of this section shall have a payroll deposit retirement savings arrangement to allow employee |
2 | participation in the program. |
3 | (e) The board, in its discretion, may extend the time limits defined in subsections (b) |
4 | through (d) of this section. |
5 | (f)(1) Each eligible employee shall be enrolled in the program unless the employee elects |
6 | not to participate in the program. An eligible employee may elect to opt out of the program by |
7 | making a notation on the opt-out form. |
8 | (2) Following initial implementation of the program pursuant to this section, at least once |
9 | every two (2) years, the board shall designate an open enrollment period during which eligible |
10 | employees that previously opted out of the program shall be given the employee information |
11 | packet with the disclosure and opt-out forms, for the employee to enroll in the program or opt out |
12 | of the program by making a notation on the opt-out form. |
13 | (3) An employee who elects to opt out of the program who subsequently wants to |
14 | participate through the employer's payroll deposit retirement savings arrangement may only |
15 | enroll during the board's designated open enrollment period or if permitted at an earlier time. |
16 | (g)(1) An employer that provides an employer-sponsored retirement plan, such as a |
17 | defined benefit plan or a 401(k), Simplified Employee Pension (SEP) plan, or Savings Incentive |
18 | Match Plan for Employees (SIMPLE) plan, or that offers an automatic enrollment payroll |
19 | deduction IRA, shall be exempt from the requirements of the RISavers retirement savings |
20 | program, if the plan or IRA qualifies for favorable federal income tax treatment under the federal |
21 | Internal Revenue Code. |
22 | (2) An employer shall retain the option at all times to set up and offer a tax-qualified |
23 | retirement plan, instead of having a payroll deposit retirement savings arrangement to allow |
24 | employee participation in the RISavers retirement savings program. |
25 | (h) An eligible employee may also terminate their participation in the program at any |
26 | time in a manner prescribed by the board and thereafter by making a notation on the opt-out form. |
27 | (i) Unless otherwise specified by the employee, a participating employee shall contribute |
28 | three percent (3%) of the employee's annual salary or wages to the program. |
29 | (j) By regulation, the board may adjust the contribution amount set in subsection (i) of |
30 | this section to no less than two percent (2%) and no more than five percent (5%) and may vary |
31 | that amount within that two percent (2%) to five percent (5%) range for participating employees |
32 | according to the length of time the employee has contributed to the program. |
33 | (k) The board may implement annual automatic escalation of employee contributions. |
34 | (1) Employee contributions subject to automatic escalation shall not exceed eight percent |
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1 | (8%) of salary. |
2 | (2) Automatic escalation shall result in no more than a one-percent-of-salary (1%) |
3 | increase in employee contributions per calendar year. |
4 | (3) A participating employee may elect to opt out of automatic escalation and may set his |
5 | or her contribution percentage rate at a level determined by the participating employee. |
6 | 35-23-17. Employer liability protection. |
7 | (a) Employers shall not have any liability for an employee's decision to participate in, or |
8 | opt out of, the RISavers retirement savings program, or for the investment decisions of employees |
9 | whose assets are deposited in the program. |
10 | (b) Employers shall not be a fiduciary, or considered to be a fiduciary, over the Rhode |
11 | Island secure choice retirement savings trust or the program. The program is a state-administered |
12 | program, not an employer-sponsored program. If the program is subsequently found to be |
13 | preempted by any federal law or regulation, employers shall not be liable as plan sponsors. An |
14 | employer shall not bear responsibility for the administration, investment, or investment |
15 | performance of the program. An employer shall not be liable with regard to investment returns, |
16 | program design, and benefits paid to program participants. |
17 | (c) An employer's voluntary contribution pursuant to § 35-23-7(j) shall not in any way |
18 | contradict the provisions of this section or change the employer's relationship to the program or |
19 | an employer's obligations to employees. |
20 | (d) An employer shall not have civil liability, and no cause of action shall arise against an |
21 | employer, for acting pursuant to the regulations prescribed by the board defining the roles and |
22 | responsibilities of employers that have a payroll deposit retirement savings arrangement to allow |
23 | employee participation in the program. |
24 | 35-23-18. State immunity. |
25 | The state shall not have any liability for the payment of the retirement savings benefit |
26 | earned by program participants pursuant to this chapter. The state, and any of the funds of the |
27 | state, shall have no obligation for payment of the benefits arising from this chapter. |
28 | 35-23-19. Annual audited financial report. |
29 | (a) The board shall submit an annual audited financial report, prepared in accordance |
30 | with generally accepted accounting principles, on the operations of the Rhode Island secure |
31 | choice retirement savings trust by August 1 to the governor, and the legislature. The annual audit |
32 | shall be made by an independent certified public accountant and shall include, but not be limited |
33 | to, direct and indirect costs attributable to the use of outside consultants, independent contractors, |
34 | and any other persons who are not state employees. |
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1 | (b) The annual audit shall be supplemented by the following information prepared by the |
2 | board: |
3 | (1) Any studies or evaluations prepared in the preceding year; |
4 | (2) A summary of the benefits provided by the trust including the number of participants |
5 | in the trust; and |
6 | (3) Any other information that is relevant in order to make a full, fair, and effective |
7 | disclosure of the operations of the Rhode Island secure choice retirement savings trust. |
8 | 35-23-20. Required favorable federal tax treatment. |
9 | (a) The board shall not implement the program if the IRA arrangements offered fail to |
10 | qualify for the favorable federal income tax treatment ordinarily accorded to IRAs under the |
11 | Internal Revenue Code, or if it is determined that the program is an employee benefit plan under |
12 | the federal Employee Retirement Income Security Act. |
13 | (b) Prior to opening the program for enrollment, the board shall report to the governor |
14 | and legislature the specific date on which the program will start to enroll program participants |
15 | and that the following prerequisites and requirements for the program have been met: |
16 | (1) The program is structured in a manner to keep the program from being classified as an |
17 | employee benefit plan subject to the federal Employee Retirement Income Security Act; |
18 | (2) The payroll deduction IRA arrangements offered by the program qualify for the |
19 | favorable federal income tax treatment ordinarily accorded to IRA arrangements under the |
20 | Internal Revenue Code; |
21 | (3) The board has defined in regulation the roles and responsibilities of employers in a |
22 | manner to keep the program from being classified as an employee benefit plan subject to the |
23 | federal Employee Retirement Income Security Act; and |
24 | (4) The board has adopted a third-party administrator operational model that limits |
25 | employer interaction and transactions with the employee to the extent feasible. |
26 | 35-23-21. Prohibited conduct. |
27 | A board member, program administrator, and other staff of the board shall not do any of |
28 | the following: |
29 | (1) Directly or indirectly have any interest in the making of any investment made for the |
30 | program, or in the gains or profits accruing from any investment made for the program; |
31 | (2) Borrow any funds or deposits of the trust, or use those funds or deposits in any |
32 | manner, for themselves or as an agent or partner of others; or |
33 | (3) Become an endorser, surety, or obligor on investments by the board. |
34 | 35-23-22. Duties of board and staff. |
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1 | (a) The board and the program administrator and staff, including contracted |
2 | administrators and consultants, shall discharge their duties as fiduciaries with respect to the trust |
3 | solely in the interest of the program participants as follows: |
4 | (1) For the exclusive purposes of providing benefits to program participants and |
5 | defraying reasonable expenses of administering the program; and |
6 | (2) By investing with the care, skill, prudence, and diligence under the circumstances |
7 | then prevailing that a prudent person acting in a like capacity and familiar with those matters |
8 | would use in the conduct of an enterprise of a like character and with like aims. |
9 | (b) The board, subject to its authority and fiduciary duty, shall design and implement the |
10 | RISavers retirement savings program as follows: |
11 | (1) For up to three (3) years following the initial implementation of the program, the |
12 | board shall establish managed accounts invested in United States Treasuries, or similar |
13 | investments; the board shall have the authority to provide for investment in accordance with the |
14 | provisions of federal law providing for tax deferred treatment; |
15 | (2) The board shall develop and implement an investment policy that defines the |
16 | program's investment objectives and shall establish policies and procedures enabling investment |
17 | objectives to be met in a prudent manner. The board shall seek to minimize participant fees and |
18 | strive to implement program features that provide maximum possible income replacement |
19 | balanced with appropriate risk in an IRA-based environment. The policy shall describe the |
20 | investment options available to holders of individual savings accounts established as part of the |
21 | program. Investment options may encompass a range of risk and return opportunities and allow |
22 | for a rate of return commensurate with an appropriate level of risk to meet the investment |
23 | objectives stated in the policy; |
24 | (3) The board shall annually prepare and adopt a written statement of investment policy |
25 | that includes a risk management and oversight program. The board shall consider the statement of |
26 | investment policy and any changes in the investment policy at a public hearing; and |
27 | (4) The risk management and oversight program shall include an effective risk |
28 | management system to monitor the risk levels of the RISavers retirement savings program |
29 | investment portfolio and ensure that the risks taken are prudent and properly managed. The |
30 | program shall be managed to provide an integrated process for overall risk management on both a |
31 | consolidated and disaggregated basis, and to monitor investment returns as well as risk to |
32 | determine if the risks taken are adequately compensated compared to applicable performance |
33 | benchmarks and standards. |
34 | (c) The board shall approve an investment management entity or entities, the costs of |
| LC003219 - Page 16 of 18 |
1 | which shall be paid out of funds held in the trust and shall not be attributed to the administrative |
2 | costs of the board in operating the trust. Not later than thirty (30) days after the close of each |
3 | month, the board shall place on file for public inspection during business hours a report with |
4 | respect to investments made pursuant to this section and a report of deposits in financial |
5 | institutions. |
6 | 35-23-23. Rules and regulations. |
7 | (a) The board may adopt regulations to implement this chapter. |
8 | (b) The tax administrator in consultation with the board shall adopt rules and regulations |
9 | regarding the reporting and the deferral of taxers in accordance with the provisions of this |
10 | chapter. |
11 | 35-23-24. Effect on benefit means test. |
12 | A payroll deposit IRA arrangement offered pursuant to the RISavers retirement savings |
13 | program shall have the same status as, and be treated consistently with, any other IRA for the |
14 | purpose of determining eligibility or benefit level for a program that uses a means test. |
15 | 35-23-25. Liberal construction. |
16 | This chapter shall be construed liberally in order to effectuate its purpose. The purposes |
17 | of this chapter and all of its provisions with respect to the powers granted shall be broadly |
18 | interpreted to effectuate that intent and purposes and not as to any limitation of powers. |
19 | SECTION 2. This act shall take effect upon passage. |
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EXPLANATION | |
BY THE LEGISLATIVE COUNCIL | |
OF | |
A N A C T | |
RELATING TO PUBLIC FINANCE -- ESTABLISHING RHODE ISLAND SECURE CHOICE | |
RETIREMENT SAVINGS TRUST ACT | |
*** | |
1 | This act would establish the Rhode Island secure choice retirement savings trust. The act |
2 | would establish an investment board which is a public corporation. The act would allow for |
3 | creation of IRA-type retirement investments managed by the investment board. |
4 | This act would take effect upon passage. |
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