House File 456 - Introduced HOUSE FILE BY T. OLSON and RAECKER Passed House, Date Passed Senate, Date Vote: Ayes Nays Vote: Ayes Nays Approved A BILL FOR 1 An Act concerning tax=sheltered investment contracts and 2 including an effective date. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 2154HH 83 5 ec/rj/5 PAG LIN 1 1 Section 1. Section 260C.14, subsection 9, paragraphs a and 1 2 b, Code 2009, are amended to read as follows: 1 3 a. (1) The board may establish a plan, in accordance with 1 4 section 403(b) of the Internal Revenue Code, as defined in 1 5 section 422.3, for employees, which plan shall consist of one 1 6 or more investment contracts, on a group or individual basis, 1 7 acquired from a company, or a salesperson for that company, 1 8 that is authorized to do business in this state. 1 9 (2) The plan shall ensure that local tax=sheltered 1 10 investment contract providers be employed by companies 1 11 selected to offer investment contracts within the plan to 1 12 advise employees concerning the plan. Local tax=sheltered 1 13 investment contract providers shall consist of individuals, 1 14 otherwise authorized to offer plans in accordance with section 1 15 403(b), who provided eligible employees with tax=sheltered 1 16 investment contracts prior to establishing the plan, are 1 17 located within the jurisdiction of the applicable community 1 18 college, and otherwise consent to comply with the requirements 1 19 of the plan established pursuant to this subsection. 1 20 b. The selection of investment contracts to be included 1 21 within the plan established by the board shall be madeeither1 22 pursuant to a competitive bidding process conducted by the 1 23 board, in coordination with employee organizations 1 24 representing employees eligible to participate in the plan, 1 25 pursuant to a process whereby no more than five companies 1 26 authorized to issue investment contracts shall be selected by 1 27 the applicable employer and no more than three companies 1 28 authorized to issue investment contracts shall be selected by, 1 29 and in the sole discretion of, the employee organizations 1 30 representing the applicable employer's employees, or pursuant 1 31 to an agreement with the department of administrative services 1 32 to make available investment contracts included in a deferred 1 33 compensation or similar plan established by the department 1 34 pursuant to section 8A.438, which plan meets the requirements 1 35 of this subsection. The determination ofwhetherhow to 2 1 select investment contracts for the planpursuant to a 2 2 competitive bidding process or by agreement with the 2 3 department of administrative servicesshall be made by 2 4 agreement between the board and the employee organizations 2 5 representing employees eligible to participate in the plan. 2 6 Sec. 2. Section 273.3, subsection 14, paragraphs a and b, 2 7 Code 2009, are amended to read as follows: 2 8 a. (1) The board may establish a plan, in accordance with 2 9 section 403(b) of the Internal Revenue Code, as defined in 2 10 section 422.3, for employees, which plan shall consist of one 2 11 or more investment contracts, on a group or individual basis, 2 12 acquired from a company, or a salesperson for that company, 2 13 that is authorized to do business in this state. 2 14 (2) The plan shall ensure that local tax=sheltered 2 15 investment contract providers be employed by companies 2 16 selected to offer investment contracts within the plan to 2 17 advise employees concerning the plan. Local tax=sheltered 2 18 investment contract providers shall consist of individuals, 2 19 otherwise authorized to offer plans in accordance with section 2 20 403(b), who provided eligible employees with tax=sheltered 2 21 investment contracts prior to establishing the plan, are 2 22 located within the jurisdiction of the applicable area 2 23 education agency, and otherwise consent to comply with the 2 24 requirements of the plan established pursuant to this 2 25 subsection. 2 26 b. The selection of investment contracts to be included 2 27 within the plan established by the board shall be madeeither2 28 pursuant to a competitive bidding process conducted by the 2 29 board, in coordination with employee organizations 2 30 representing employees eligible to participate in the plan, 2 31 pursuant to a process whereby no more than five companies 2 32 authorized to issue investment contracts shall be selected by 2 33 the applicable employer and no more than three companies 2 34 authorized to issue investment contracts shall be selected by, 2 35 and in the sole discretion of, the employee organizations 3 1 representing the applicable employer's employees, or pursuant 3 2 to an agreement with the department of administrative services 3 3 to make available investment contracts included in a deferred 3 4 compensation or similar plan established by the department 3 5 pursuant to section 8A.438, which plan meets the requirements 3 6 of this subsection. The determination ofwhetherhow to 3 7 select investment contracts for the planpursuant to a 3 8 competitive bidding process or by agreement with the 3 9 department of administrative servicesshall be made by 3 10 agreement between the board and the employee organizations 3 11 representing employees eligible to participate in the plan. 3 12 Sec. 3. Section 294.16, subsections 1 and 2, Code 2009, 3 13 are amended to read as follows: 3 14 1. a. The school district may establish a plan, in 3 15 accordance with section 403(b) of the Internal Revenue Code, 3 16 as defined in section 422.3, for employees, which plan shall 3 17 consist of one or more investment contracts, on a group or 3 18 individual basis, acquired from a company, or a salesperson 3 19 for that company, that is authorized to do business in this 3 20 state. 3 21 b. The plan shall ensure that local tax=sheltered 3 22 investment contract providers be employed by companies 3 23 selected to offer investment contracts within the plan to 3 24 advise employees concerning the plan. Local tax=sheltered 3 25 investment contract providers shall consist of individuals, 3 26 otherwise authorized to offer plans in accordance with section 3 27 403(b), who provided eligible employees with tax=sheltered 3 28 investment contracts prior to establishing the plan, are 3 29 located within the jurisdiction of the applicable school 3 30 district, and otherwise consent to comply with the 3 31 requirements of the plan established pursuant to this section. 3 32 2. The selection of investment contracts to be included 3 33 within the plan established by the school district shall be 3 34 madeeitherpursuant to a competitive bidding process 3 35 conducted by the school district, in coordination with 4 1 employee organizations representing employees eligible to 4 2 participate in the plan, pursuant to a process whereby no more 4 3 than five companies authorized to issue investment contracts 4 4 shall be selected by the applicable employer and no more than 4 5 three companies authorized to issue investment contracts shall 4 6 be selected by, and in the sole discretion of, the employee 4 7 organizations representing the applicable employer's 4 8 employees, or pursuant to an agreement with the department of 4 9 administrative services to make available investment contracts 4 10 included in a deferred compensation or similar plan 4 11 established by the department pursuant to section 8A.438, 4 12 which plan meets the requirements of this section. The 4 13 determination ofwhetherhow to select investment contracts 4 14 for the planpursuant to a competitive bidding process or by 4 15 agreement with the department of administrative servicesshall 4 16 be made by agreement between the school district and the 4 17 employee organizations representing employees eligible to 4 18 participate in the plan. 4 19 Sec. 4. 2008 Iowa Acts, chapter 1171, section 67, 4 20 subsection 1, is amended to read as follows: 4 21 1. The department of administrative services shall 4 22 establish, by January 1, 2010, a plan, as authorized pursuant 4 23 to section 8A.438 and in accordance with section 403(b) of the 4 24 Internal Revenue Code, as defined in section 422.3, for 4 25 employees, which plan shall consist of one or more investment 4 26 contracts, on a group or individual basis, acquired from a 4 27 company, or a salesperson for that company, that is authorized 4 28 to do business in this state, that is eligible to be utilized 4 29 as a vendor of investment contracts for plans established 4 30 pursuant to section 260C.14, subsection 9, section 273.3, 4 31 subsection 14, or section 294.16, and otherwise meets the 4 32 requirement relative to local tax=sheltered investment 4 33 contract providers as provided in section 260C.14, subsection 4 34 9, section 273.3, subsection 14, and section 294.16. 4 35 Sec. 5. EFFECTIVE DATE. This Act, being deemed of 5 1 immediate importance, takes effect upon enactment. 5 2 EXPLANATION 5 3 This bill modifies the requirements relative to 5 4 tax=sheltered investment plans offered by community colleges, 5 5 area education agencies, and school districts. 5 6 The bill provides that investment contracts in 5 7 tax=sheltered investment plans can be selected by having the 5 8 employer select up to five, and the applicable employee 5 9 organization select up to three, investment contracts for the 5 10 plan. Current law provides that selection of investment 5 11 contracts shall only be through a competitive bidding process 5 12 or by using the plan established by the department of 5 13 administrative services. 5 14 The bill also provides that plans established shall ensure 5 15 that local tax=sheltered investment contract providers be 5 16 employed by companies selected to offer investment contracts 5 17 within the plan to advise employees concerning the plan. The 5 18 bill provides that local tax=sheltered investment contract 5 19 providers shall consist of individuals, otherwise authorized 5 20 to offer plans in accordance with Code section 403(b), who 5 21 provided eligible employees with tax=sheltered investment 5 22 contracts prior to establishing the plan, are located within 5 23 the jurisdiction of the applicable employer, and otherwise 5 24 consent to comply with the requirements of the plan. The bill 5 25 further provides that the plan established by the department 5 26 of administrative services for potential adoption by community 5 27 colleges, area education agencies, and school districts comply 5 28 with the requirement relative to local tax=sheltered 5 29 investment contract providers. 5 30 The bill takes effect upon enactment. 5 31 LSB 2154HH 83 5 32 ec/rj/5