SSB 1234 (LSB 2993XC (4) 91)

SENATE FILE _____ 

BY  (PROPOSED COMMITTEE ON APPROPRIATIONS BILL BY CHAIRPERSON KRAAYENBRINK)

A BILL FOR

An Act establishing a retirement savings plan trust, making appropriations, and including implementation provisions.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:

    Section 1.  NEW SECTION.  12L.1  Definitions.
   As used in this chapter, unless the context otherwise requires:
   1.  “Administrative fund” means the administrative fund established under section 12L.4.
   2.  “Employer” means a person or entity engaged in a business, industry, profession, trade, or other enterprise in Iowa.
   3.  “Internal Revenue Code” means the same as defined in section 12I.1.
   4.  “Iowa retirement savings plan trust” or “trust” means the trust created under section 12L.2.
   5.  “Participant” means an employed individual that has entered into a participation agreement under this chapter to contribute to an Iowa retirement savings plan.
   6.  “Participation agreement” means an agreement between a participant and the Iowa retirement savings plan trust entered into under this chapter.
   7.  “Program fund” means the program fund established under section 12L.4.
    Sec. 2.  NEW SECTION.  12L.2  Creation of Iowa retirement savings plan trust.
   An Iowa retirement savings plan trust, as allowed by the Internal Revenue Code, is created for the purpose of helping Iowans save for retirement. The treasurer of state is the trustee of the trust, and has all powers necessary to carry out and effectuate the purposes, objectives, and provisions of this chapter pertaining to the trust, including the power to do all of the following:
   1.  Make and enter into contracts necessary for the administration of the trust.
   2.  Enter into agreements with any financial institution, the state, or any federal or other state agency, or other entity as required to implement this chapter.
   3.  Carry out the duties and obligations of the trust pursuant to this chapter.
   4.  Accept any grants, gifts, legislative appropriations, and other moneys from the state, any unit of federal, state, or local government, or any other person, firm, partnership, or corporation which the treasurer of state shall deposit into the administrative fund or the program fund.
   5.  Carry out studies and projections so the treasurer of state may advise participants regarding present and estimated future retirement needs and levels of financial participation in the trust required in order to enable participants to achieve their retirement funding objectives.
   6.  Participate in any federal, state, or local governmental program for the benefit of the trust.
   7.  Procure insurance against any loss in connection with the property, assets, or activities of the trust.
   8.  Enter into agreements with participants and employers.
   9.  Make distributions and refunds to participants pursuant to participation agreements as prescribed by the Internal Revenue Code.
   10.  Invest moneys from the program fund in any investments which are determined by the treasurer of state to be appropriate.
   11.  Engage investment advisors, if necessary, to assist in the investment of trust assets.
   12.  Contract for goods and services and engage personnel as necessary, including consultants, actuaries, managers, legal counsel, and auditors, for the purpose of rendering professional, managerial, and technical assistance and advice to the treasurer of state regarding trust administration and operation.
   13.  Establish, impose, and collect administrative fees and charges in connection with transactions of the trust, and provide for reasonable service charges, including penalties for cancellations and late payments with respect to participation agreements.
   14.  Develop and disseminate information designed to educate individuals about the benefits of planning and saving for retirement, including information in furtherance of financial capability and financial literacy, and to help participants decide the savings strategies and level of financial participation in the trust that may be appropriate.
   15.  Administer the funds of the trust.
   16.  Adopt rules pursuant to chapter 17A for the administration of the trust.
    Sec. 3.  NEW SECTION.  12L.3  Limitation of liability.
   1.  The Iowa retirement savings plan trust, the treasurer of state, and the state of Iowa shall not guarantee any rate of return or any interest rate on any contribution to the trust. The trust, treasurer of state, and the state of Iowa are not liable for any loss incurred by any person as a result of participating in the trust.
   2.  An employer shall not be liable for any of the following:
   a.  A participant’s investment decisions.
   b.  The administration, investment, investment returns, or investment performance of the plan including but not limited to an interest rate or rate of return on a contribution or account balance, provided the employer is not involved in the administration or investment of the plan.
   c.  The plan design or the benefits paid to a participant.
   d.  Any loss, failure to realize gain, or other adverse consequence resulting from participation in the plan including but not limited to adverse tax consequences or loss of favorable tax treatment, public assistance, or other benefits.
    Sec. 4.  NEW SECTION.  12L.4  Program and administrative funds —— investment and payments.
   1.  The treasurer of state shall segregate moneys received by the Iowa retirement savings plan trust into two funds, the program fund and the administrative fund.
   2.  All moneys paid by participants in connection with participation agreements shall be deposited as received into separate accounts within the program fund.
   3.  Contributions to the trust made by participants shall only be made in the form of cash.
   4.  For the fiscal year beginning July 1, 2025, there is appropriated from the unclaimed property trust fund established in section 556.18 to the treasurer of state, an amount not to exceed two hundred thousand dollars for deposit in the administrative fund. 
   5.  Between July 1, 2026, and June 30, 2032, the treasurer of state shall transfer the amount appropriated in subsection 4 from the administrative fund to the unclaimed property trust fund in a manner determined by the treasurer of state using moneys obtained from fees authorized by section 12L.2, subsection 13.
    Sec. 5.  NEW SECTION.  12L.5  Cancellation of agreements.
   A participant may cancel a participation agreement at will. Upon cancellation of a participation agreement, a participant shall be entitled to the return of the participant’s account balance subject to penalties prescribed by the Internal Revenue Code.
    Sec. 6.  NEW SECTION.  12L.6  Annual audited financial report.
   1.  The treasurer of state shall submit an annual audited financial report, prepared in accordance with generally accepted accounting principles, on the operations of the Iowa retirement savings plan trust by November 1 to the governor and the general assembly.
   2.  The annual audit shall be made either by the auditor of state or by an independent certified public accountant designated by the auditor of state and must include direct and indirect costs attributable to the use of outside consultants, independent contractors, and any other persons who are not state employees.
   3.  The annual audit must be supplemented by all of the following information prepared by the treasurer of state:
   a.  Any related studies or evaluations prepared in the preceding year.
   b.  A summary of the benefits provided by the trust, including the number of participants in the trust.
   c.  Any other information which is relevant in order to make a full, fair, and effective disclosure of the operations of the trust.
    Sec. 7.  NEW SECTION.  12L.7  Tax considerations.
   For federal tax purposes, the Iowa retirement savings plan trust shall conform to the requirements established by the Internal Revenue Code to be able to operate as a retirement plan. The plan may conform to the requirements under section 401(a), 401(k), 403(a), 403(b), 408(k), 408(p), or another section of the Internal Revenue Code which allows Iowans the best retirement option under the trust as determined by the treasurer of state.
    Sec. 8.  NEW SECTION.  12L.8  Property rights to assets in trust.
   1.  The assets of the Iowa retirement savings plan trust shall at all times be preserved, invested, and expended solely and only for the purposes of the trust and shall be held in trust for the participants.
   2.  No property rights in the trust shall exist in favor of the state.
   3.  The assets of the trust shall not be transferred or used by the state for any purposes other than the purposes of the trust.
    Sec. 9.  NEW SECTION.  12L.9  Construction.
   This chapter shall be construed liberally in order to effectuate its purpose.
    Sec. 10.  IMPLEMENTATION PROVISION.  The treasurer of state shall provide that when the requirements of chapter 12L are enacted, individuals may begin making contributions to the Iowa retirement savings plan trust, as created by section 12L.2, as enacted in this Act, no earlier than January 1, 2026.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
   This bill creates the Iowa retirement savings plan trust under the office of treasurer of state for the purpose of helping Iowans save for retirement. The bill provides that the trust be operated so that, for federal tax purposes, the trust meets the requirements of a retirement plan as provided by the Internal Revenue Code and functions according to other federal law.
   The state treasurer is the trustee of the trust and has numerous powers, as specified in the bill, for the purpose of carrying out the purpose of the trust. Powers granted the treasurer of state to effectuate the purpose of the trust include entering into agreements with trust participants and employers, investing moneys in the trust, and entering into any agreements or contracts necessary to carry out the purposes of the trust.
   A participant may cancel participation in the trust at any time. 
   The bill provides that the state, the treasurer of state, and the trust shall not guarantee any rate of return on any contributions to the trust and are not liable for any loss incurred by any person as a result of participating in the trust. An employer is also not liable for a participant’s investment decisions, the administration of the plan, or the consequences of participation in the plan. The bill requires the treasurer to submit an annual audited financial report on the operations of the trust.
   For FY 2025-2026, the bill appropriates from the unclaimed property trust fund to the treasurer of state for deposit in the trust’s administrative fund an amount not to exceed $200,000 and requires the treasurer of state to reimburse the unclaimed property trust fund from the administrative fund by June 30, 2032.
   The bill provides that when the requirements of the bill are enacted, the treasurer shall not allow individuals to make contributions to the trust earlier than January 1, 2026.