Senate Study Bill 3164 - Introduced SENATE/HOUSE FILE _____ BY (PROPOSED TREASURER OF STATE BILL) A BILL FOR An Act establishing a retirement savings plan trust, making 1 appropriations, and including contingent implementation and 2 effective date provisions. 3 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 4 TLSB 5239XD (5) 86 ec/sc
S.F. _____ H.F. _____ Section 1. NEW SECTION . 12J.1 Purpose and definitions. 1 1. The general assembly finds that the general welfare and 2 well-being of the state are directly related to the ability 3 of the citizens of the state to save for their retirement 4 years, and that a vital and valid public purpose is served by 5 the creation and implementation of programs which encourage 6 and make possible the attainment of financial security by 7 the greatest number of citizens of the state. In order to 8 make available to the citizens of the state an opportunity to 9 fund future retirement savings needs, it is necessary that a 10 public trust be established in which moneys may be invested for 11 retirement. 12 2. As used in this chapter, unless the context otherwise 13 requires: 14 a. “Administrative fund” means the administrative fund 15 established under section 12J.4. 16 b. “Employer” means a person or entity engaged in a 17 business, industry, profession, trade, or other enterprise in 18 Iowa. 19 c. “Internal Revenue Code” means the same as defined in 20 section 422.3. 21 d. “Iowa retirement savings plan trust” or “trust” means the 22 trust created under section 12J.2. 23 e. “Participant” means an individual that has entered into a 24 participation agreement under this chapter to contribute to an 25 Iowa retirement savings plan. 26 f. “Participation agreement” means an agreement between a 27 participant and the trust entered into under this chapter. 28 g. “Program fund” means the program fund established under 29 section 12J.4. 30 Sec. 2. NEW SECTION . 12J.2 Creation of the Iowa retirement 31 savings plan trust. 32 An Iowa retirement savings plan trust as allowed by the 33 Internal Revenue Code is created for the purpose of helping 34 Iowans save for retirement. The treasurer of state is the 35 -1- LSB 5239XD (5) 86 ec/sc 1/ 7
S.F. _____ H.F. _____ trustee of the trust, and has all powers necessary to carry out 1 and effectuate the purposes, objectives, and provisions of this 2 chapter pertaining to the trust, including the power to do all 3 of the following: 4 1. Make and enter into contracts necessary for the 5 administration of the trust. 6 2. Enter into agreements with any financial institution, 7 the state, or any federal or other state agency, or other 8 entity as required to implement this chapter. 9 3. Carry out the duties and obligations of the trust 10 pursuant to this chapter. 11 4. Accept any grants, gifts, legislative appropriations, 12 and other moneys from the state, any unit of federal, state, or 13 local government, or any other person, firm, partnership, or 14 corporation which the treasurer of state shall deposit into the 15 administrative fund or the program fund. 16 5. Carry out studies and projections so the treasurer of 17 state may advise participants regarding present and estimated 18 future retirement needs and levels of financial participation 19 in the trust required in order to enable participants to 20 achieve their retirement funding objectives. 21 6. Participate in any federal, state, or local governmental 22 program for the benefit of the trust. 23 7. Procure insurance against any loss in connection with the 24 property, assets, or activities of the trust. 25 8. Enter into agreements with participants and employers. 26 9. Make distributions and refunds to participants pursuant 27 to participation agreements as prescribed by the Internal 28 Revenue Code. 29 10. Invest moneys from the program fund in any investments 30 which are determined by the treasurer of state to be 31 appropriate. 32 11. Engage investment advisors, if necessary, to assist in 33 the investment of trust assets. 34 12. Contract for goods and services and engage personnel 35 -2- LSB 5239XD (5) 86 ec/sc 2/ 7
S.F. _____ H.F. _____ as necessary, including consultants, actuaries, managers, 1 legal counsel, and auditors for the purpose of rendering 2 professional, managerial, and technical assistance and advice 3 to the treasurer of state regarding trust administration and 4 operation. 5 13. Establish, impose, and collect administrative fees 6 and charges in connection with transactions of the trust, and 7 provide for reasonable service charges, including penalties for 8 cancellations and late payments with respect to participation 9 agreements. 10 14. Administer the funds of the trust. 11 15. Adopt rules pursuant to chapter 17A for the 12 administration of the trust. 13 Sec. 3. NEW SECTION . 12J.3 Limitation of liability. 14 The trust, the treasurer of state, and the state of Iowa may 15 not guarantee any rate of return or any interest rate on any 16 contribution to the trust. The trust, treasurer of state, and 17 the state of Iowa are not liable for any loss incurred by any 18 person as a result of participating in the trust. 19 Sec. 4. NEW SECTION . 12J.4 Program and administrative funds 20 —— investment and payments. 21 1. The treasurer of state shall segregate moneys received 22 by the trust into two funds: the program fund and the 23 administrative fund. 24 2. All moneys paid by participants in connection with 25 participation agreements shall be deposited as received into 26 separate accounts within the program fund. 27 3. Contributions to the trust made by participants may only 28 be made in the form of cash. 29 Sec. 5. NEW SECTION . 12J.5 Cancellation of agreements. 30 A participant may cancel a participation agreement at will. 31 Upon cancellation of a participation agreement, a participant 32 shall be entitled to the return of the participant’s account 33 balance subject to penalties prescribed by the Internal Revenue 34 Code. 35 -3- LSB 5239XD (5) 86 ec/sc 3/ 7
S.F. _____ H.F. _____ Sec. 6. NEW SECTION . 12J.6 Annual audited financial report 1 to governor and general assembly. 2 1. The treasurer of state shall submit an annual audited 3 financial report, prepared in accordance with generally 4 accepted accounting principles, on the operations of the trust 5 by January 1 to the governor and the general assembly. 6 2. The annual audit shall be made either by the auditor 7 of state or by an independent certified public accountant 8 designated by the auditor of state and shall include direct and 9 indirect costs attributable to the use of outside consultants, 10 independent contractors, and any other persons who are not 11 state employees. 12 3. The annual audit shall be supplemented by all of the 13 following information prepared by the treasurer of state: 14 a. Any related studies or evaluations prepared in the 15 preceding year. 16 b. A summary of the benefits provided by the trust including 17 the number of participants in the trust. 18 c. Any other information which is relevant in order to make 19 a full, fair, and effective disclosure of the operations of the 20 trust. 21 Sec. 7. NEW SECTION . 12J.7 Tax considerations. 22 For federal tax purposes, the Iowa retirement savings plan 23 trust shall conform to the requirements established by the 24 Internal Revenue Code to be able to operate as a retirement 25 plan. The plan may conform to the requirements under section 26 401(a), section 408, or another section of the Internal Revenue 27 Code which allows Iowans the best retirement option under the 28 trust as determined by the treasurer of state. 29 Sec. 8. NEW SECTION . 12J.8 Property rights to assets in 30 trust. 31 1. The assets of the trust shall at all times be preserved, 32 invested, and expended solely and only for the purposes of the 33 trust and shall be held in trust for the participants. 34 2. No property rights in the trust shall exist in favor of 35 -4- LSB 5239XD (5) 86 ec/sc 4/ 7
S.F. _____ H.F. _____ the state. 1 3. The assets of the trust shall not be transferred or used 2 by the state for any purposes other than the purposes of the 3 trust. 4 Sec. 9. NEW SECTION . 12J.9 12J.9 Construction. 5 This chapter shall be construed liberally in order to 6 effectuate its purpose. 7 Sec. 10. TREASURER OF STATE —— IOWA RETIREMENT SAVINGS PLAN 8 TRUST APPROPRIATION. There is appropriated from the general 9 fund of the state to the treasurer of state for the fiscal year 10 beginning July 1, 2016, and ending June 30, 2017, the following 11 amount, or so much thereof as is necessary, to be used for the 12 purposes designated: 13 For establishing and managing an Iowa retirement savings 14 plan trust, including salaries, support, maintenance, and 15 miscellaneous purposes: 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,500,000 17 Notwithstanding section 8.33, moneys appropriated in this 18 section that remain unencumbered or unobligated at the close of 19 the fiscal year shall not revert but shall remain available for 20 expenditure for the purposes designated until the close of the 21 fiscal year that begins July 1, 2017. 22 Sec. 11. IMPLEMENTATION PROVISION. The treasurer of state 23 shall provide that when the requirements of chapter 12J are 24 enacted, individuals may begin making contributions to the Iowa 25 retirement savings plan trust, as created by section 12J.2, as 26 enacted in this Act, no earlier than July 1, 2018. 27 Sec. 12. CONTINGENT EFFECTIVE DATE. 28 1. This Act takes effect, but in no event earlier than 29 July 1, 2017, on the date that the treasurer of state notifies 30 the Code editor that both of the following contingencies have 31 occurred: 32 a. An amount of no less than one million five hundred 33 thousand dollars has been appropriated to the treasurer of 34 state for the purpose of establishing and managing an Iowa 35 -5- LSB 5239XD (5) 86 ec/sc 5/ 7
S.F. _____ H.F. _____ retirement savings plan trust. 1 b. The treasurer of state has determined, at the sole 2 discretion of the treasurer of state, that establishing an Iowa 3 retirement savings plan trust is feasible and that applicable 4 federal requirements make establishing a private retirement 5 plan favorable for Iowans contributing to the trust. 6 2. The treasurer of state shall notify the Code editor in 7 writing whether the contingencies in subsection 1 have occurred 8 or will not occur. 9 EXPLANATION 10 The inclusion of this explanation does not constitute agreement with 11 the explanation’s substance by the members of the general assembly. 12 This bill creates the Iowa retirement savings plan trust 13 under the office of treasurer of state for the purpose of 14 helping Iowans save for retirement. The bill provides that 15 the trust be operated so that, for federal tax purposes, it 16 meets the requirements of a retirement plan as provided by the 17 Internal Revenue Code. 18 The state treasurer is the trustee of the trust and has 19 numerous powers, as specified in the bill, for the purpose of 20 carrying out the purpose of the trust. Powers granted the 21 treasurer of state to effectuate the purpose of the trust 22 include entering into agreements with trust participants and 23 employers, investing moneys in the trust, and entering into any 24 agreements or contracts necessary to carry out the purposes of 25 the trust. 26 The bill provides that the state, the treasurer of state, 27 and the trust may not guarantee any rate of return on any 28 contributions to the trust and are not liable for any loss 29 incurred by any person as a result of participating in the 30 trust. The bill requires the treasurer to submit an annual 31 audited financial report on the operations of the trust. 32 The bill provides an appropriation to the treasurer of state 33 for FY 2016-2017 for the purposes of establishing and managing 34 the Iowa retirement savings plan trust. 35 -6- LSB 5239XD (5) 86 ec/sc 6/ 7
S.F. _____ H.F. _____ The bill provides that when the requirements of the bill 1 are enacted, the treasurer shall not allow individuals to make 2 contributions to the trust earlier than July 1, 2018. 3 The bill provides that the bill takes effect no earlier 4 than July 1, 2017, and only on the date the treasurer of state 5 notifies the Code editor, in writing, that no less than $1.5 6 million has been appropriated to the treasurer of state for the 7 purpose of the bill and that establishing an Iowa retirement 8 savings plan trust is feasible, and applicable federal 9 requirements make establishing the trust favorable for Iowans 10 contributing to the trust. 11 -7- LSB 5239XD (5) 86 ec/sc 7/ 7