Bill Text: MI HB5776 | 2015-2016 | 98th Legislature | Introduced


Bill Title: Retirement; other; retirement program for certain nonpublic employees to participate in a benefit plan; create, and provide oversight. Creates new act.

Spectrum: Partisan Bill (Democrat 5-0)

Status: (Introduced - Dead) 2016-08-03 - Bill Electronically Reproduced 07/13/2016 [HB5776 Detail]

Download: Michigan-2015-HB5776-Introduced.html

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

HOUSE BILL No. 5776

July 13, 2016, Introduced by Reps. Dianda, Wittenberg, Irwin, Lane and Brinks and referred to the Committee on Financial Services.

 

     A bill to create the secure retirement savings program to

 

provide retirement saving options for certain employees; to create

 

the secure retirement savings board and prescribe its powers and

 

duties; to provide for the powers and duties of certain

 

governmental officers and entities; to require participation in the

 

program by certain employers; to create the secure retirement

 

savings program fund as a trust fund outside the state treasury

 

consisting of employee retirement accounts; to establish the

 

Michigan secure retirement administrative fund to pay program

 

administrative expenses; to provide for civil fines; and to require

 

the promulgation of rules.

 

THE PEOPLE OF THE STATE OF MICHIGAN ENACT:

 

     Sec. 1. This act shall be known and may be cited as the

 

"retirement savings program act".


     Sec. 2. As used in this act:

 

     (a) "Board" means the secure retirement savings board

 

established in section 6.

 

     (b) "Department" means the department of treasury.

 

     (c) "Director" means the state treasurer.

 

     (d) "Employee" means an individual who is 18 years of age or

 

older, is employed by an employer, and has wages allocable to this

 

state during the calendar year for purposes of the income tax act

 

of 1967, 1967 PA 281, MCL 206.1 to 206.713.

 

     (e) "Employer" means a person or entity engaged in a for-

 

profit or nonprofit business, industry, profession, trade, or other

 

enterprise in this state, that has continuously during the previous

 

calendar year employed not fewer than 25 employees in this state,

 

has been in business at least 2 years, and has not offered a

 

qualified retirement plan, including, but not limited to, a plan

 

qualified under section 401(a), section 401(k), section 403(a),

 

section 403(b), section 408(k), section 408(p), or section 457(b)

 

of the internal revenue code of 1986, 26 USC 401, 403, 408, and

 

457, in the preceding 2 years.

 

     (f) "Enrollee" means an employee who is enrolled in the

 

program.

 

     (g) "Fund" means the Michigan secure retirement savings

 

program fund.

 

     (h) "Internal revenue code" means the internal revenue code of

 

1986.

 

     (i) "IRA" means a Roth individual retirement account under

 

section 408A of the internal revenue code, 26 USC 408A.


     (j) "Participating employer" means an employer or small

 

employer that provides a payroll deposit retirement savings

 

arrangement as provided for by this act for its employees who are

 

enrollees in the program.

 

     (k) "Payroll deposit retirement savings arrangement" means an

 

arrangement by which a participating employer allows enrollees to

 

remit payroll deduction contributions to the program.

 

     (l) "Program" means the Michigan secure retirement savings

 

program.

 

     (m) "Small employer" means a person or entity engaged in a

 

business, industry, profession, trade, or other enterprise in this

 

state, whether for profit or not for profit, that employed fewer

 

than 25 employees in this state at any time in the previous

 

calendar year or has been in business less than 2 years, and that

 

notifies the department that it is interested in being a

 

participating employer.

 

     (n) "Wages" means any compensation within the meaning of

 

section 219(f)(1) of the internal revenue code, 26 USC 219, that is

 

received by an enrollee from a participating employer during the

 

calendar year.

 

     Sec. 3. A retirement savings program in the form of an

 

automatic enrollment payroll deduction IRA, known as the Michigan

 

secure retirement savings program, is established in the

 

department. The board shall administer the program for the purpose

 

of promoting greater retirement savings for private-sector

 

employees in a convenient, low-cost, and portable manner.

 

     Sec. 4. (1) The secure retirement savings program fund is


established as a trust outside of the state treasury, with the

 

board as its trustee. The fund includes the individual retirement

 

accounts of enrollees, which must be maintained as individual

 

accounts. The fund consists of money received from enrollees and

 

participating employers through automatic payroll deductions and

 

contributions made under this act. The fund must be operated in a

 

manner determined by the board so that the accounts of enrollees

 

established under the program meet the requirements for IRAs under

 

the internal revenue code.

 

     (2) The money deposited in the fund is not property of this

 

state, and the fund must not be construed to be a department,

 

institution, or agency of this state. Money in the fund must not be

 

commingled with state money, and this state has no claim to or

 

against, or interest in, the money in the fund.

 

     Sec. 5. The secure retirement administrative fund is created

 

as a separate trust fund in the state treasury and is continuously

 

appropriated for the authorized purposes of the fund. The board

 

shall use money in the secure retirement administrative fund to pay

 

for administrative expenses it incurs in the performance of its

 

duties under this act. The board shall use money in the secure

 

retirement administrative fund to cover start-up administrative

 

expenses it incurs in the performance of its duties under this act.

 

The secure retirement administrative fund may receive grants or

 

other money designated for administrative purposes from this state;

 

a unit of federal or local government; or any other person, firm,

 

partnership, or corporation. Any interest or earnings attributable

 

to money in the secure retirement administrative fund must be


deposited into the secure retirement administrative fund.

 

     Sec. 6. (1) There is created in the department the secure

 

retirement savings board. The board consists of the following 7

 

members:

 

     (a) The state treasurer, or his or her designee, who shall

 

serve as chair.

 

     (b) A designee of the state treasurer.

 

     (c) The director of the department of technology, management,

 

and budget or his or her designee.

 

     (d) Two public representatives with expertise in retirement

 

savings plan administration or investment, or both, appointed by

 

the governor.

 

     (e) A representative of participating employers, appointed by

 

the governor.

 

     (f) A representative of enrollees, appointed by the governor.

 

     (2) Members of the board serve without compensation but may be

 

reimbursed for necessary travel expenses incurred in connection

 

with their board duties from money appropriated for the purpose.

 

     (3) The initial appointments for the governor's appointees are

 

as follows: 1 public representative for 4 years; 1 public

 

representative for 2 years; the representative of participating

 

employers for 3 years; and the representative of enrollees for 1

 

year. Subsequent appointments are for terms of 4 years.

 

     (4) A vacancy in the term of an appointed board member is

 

filled for the balance of the unexpired term in the same manner as

 

the original appointment.

 

     (5) Each appointment by the governor is subject to the advice


and consent of the senate. For a vacancy during a recess of the

 

senate, the governor shall make a temporary appointment until the

 

next meeting of the senate, at which time the governor shall

 

appoint a person to fill the office. Any appointment that has not

 

been acted on by the senate within 60 session days after receipt of

 

notice of the appointment is considered to have received the advice

 

and consent of the senate.

 

     Sec. 7. The board, the individual members of the board, the

 

trustee appointed under section 8(b), any other agents appointed or

 

engaged by the board, and all persons serving as program staff

 

shall discharge their duties with respect to the program solely in

 

the interest of the program's enrollees and beneficiaries as

 

follows:

 

     (a) For the exclusive purposes of providing benefits to

 

enrollees and beneficiaries and defraying reasonable expenses of

 

administering the program.

 

     (b) By investing with the care, skill, prudence, and diligence

 

under the prevailing circumstances that a prudent person acting in

 

a like capacity and familiar with those matters would use in the

 

conduct of an enterprise of a like character and with like aims.

 

     (c) By using any contributions paid by employees and employers

 

into the trust exclusively for the purpose of paying benefits to

 

the enrollees of the program, for the cost of administration of the

 

program, and for investments made for the benefit of the program.

 

     Sec. 8. In addition to the other duties and responsibilities

 

stated in this act, the board shall do all of the following:

 

     (a) Cause the program to be designed, established, and


operated in a manner that does all of the following:

 

     (i) Accords with best practices for retirement savings

 

vehicles.

 

     (ii) Maximizes participation, savings, and sound investment

 

practices.

 

     (iii) Maximizes simplicity, including ease of administration

 

for participating employers and enrollees.

 

     (iv) Provides an efficient product to enrollees by pooling

 

investment funds.

 

     (v) Ensures the portability of benefits.

 

     (vi) Provides for the deaccumulation of enrollee assets in a

 

manner that maximizes financial security in retirement.

 

     (b) Appoint a trustee to the fund in compliance with section

 

408 of the internal revenue code, 26 USC 408.

 

     (c) Explore and establish investment options, subject to

 

section 11, that offer employees returns on contributions and the

 

conversion of individual retirement savings account balances to

 

secure retirement income without incurring debt or liabilities to

 

this state.

 

     (d) Establish the process by which interest, investment

 

earnings, and investment losses are allocated to individual program

 

accounts on a pro rata basis and are computed at the interest rate

 

on the balance of an individual's account.

 

     (e) Make and enter into contracts necessary for the

 

administration of the program and fund, including, but not limited

 

to, retaining and contracting with investment managers, private

 

financial institutions, other financial and service providers,


consultants, actuaries, counsel, auditors, third-party

 

administrators, and other professionals as necessary.

 

     (f) Conduct a review of the performance of any investment

 

vendors every 4 years, including, but not limited to, a review of

 

returns, fees, and customer service. A copy of reviews conducted

 

under this subdivision must be posted to the board's Internet

 

website.

 

     (g) Determine the number and duties of staff members needed to

 

administer the program and assemble the staff, including, as

 

needed, employing staff, appointing a program administrator, and

 

entering into contracts with the state treasurer to make employees

 

of the state treasurer's office available to administer the

 

program.

 

     (h) Cause money in the fund to be held and invested as pooled

 

investments described in section 11, with a view to achieving cost

 

savings through efficiencies and economies of scale.

 

     (i) Evaluate and establish the process by which an enrollee is

 

able to contribute a portion of his or her wages to the program for

 

automatic deposit of those contributions and the process by which

 

the participating employer provides a payroll deposit retirement

 

savings arrangement to forward those contributions and related

 

information to the program, including, but not limited to,

 

contracting with financial service companies and third-party

 

administrators with the capability to receive and process employee

 

information and contributions for payroll deposit retirement

 

savings arrangements or similar arrangements.

 

     (j) Design and establish the process for enrollment under


section 14, including the process by which an employee can opt not

 

to participate in the program, select a contribution level, select

 

an investment option, and terminate participation in the program.

 

     (k) Evaluate and establish the process by which an individual

 

may voluntarily enroll in and make contributions to the program.

 

     (l) Accept any grants, appropriations, or other money from

 

this state, any unit of federal, state, or local government, or any

 

other person, firm, partnership, or corporation solely for deposit

 

into the fund, whether for investment or administrative purposes.

 

     (m) Evaluate the need for, and procure as needed, insurance

 

against any and all loss in connection with the property, assets,

 

or activities of the program, and indemnify as needed each member

 

of the board from personal loss or liability resulting from a

 

member's action or inaction as a member of the board.

 

     (n) Make provisions for paying administrative costs and

 

expenses for the creation, management, and operation of the

 

program, including the costs associated with subdivisions (e), (g),

 

(i), and (m) and sections 6(2), 11(2), 18(1), and 19(13). Subject

 

to appropriation, the state may pay administrative costs associated

 

with the creation and management of the program until sufficient

 

assets are available in the fund for that purpose. Then, all

 

administrative costs of the fund, including repayment of any start-

 

up funds provided by the state, must be paid only out of money on

 

deposit in the fund. However, private money or federal funding

 

received under subdivision (l) to implement the program until the

 

fund is self-sustaining shall not be repaid unless that money was

 

offered contingent upon the promise of repayment. The board shall


keep annual administrative expenses as low as possible and shall

 

not exceed 0.75% of the total trust balance.

 

     (o) Allocate administrative fees pro rata to individual

 

retirement accounts in the program.

 

     (p) Set minimum and maximum contribution levels in accordance

 

with limits established for IRAs in the internal revenue code.

 

     (q) Facilitate education and outreach to employers and

 

employees.

 

     (r) Facilitate program compliance with all applicable

 

requirements under the internal revenue code, including tax

 

qualification requirements or any other applicable law and

 

accounting requirements.

 

     (s) Carry out the duties and obligations of the program in an

 

effective, efficient, and low-cost manner.

 

     (t) Exercise any and all other powers reasonably necessary to

 

effectuate the program purposes and objectives.

 

     (u) Deposit into the Michigan secure retirement administrative

 

fund all grants, gifts, donations, fees, and earnings from

 

investments from the Michigan secure retirement savings program

 

fund that are used to recover administrative costs. All expenses of

 

the board must be paid from the Michigan secure retirement

 

administrative fund.

 

     Sec 9. The board shall annually prepare and adopt a written

 

statement of investment policy that includes a risk management and

 

oversight program. The investment policy must prohibit the board,

 

program, and fund from borrowing for investment purposes. The risk

 

management and oversight program must be designed to ensure that an


effective risk management system is in place to monitor the risk

 

levels of the program and fund portfolio, to ensure that the risks

 

taken are prudent and properly managed, to provide an integrated

 

process for overall risk management, and to assess investment

 

returns and risk to determine if the risks taken are adequately

 

compensated compared to applicable performance benchmarks and

 

standards. The board shall consider the statement of investment

 

policy and any changes in the investment policy at a public

 

hearing.

 

     Sec. 10. (1) The board may engage, after an open bid process,

 

an investment manager or managers to invest the fund and any other

 

assets of the program. Money in the fund may be invested or

 

reinvested by the state treasurer's office or may be invested in

 

whole or in part under contract with private investment managers

 

selected by the board. In selecting the investment manager or

 

managers, the board shall take into consideration the investment

 

manager's fees and charges to reduce the program's administrative

 

expenses.

 

     (2) The investment manager or managers shall comply with all

 

applicable federal and state laws, rules, and regulations, and all

 

rules, policies, and guidelines promulgated by the board with

 

respect to the program and the investment of the fund, including,

 

but not limited to, the investment policy.

 

     (3) The investment manager or managers shall provide the

 

reports the board considers necessary for the board to oversee each

 

investment manager's performance and the performance of the fund.

 

     Sec. 11. (1) The board shall establish as an investment option


a life-cycle fund with a target date based on the age of the

 

enrollee. This option is the default investment for enrollees who

 

fail to elect an investment option unless and until the board

 

designates by rule a new investment option as the default as

 

described in subsection (3).

 

     (2) The board may establish any of the following additional

 

investment options:

 

     (a) A conservative principal protection fund.

 

     (b) A growth fund.

 

     (c) A secure return fund whose primary objective is the

 

preservation of the safety of principal and the provision of a

 

stable and low-risk rate of return. If the board elects to

 

establish a secure return fund, the board may procure any

 

insurance, annuity, or other product to insure the value of

 

individuals' accounts and guarantee a rate of return. The cost of

 

the funding mechanism must be paid out of the fund. The board, the

 

program, the fund, this state, or any participating employer shall

 

not assume any liability for investment or actuarial risk. The

 

board shall determine whether to establish investment options based

 

on an analysis of their cost, risk profile, benefit level,

 

feasibility, and ease of implementation.

 

     (d) An annuity fund.

 

     (3) If the board elects to establish a secure return fund, the

 

board shall then determine whether that option will be designated

 

to replace the target date or life-cycle fund as the default

 

investment option for enrollees who do not elect an investment

 

option. In making the determination, the board shall consider the


cost, risk profile, benefit level, and ease of enrollment in the

 

secure return fund. The board may at any time revisit the question

 

and, based on an analysis of the criteria, establish either the

 

secure return fund or the life-cycle fund as the default for

 

enrollees who do not elect an investment option.

 

     Sec. 12. Interest, investment earnings, and investment losses

 

must be allocated to individual program accounts as established by

 

the board under section 8(d). An individual's retirement savings

 

benefit under the program must be an amount equal to the balance in

 

the individual's program account on the date the retirement savings

 

benefit becomes payable. The state is not liable for any payment of

 

benefits to any participant in the program.

 

     Sec. 13. (1) Before opening the program for enrollment, the

 

board shall design and disseminate to all employers an employer

 

information packet and an employee information packet. The employer

 

information packet and employee information packet must include

 

background information on the program, appropriate disclosures for

 

employees, and information regarding the vendor Internet website

 

described in section 14(10).

 

     (2) The board shall provide for the contents of both the

 

employee information packet and the employer information packet.

 

     (3) The employee information packet must include a disclosure

 

form. The disclosure form must explain, but not be limited to, all

 

of the following:

 

     (a) The benefits and risks associated with making

 

contributions to the program.

 

     (b) The mechanics of how to make contributions to the program.


     (c) How to opt out of the program.

 

     (d) How to participate in the program with a level of employee

 

contributions other than 3%.

 

     (e) The process for withdrawing retirement savings.

 

     (f) How to obtain additional information about the program.

 

     (g) That employees seeking financial advice should contact

 

financial advisors, that participating employers are not in a

 

position to provide financial advice, and that participating

 

employers are not liable for decisions employees make under this

 

act.

 

     (h) That the program is not an employer-sponsored retirement

 

plan.

 

     (i) That the program fund is not guaranteed by this state.

 

     (4) The employee information packet must also include a form

 

for an employee to note his or her decision to opt out of

 

participation in the program or elect to participate with a level

 

of employee contributions other than 3%.

 

     (5) Participating employers shall supply the employee

 

information packet to employees on launch of the program.

 

Participating employers shall supply the employee information

 

packet to new employees at the time of hiring, and new employees

 

may opt out of participation in the program or elect to participate

 

with a level of employee contributions other than 3% at that time.

 

     Sec. 14. (1) Except as otherwise provided in section 21, the

 

program must be implemented and enrollment of employees must begin

 

within 24 months after the effective date of this act. Subsections

 

(2) to (9) apply after the board opens the program for enrollment.


     (2) An employer shall establish a payroll deposit retirement

 

savings arrangement to allow each employee to participate in the

 

program within 9 months after the board opens the program for

 

enrollment.

 

     (3) Employers shall automatically enroll in the program each

 

of their employees who has not opted out of participation in the

 

program using the process described in section 13(3) and shall

 

provide payroll deduction retirement savings arrangements for those

 

employees and deposit the money into the program on their behalf.

 

Small employers may provide payroll deduction retirement savings

 

arrangements for each employee who elects to participate in the

 

program.

 

     (4) Enrollees may select a contribution level into the fund.

 

The level may be expressed as a percentage of wages or as a dollar

 

amount up to the deductible amount for the enrollee's taxable year

 

under section 219(b)(1)(A) of the internal revenue code, 26 USC

 

219. An enrollee may change his or her contribution level at any

 

time, subject to rules promulgated by the board. If an enrollee

 

fails to select a contribution level using the process described in

 

section 13(3), he or she shall contribute 3% of his or her wages to

 

the program, but the contributions must not cause the enrollee's

 

total contributions to IRAs for the year to exceed the deductible

 

amount for the enrollee's taxable year under section 219(b)(1)(A)

 

of the internal revenue code, 26 USC 219.

 

     (5) Enrollees may select an investment option from the

 

permitted investment options listed in section 11. Enrollees may

 

change their investment option at any time, subject to rules


promulgated by the board. If an enrollee fails to select an

 

investment option, the enrollee must be placed in the investment

 

option selected by the board as the default under section 11(3). If

 

the board has not selected a default investment option under

 

section 11(3), an enrollee who fails to select an investment option

 

must be placed in the life-cycle fund investment option.

 

     (6) Following initial implementation of the program under this

 

section, at least once every year, participating employers shall

 

designate an open enrollment period during which employees who

 

previously opted out of the program may enroll in the program.

 

     (7) An employee who has opted out of the program and

 

subsequently wants to participate through the participating

 

employer's payroll deposit retirement savings arrangement may

 

enroll only during the participating employer's designated open

 

enrollment period or, if permitted by the participating employer,

 

at an earlier time.

 

     (8) Employers retain the option to set up any type of

 

employer-sponsored retirement plan, such as a defined benefit plan

 

or a 401(k), Simplified Employee Pension Plan (SEP), or Savings

 

Incentive Match Plan for Employees (SIMPLE) plan, or to offer an

 

automatic enrollment payroll deduction IRA, instead of having a

 

payroll deposit retirement savings arrangement to allow employee

 

participation in the program.

 

     (9) An employee may terminate his or her participation in the

 

program at any time in a manner prescribed by the board.

 

     (10) The board shall establish and maintain an Internet

 

website designed to assist employers in identifying private sector


providers of retirement arrangements that can be set up by the

 

employer rather than allowing employee participation in the program

 

under this act. However, the board shall only establish and

 

maintain an Internet website under this subsection if private

 

sector providers show sufficient interest in the website and

 

furnish the funding necessary to establish and maintain it. The

 

board shall provide public notice of the availability of and the

 

process for inclusion on the Internet website before it becomes

 

publicly available. If established, the Internet website must be

 

available to the public before the board opens the program for

 

enrollment, and the Internet website address must be included on

 

any Internet website posting or other materials regarding the

 

program offered to the public by the board.

 

     Sec. 15. Employee contributions deducted by the participating

 

employer through payroll deduction must be paid by the

 

participating employer to the fund using 1 or more payroll deposit

 

retirement savings arrangements established by the board under

 

section 8(i), by 1 of the following times:

 

     (a) On or before the last day of the month following the month

 

in which the compensation otherwise would have been payable to the

 

employee in cash.

 

     (b) Before a later deadline prescribed by the board for making

 

the payments, but not later than the due date for the deposit of

 

tax required to be deducted and withheld relating to collection of

 

income tax at source on wages or for the deposit of tax required to

 

be paid under the employment security insurance system for the

 

payroll period to which the payments relate.


     Sec. 16. (1) This state has no duty and is not liable to a

 

party for the payment of any retirement savings benefits accrued by

 

a individual under the program. Any financial liability for the

 

payment of retirement savings benefits in excess of money available

 

under the program must be borne solely by the entities with whom

 

the board contracts to provide insurance to protect the value of

 

the program.

 

     (2) A state board, commission, or agency, or any officer,

 

employee, or member thereof, is not liable for any loss or

 

deficiency resulting from particular investments selected under

 

this act, except for any liability that arises out of a breach of

 

fiduciary duty under section 7.

 

     Sec. 17. (1) Participating employers are not liable for an

 

employee's decision to participate in, or opt out of, the program

 

or for the investment decisions of the board or of any enrollee.

 

     (2) A participating employer is not a fiduciary, and is not

 

considered to be a fiduciary, with regard to the program. A

 

participating employer has no responsibility for the

 

administration, investment, or investment performance of the

 

program. A participating employer is not liable as to investment

 

returns, program design, or benefits paid to program participants.

 

     Sec. 18. (1) By July 1 of each year after the program begins

 

operating, the board shall submit to the governor, the state

 

treasurer, and the standing committees of the senate and house of

 

representatives concerned with retirement issues all of the

 

following:

 

     (a) An audited financial report, prepared in accordance with


generally accepted accounting principles, on the operations of the

 

program during the prior calendar year. The annual audit must be

 

made by an independent certified public accountant and must

 

include, but is not limited to, direct and indirect costs

 

attributable to the use of outside consultants, independent

 

contractors, and any other persons who are not state employees for

 

the administration of the program.

 

     (b) A report prepared by the board, including at a minimum, a

 

summary of the benefits provided by the program, including the

 

number of enrollees in the program; the percentage and amounts of

 

investment options and rates of return; and any other information

 

that is relevant to make a full, fair, and effective disclosure of

 

the operations of the program and the fund.

 

     (2) In addition to any other statements or reports required by

 

law, the board shall provide the following periodic reports at

 

least annually, that may also include any other information

 

regarding the program as the board may determine:

 

     (a) A report of the names of each enrollee employed by the

 

participating employer and the amounts of contributions made by the

 

participating employer on behalf of each employee during the

 

reporting period.

 

     (b) A report to each enrollee of the contributions and

 

investment income allocated to, withdrawals from, and balances in

 

his or her program account for the reporting period.

 

     Sec. 19. (1) An employer that fails without reasonable cause

 

to enroll an employee in the program within the time prescribed

 

under section 14 is subject to a penalty equal to 1 the following:


     (a) Two hundred fifty dollars for each employee for each

 

calendar year or portion of a calendar year during which the

 

employee neither was enrolled in the program nor had elected out of

 

participation in the program.

 

     (b) For each calendar year beginning after the date a penalty

 

has been assessed with respect to an employee, $500.00 for any

 

portion of that calendar year during which an employee who has not

 

opted out of participation in the program under the process

 

described in section 13(3) is not enrolled in the program.

 

     (2) After determining that an employer is subject to penalty

 

under this section for a calendar year, the department shall issue

 

a notice of proposed assessment to the employer, stating the number

 

of employees for which the penalty is proposed under subsection

 

(1)(a) and the number of employees for which the penalty is

 

proposed under subsection (1)(b) for the calendar year, and the

 

total amount of fines proposed. If the employer files a protest

 

with the department under subsection (3) within 90 days after the

 

date on which the notice of proposed assessment is issued, the

 

fines specified in the notice are considered assessed on the date

 

when a decision of the department upholding the assessment becomes

 

final. If a protest is not filed within that time, the assessment

 

date of the fines is the ninety-first day after the assessment

 

notice is issued.

 

     (3) A written protest against the proposed assessment must be

 

filed with the department in the form the department requires by

 

rule, setting forth the grounds on which the protest is based. If

 

the protest is filed within 90 days after the date the notice of


proposed assessment is issued, the department shall reconsider the

 

proposed assessment and shall grant the employer a hearing. As soon

 

as practicable after the reconsideration and hearing, the

 

department shall issue a notice of decision to the employer,

 

setting forth the department's findings of fact and the basis of

 

the decision. The decision of the department becomes final as

 

follows:

 

     (a) If no further action for review of the decision is taken

 

under the administrative procedures act of 1969, 1969 PA 306, MCL

 

24.201 to 24.328, on the date on which the time for requesting the

 

review has expired.

 

     (b) If a timely action for review of the decision is taken

 

under the administrative procedures act of 1969, 1969 PA 306, MCL

 

24.201 to 24.328, on the date all proceedings in court for the

 

review of the assessment have terminated or the time for further

 

appeal has expired.

 

     (4) As soon as practicable after the fines specified in a

 

notice of proposed assessment are considered assessed, the

 

department shall notify the employer liable for any unpaid portion

 

of the assessment, stating the amount due and demanding payment. If

 

an employer neglects or refuses to pay the entire liability shown

 

on the notice and demand within 10 days after the notice and demand

 

are issued, the unpaid amount is a lien in favor of this state on

 

all property and rights to property, whether real or personal,

 

belonging to the employer, and the provisions in the income tax act

 

of 1967, 1967 PA 281, MCL 206.1 to 206.713, regarding liens,

 

levies, and collection actions for unpaid liabilities under that


act, including the periods for taking any action, apply to the

 

unpaid amount.

 

     (5) An employer that has overpaid a penalty assessed under

 

this section may file a claim for refund with the department. A

 

claim must be in writing in the form the department requires by

 

rule and must state the specific grounds for the claim. As soon as

 

practicable after receiving the claim, the department shall examine

 

it and either issue a refund or issue a notice of denial. If the

 

employer files a protest, the department shall reconsider the

 

denial and grant the employer a hearing. As soon as practicable

 

after reconsideration and hearing, the department shall issue a

 

notice of decision to the employer. In each case decided in whole

 

or in part adversely to the employer, the notice must set forth

 

briefly the department's findings of fact and the basis of

 

decision. A denial of a claim for refund becomes final 90 days

 

after the date it is issued, except for amounts as to which the

 

employer has filed a protest with the department. If a protest has

 

been timely filed, the decision of the department becomes final as

 

follows:

 

     (a) If no further action for review of the decision is taken

 

under the administrative procedures act of 1969, 1969 PA 306, MCL

 

24.201 to 24.328, on the date on which the time for requesting the

 

review has expired.

 

     (b) If a timely action for review of the decision is taken

 

under the administrative procedures act of 1969, 1969 PA 306, MCL

 

24.201 to 24.328, on the date all proceedings in court for the

 

review of the assessment have terminated or the time for further


appeal has expired.

 

     (6) A notice of proposed assessment must not be issued with

 

respect to a calendar year after June 30 of the fourth subsequent

 

calendar year. A claim for refund may not be filed more than 1 year

 

after the date of payment.

 

     (7) The administrative procedures act of 1969, 1969 PA 306,

 

MCL 24.201 to 24.328, and the rules adopted under that act apply to

 

and govern all proceedings for the judicial review of final

 

decisions of the department in response to a protest filed by the

 

employer under subsections (3) and (5).

 

     (8) Notice required under this section may be given or issued

 

by mailing it by first-class mail addressed to the person concerned

 

at his or her last known address.

 

     (9) All books and records and other papers and documents

 

relevant to determining any penalty due under this section are

 

subject to inspection during business hours by the department or

 

its authorized agents and employees.

 

     (10) For purposes of any provision of state law allowing the

 

department or any other agency of this state to offset an amount

 

owed to a taxpayer against a tax liability of that taxpayer or

 

allowing the department to offset an overpayment of tax against any

 

liability owed to this state, a penalty assessed under this section

 

is considered to be a tax liability of the employer and any refund

 

due to an employer is considered to be an overpayment of tax of the

 

employer.

 

     (11) Except as provided in this subsection, all information

 

received by the department from returns filed by an employer or


from any investigation conducted under this act are confidential

 

and exempt from disclosure under the freedom of information act,

 

1976 PA 442, MCL 15.231 to 15.246. The information may be used for

 

official purposes within the department or pursuant to official

 

procedures for collecting fines assessed under this act. This

 

subsection does not prohibit the director from publishing or making

 

available to the public reasonable statistics concerning the

 

operation of this act wherein the contents of returns are grouped

 

into aggregates in a way that the specific information of any

 

employer is not disclosed. This subsection does not prohibit the

 

director from divulging information to an authorized representative

 

of the employer or to any person pursuant to a request or

 

authorization made by the employer or by an authorized

 

representative of the employer.

 

     (12) Civil fines collected under this act and fees collected

 

under subsection (13) must be deposited into the general fund of

 

this state. The department may, subject to appropriation, use money

 

in the fund to cover expenses it incurs in performing its duties

 

under this act.

 

     (13) The department may charge the board a reasonable fee for

 

its costs in performing its duties under this section to the extent

 

that the costs have not been recovered from fines imposed under

 

this section.

 

     (14) This section applies 9 months after the board notifies

 

the director that the program has been implemented. On receipt of

 

notification from the board, the department shall immediately post

 

on its Internet website a notice stating the date that this section


becomes operative. The notice must include a statement that as an

 

alternative to enrolling employees in the program, employers may

 

sponsor an arrangement, including, but not limited to, a defined

 

benefit plan, 401(k) plan, Simplified Employee Pension Plan (SEP),

 

Savings Incentive Match Plan for Employees (SIMPLE) plan, or

 

automatic payroll deduction IRA offered through a private provider.

 

The board shall provide a link to the vendor Internet website

 

described in section 14(10).

 

     Sec. 20. The department in consultation with the board shall

 

promolgate, in accordance with the administrative procedures act of

 

1969, 1969 PA 306, MCL 24.201 to 24.328, any rules that may be

 

necessary to implement this act.

 

     Sec. 21. If the board does not obtain adequate money to

 

implement the program within the time frame set forth under section

 

14, the board may delay the implementation of the program and the

 

dates that sections dependent on an operating program begin to

 

apply must be correspondingly extended.

 

     Sec. 22. The board shall request in writing an opinion or

 

ruling from the appropriate entity with jurisdiction over the

 

federal employee retirement income security act of 1974, Public Law

 

93-406, regarding the applicability of that act to the program. The

 

board shall not implement the program if the IRA arrangements

 

offered under the program fail to qualify for the favorable federal

 

income tax treatment ordinarily accorded to IRAs under the internal

 

revenue code or if it is determined that the program is an employee

 

benefit plan and state or employer liability is established under

 

the federal employee retirement income security act of 1974, Public


Law 93-406.

 

     Enacting section 1. This act takes effect 90 days after the

 

date it is enacted into law.

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