Bill Text: MN SF2078 | 2013-2014 | 88th Legislature | Introduced
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: State-administered retirement savings plan report requirement and appropriation
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Introduced - Dead) 2014-03-26 - Comm report: To pass as amended and re-refer to Finance [SF2078 Detail]
Download: Minnesota-2013-SF2078-Introduced.html
Bill Title: State-administered retirement savings plan report requirement and appropriation
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Introduced - Dead) 2014-03-26 - Comm report: To pass as amended and re-refer to Finance [SF2078 Detail]
Download: Minnesota-2013-SF2078-Introduced.html
1.2relating to retirement; creating the Minnesota secure choice retirement savings
1.3plan; requiring a report; establishing a trust account;proposing coding for new
1.4law as Minnesota Statutes, chapter 352G.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. [352G.01] DEFINITIONS.
1.7 Subdivision 1. Applicability. For purposes of sections 352G.01 to 352G.08, the
1.8terms defined in this section shall have the meanings given them.
1.9 Subd. 2. 401(a). (a) "401(a) account" means an account associated with an
1.10individual plan participant within a 401(a) trust.
1.11(b) "401(a) trust" means a trust fund that is created to receive employer profit-sharing
1.12contributions to individual accounts of employees under section 401(a) of the Code.
1.13 Subd. 3. Board. "Board" means the Minnesota Secure Choice Retirement Savings
1.14Board.
1.15 Subd. 4. Code. "Code" means the Internal Revenue Code of 1986, as amended
1.16through April 14, 2011.
1.17 Subd. 5. Eligible employee. "Eligible employee" means: (1) a person, other than
1.18an excluded employee, who is employed by an eligible employer; or (2) a self-employed
1.19person.
1.20 Subd. 6. Eligible employer. "Eligible employer" means a person or entity with one
1.21or more employees in Minnesota, excluding the federal government.
1.22 Subd. 7. Excluded employee. (a) "Excluded employee" means:
2.1(1) any employee who is eligible to participate in either a qualifying retirement plan
2.2or arrangement described in section 219(g)(5) of the Code, or an automatic enrollment
2.3payroll deduction IRA maintained or offered by the employee's employer;
2.4(2) any employee who was eligible at any time during the preceding two calendar
2.5years to participate in a qualifying retirement plan or arrangement described in section
2.6219(g)(5) of the Code that was terminated or frozen by the employee's employer;
2.7(3) any employee who was eligible at any time during the preceding two calendar
2.8years to participate in an automatic enrollment payroll deduction IRA maintained or
2.9offered by the employee's employer that the employer ceased to offer;
2.10(4) any employee covered by a collective bargaining agreement that expressly
2.11provides for the employer to contribute to a multiemployer retirement plan described in
2.12section 414(f) of the Code;
2.13(5) any employee who is an active member of a public employee retirement plan
2.14listed in section 356.20, subdivision 2; and
2.15(6) any employee who has not attained the age of 18 before the beginning of the
2.16calendar year.
2.17(b) A person who is an excluded employee with respect to employment by one
2.18employer is excluded only with respect to that employer, and is not an excluded employee
2.19with respect to another employer, or with respect to self-employment, if paragraph (a)
2.20does not apply to that employment. A person who becomes an excluded employee is
2.21excluded only for purposes of future contributions, and this exclusion does not affect the
2.22person's account with respect to prior contributions.
2.23 Subd. 8. IRA. "IRA" means an individual retirement account or individual
2.24retirement annuity under sections 408(a) or 408(b) of the Code.
2.25 Subd. 9. Participating employer. "Participating employer" means an eligible
2.26employer that provides a payroll deposit retirement savings arrangement under this
2.27chapter for eligible employees.
2.28 Subd. 10. Payroll deposit retirement savings arrangement. "Payroll deposit
2.29retirement savings arrangement" means an arrangement by which an employer allows
2.30employees to remit payroll deduction contributions to the plan.
2.31 Subd. 11. Plan. "Plan" means the Minnesota secure choice retirement savings plan
2.32established in section 352G.02.
2.33 Subd. 12. Plan administrator. "Plan administrator" means the person selected by
2.34the board to administer the daily operations of the plan and to provide record keeping
2.35and other services for the plan.
3.1 Subd. 13. Trust. "Trust" means the Minnesota Secure Choice Retirement Savings
3.2Trust.
3.3 Sec. 2. [352G.02] MINNESOTA SECURE CHOICE RETIREMENT SAVINGS
3.4PLAN.
3.5 Subdivision 1. Plan established. There is hereby established a retirement savings
3.6plan known as the Minnesota secure choice retirement savings plan that shall meet all of
3.7the requirements to qualify for the favorable federal income tax treatment ordinarily
3.8accorded to IRAs under the Code, and that must not be determined to be an employee
3.9benefit plan under the federal Employee Retirement Income Security Act.
3.10 Subd. 2. Purpose. The plan is established for the purposes of:
3.11(1) promoting greater retirement income for private employees;
3.12(2) maximizing participation by private employees who have no access to retirement
3.13savings through their place of employment by minimizing barriers to participation;
3.14(3) minimizing fees;
3.15(4) portability across private employers; and
3.16(5) providing for stable income through retirement, while incurring no state liability
3.17for payment of benefits.
3.18 Sec. 3. [352G.03] MINNESOTA SECURE CHOICE RETIREMENT SAVINGS
3.19TRUST.
3.20 Subdivision 1. Trust established. (a) All assets of the plan, including contributions
3.21paid by employees and employers and investment earnings, shall be held in trust for the
3.22exclusive purposes of paying benefits to the participants of the plan, paying for the cost of
3.23administration of the plan, and making investments for the benefit of the plan participants.
3.24(b) Assets of the plan shall be held in a separate account in the state treasury known
3.25as the Minnesota Secure Choice Retirement Savings Trust to be invested by the State
3.26Board of Investment consistent with applicable rules, or may be invested by third-party
3.27investment management under contract with the State Board of Investment.
3.28(c) Plan participants may not direct the investment of contributions to the plan or
3.29plan earnings.
3.30(d) Plan assets are not subject to claims by creditors of the state, are not part of the
3.31general fund, and are not subject to appropriations by the state.
3.32 Subd. 2. Investment by the State Board of Investment. (a) The State Board of
3.33Investment shall establish the plan's investment requirements.
4.1(b) The State Board of Investment shall invest the money in the trust with care, skill,
4.2prudence, and diligence under the circumstances then prevailing that a prudent person
4.3acting in a like capacity and familiar with those matters would use in the conduct of
4.4an enterprise of a like character and with like aims, subject to the provision of section
4.511A.24, except that the accounts may be invested without limit in investment options from
4.6open-ended investment companies registered under the federal Investment Company Act
4.7of 1940, United States Code, title 15, sections 80a-1 to 80a-64.
4.8(c) The State Board of Investment may arrange for collective, common, and pooled
4.9investment of assets of the retirement savings program or arrangements, including
4.10investments in conjunction with other funds with which those assets are permitted to be
4.11collectively invested, with a view to saving costs through efficiencies and economies
4.12of scale.
4.13(d) The State Board of Investment may contract with one or more third parties,
4.14pursuant to subdivision 1, paragraph (b), for investment management or related services
4.15in connection with investing the money in the trust, subject to the responsibilities in
4.16subdivision 2, paragraphs (b) and (c). The State Board of Investment and the board may
4.17jointly contract with third-party providers, if the board and the State Board of Investment
4.18jointly determine that it is desirable to contract with the same entity or entities for
4.19administration, record keeping, and investment management services.
4.20 Subd. 3. Fees. The board and the State Board of Investment may establish an
4.21annual fee, equal to a percentage of the average daily net assets of the plan, to be imposed
4.22on participants to recover the costs of administration, record keeping, and investment
4.23management. The board and the State Board of Investment must use best efforts to keep
4.24these fees as low as possible, consistent with efficient administration and high-quality
4.25investment management, so that the returns on savings invested in the plan will be as
4.26high as possible.
4.27 Subd. 4. Risk management. The State Board of Investment shall adopt a written
4.28statement of investment policy that includes a risk management and oversight program.
4.29The investment policy shall mitigate risk by maintaining a diversified investment portfolio.
4.30 Subd. 5. Benefits. Interest, earnings, and losses shall be allocated to plan accounts
4.31as prescribed by the board. An individual's retirement savings benefit under the program
4.32shall be an amount equal to the balance in the individual's plan account on the date the
4.33retirement savings benefit becomes payable.
4.34 Subd. 6. State liability limited. The state shall have no liability for the payment of
4.35any benefit to any participant in the program.
5.1 Sec. 4. [352G.04] OPTIONAL EMPLOYER CONTRIBUTIONS.
5.2 Subdivision 1. Employer contributions. The board shall evaluate, and to the extent
5.3allowed under the federal Employee Retirement Income Security Act and the Code, shall
5.4establish a separate 401(a) trust fund to accept profit-sharing contributions from employers
5.5to individual accounts of their employees, meeting the following conditions:
5.6(1) employer contributions must be in cash or cash equivalents only; securities must
5.7not be accepted as contributions;
5.8(2) 401(a) accounts must be segregated from the trust;
5.9(3) the board must act as a fiduciary under the federal Employee Retirement Income
5.10Security Act with respect to the 401(a) accounts, and may, to the extent permitted by
5.11federal law, direct their investment in the same manner, with the same managers and
5.12asset allocations as the assets of the trust;
5.13(4) employer participation in the 401(a) profit-sharing trust fund is strictly voluntary;
5.14(5) the investments in the 401(a) accounts, comprised of employer contributions plus
5.15credited earnings, may mirror the investments in the individuals' plan accounts, comprised
5.16of employee contributions plus credited earnings, to the extent permitted by federal law; and
5.17(6) 401(a) accounts must provide for immediate vesting.
5.18 Subd. 2. Rollover. Upon the occurrence of a condition permitting a distribution
5.19of benefits under the Code, the plan participant, or beneficiary, may elect to roll over the
5.20account balance in his or her 401(a) account into his or her plan account for the purpose of
5.21obtaining secure retirement income or annuitization, to the extent permitted by law.
5.22 Sec. 5. [352G.05] MINNESOTA SECURE CHOICE RETIREMENT SAVINGS
5.23BOARD.
5.24 Subdivision 1. Minnesota Secure Choice Retirement Savings Board established.
5.25There is established the Minnesota Secure Choice Retirement Savings Board to administer
5.26the Minnesota secure choice retirement savings plan.
5.27 Subd. 2. Membership. (a) The board shall have nine members, and shall be
5.28comprised of the commissioner of management and budget or a designee, who shall serve
5.29as both treasurer and chair, and the following members:
5.30(1) four members appointed by the governor;
5.31(2) two members appointed by the speaker of the house who are not members of
5.32the legislature; and
5.33(3) two members appointed by the majority leader of the senate who are not
5.34members of the legislature.
5.35(b) Of the four members appointed under paragraph (a), clause (1):
6.1(1) one must have retirement savings or investment expertise;
6.2(2) one must represent an eligible employer with between five and 50 eligible
6.3employees; and
6.4(3) one must be an eligible employee.
6.5 Subd. 3. Appointments; membership terms; compensation; removal. (a)
6.6Section 15.0597 shall apply to all appointments and filling of vacancies, except for the
6.7commissioner.
6.8(b) Membership terms, compensation, and removal of members are as provided
6.9in section 15.0575.
6.10(c) Initial appointments to the board must be made by July 1, 2014.
6.11(d) Initial terms are as follows:
6.12(1) for members appointed under paragraph (a), clause (1), the governor shall
6.13designate two to an initial term of two years and two to an initial term of four years;
6.14(2) for members appointed under paragraph (a), clause (2), the speaker of the house
6.15shall designate one to an initial term of one year and one to an initial term of three years; and
6.16(3) for members appointed under paragraph (a), clause (3), the majority leader of
6.17the senate shall designate one to an initial term of one year, and one to an initial term
6.18of three years.
6.19 Subd. 4. Quorum. A majority of the members appointed and serving shall
6.20constitute a quorum for the transaction of any business.
6.21 Subd. 5. Initial meeting. The commissioner of management and budget must
6.22convene the initial meeting of the board by August 1, 2014.
6.23 Subd. 6. Board duties and powers. The board shall have the power and authority
6.24to do all of the following:
6.25(1) appoint a plan administrator, employ staff, determine the duties of the plan
6.26administrator and other staff as necessary, and set their compensation;
6.27(2) make provisions for the payment of costs of administration and operation of
6.28the trust;
6.29(3) allocate administrative fees to each individual retirement account on a pro rata
6.30basis;
6.31(4) design and establish the process for the enrollment of plan participants;
6.32(5) evaluate and establish the process by which an eligible employer is able to
6.33forward contributions and related information to the plan or its agents, which may include,
6.34but is not limited to:
6.35(i) existing processes and arrangements used for the deposit and administration
6.36of tax required to be deducted and withheld relating to the collection of income tax at
7.1source on wages, or for the deposit of tax required to be paid under the unemployment
7.2insurance system; or
7.3(ii) financial services companies and third-party administrators with the capability to
7.4receive and process information on plan participants and contributions by payroll deposit
7.5retirement savings arrangement or other arrangements authorized by this chapter;
7.6(6) determine the eligibility of employers, employees, or other individuals to
7.7participate in the plan as necessary;
7.8(7) evaluate and establish the process by which an individual or an employee of a
7.9nonparticipating employer may enroll in and make contributions to the plan;
7.10(8) determine the means and plan conditions by which to maximize eligible
7.11employee participation in the plan;
7.12(9) set minimum and maximum contribution levels in accordance with contribution
7.13limits set for IRAs and 401(a) accounts by the Code;
7.14(10) explore and establish investment policies that offer employees returns on
7.15contributions and the conversion of individual plan account balances to secure retirement
7.16income or annuitization, without incurring debt or liabilities to the state;
7.17(11) procure insurance indemnifying each member of the board from personal loss
7.18or liability resulting from a member's action or inaction as a member of the board;
7.19(12) evaluate and recommend appropriate incentives for compliance and penalties
7.20for noncompliance with the rules and requirements for participation in the plan;
7.21(13) promulgate rules to implement this act and to govern the trust, the plan, and
7.22participation in the plan; and
7.23(14) report the following annually beginning December 1, 2015, to the majority
7.24leader of the senate, the speaker of the house, and the chairs of the house of representatives
7.25and senate committees with primary jurisdiction over retirement systems and associations:
7.26(i) estimates of the average amount of savings and other financial resources that are
7.27recommended for a financially secure retirement in Minnesota;
7.28(ii) estimates of the relative progress toward achieving the savings recommended for
7.29a financially secure retirement by age, gender, race, ethnicity, and plan eligibility;
7.30(iii) the number of eligible employees, participating employers, and plan participants
7.31in Minnesota;
7.32(iv) the total assets in the trust and average plan account assets by age;
7.33(v) the annual fee as a percentage of the average daily net assets of the plan; and
7.34(vi) the estimated impact on publicly funded social safety net programs attributable
7.35to insufficient retirement savings.
7.36 Subd. 7. Expiration. The board expires January 1, 2020.
8.1 Sec. 6. [352G.06] INFORMATION, DATA, AND DISCLOSURE.
8.2 Subdivision 1. Employee information packet. Prior to opening the plan for
8.3enrollment, the board shall design and disseminate an employee information packet to
8.4all eligible employers. The packet must include background information on the plan and
8.5appropriate disclosures for employees, as well as a sample enrollment form to be used by
8.6employees to provide written authorization for payroll deductions for plan contributions.
8.7 Subd. 2. Disclosure form. (a) The disclosure form must include, but not be limited
8.8to, all of the following:
8.9(1) the benefits and risks associated with making contributions to the plan;
8.10(2) how to make contributions to the plan;
8.11(3) how to suspend contributions to the plan;
8.12(4) the process for withdrawal of retirement savings; and
8.13(5) how to obtain additional information on the plan.
8.14(b) In addition, the disclosure form must clearly articulate the following:
8.15(1) employees seeking financial advice must be instructed to contact a financial
8.16advisor for financial advice, and employees must be advised that employers are not in
8.17a position to provide financial advice, and that employers are not liable for decisions
8.18employees make pursuant to this chapter;
8.19(2) the plan is not an employer-sponsored retirement plan; and
8.20(3) the trust is not guaranteed by the state.
8.21 Subd. 3. Data. Data on plan participants and individuals' plan accounts and 401(a)
8.22accounts are private data on individuals or nonpublic data as defined in section 13.02.
8.23 Sec. 7. [352G.08] SEVERABILITY.
8.24Should any part of this act be declared invalid or unenforceable, or the enforcement
8.25or compliance with it is suspended, restrained, or barred, either by the state or by the final
8.26judgment of a court of competent jurisdiction, the remainder of this act shall remain
8.27in full force and effect.
8.28 Sec. 8. REPORT.
8.29The board must report the following no later than December 1, 2014, to the majority
8.30leader of the senate, the speaker of the house, and the chairs of the house of representatives
8.31and senate committees with primary jurisdiction over retirement systems and associations:
8.32(1) estimates of the average amount of savings and other financial resources that
8.33residents of Minnesota have upon retirement;
9.1(2) estimates of the average amount of savings and other financial resources that are
9.2recommended for a financially secure retirement in Minnesota;
9.3(3) estimates of the relative progress toward achieving the savings recommended for
9.4a financially secure retirement by age, gender, race, ethnicity, and plan eligibility;
9.5(4) the number of eligible employees in Minnesota;
9.6(5) the estimated impact on publicly funded social safety net programs attributable
9.7to insufficient retirement savings;
9.8(6) options for structuring contributions to the plan that achieve the purposes in
9.9Minnesota Statutes, section 352G.02, subdivision 2, including contribution mechanism
9.10and applicability of the Code, and portability under the Code;
9.11(7) options for ensuring that benefits provide for stable income throughout
9.12beneficiaries' retirement years, including the use of insurance against loss in connection
9.13with the property, assets, or activities of the trust, or private underwriting or reinsurance to
9.14manage risk and ensure a minimum rate of return;
9.15(8) projected fees, pursuant to Minnesota Statutes, section 352G.03, subdivision
9.163, relative to asset size and plan structure, with estimates of investment-related fees
9.17determined in consultation with the State Board of Investment;
9.18(9) the cost to participating employers relative to plan structure;
9.19(10) the aggregate economic effect of plan options within the state; and
9.20(11) any changes to state law required to:
9.21(i) implement the plan;
9.22(ii) open the plan to enrollment;
9.23(iii) achieve the purpose in Minnesota Statutes, section 352G.02; and
9.24(iv) facilitate the responsibilities of the board in Minnesota Statutes, section 352G.05.
9.25 Sec. 9. EFFECTIVE DATE.
9.26Sections 1 to 8 are effective the day following final enactment.
1.3plan; requiring a report; establishing a trust account;proposing coding for new
1.4law as Minnesota Statutes, chapter 352G.
1.5BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:
1.6 Section 1. [352G.01] DEFINITIONS.
1.7 Subdivision 1. Applicability. For purposes of sections 352G.01 to 352G.08, the
1.8terms defined in this section shall have the meanings given them.
1.9 Subd. 2. 401(a). (a) "401(a) account" means an account associated with an
1.10individual plan participant within a 401(a) trust.
1.11(b) "401(a) trust" means a trust fund that is created to receive employer profit-sharing
1.12contributions to individual accounts of employees under section 401(a) of the Code.
1.13 Subd. 3. Board. "Board" means the Minnesota Secure Choice Retirement Savings
1.14Board.
1.15 Subd. 4. Code. "Code" means the Internal Revenue Code of 1986, as amended
1.16through April 14, 2011.
1.17 Subd. 5. Eligible employee. "Eligible employee" means: (1) a person, other than
1.18an excluded employee, who is employed by an eligible employer; or (2) a self-employed
1.19person.
1.20 Subd. 6. Eligible employer. "Eligible employer" means a person or entity with one
1.21or more employees in Minnesota, excluding the federal government.
1.22 Subd. 7. Excluded employee. (a) "Excluded employee" means:
2.1(1) any employee who is eligible to participate in either a qualifying retirement plan
2.2or arrangement described in section 219(g)(5) of the Code, or an automatic enrollment
2.3payroll deduction IRA maintained or offered by the employee's employer;
2.4(2) any employee who was eligible at any time during the preceding two calendar
2.5years to participate in a qualifying retirement plan or arrangement described in section
2.6219(g)(5) of the Code that was terminated or frozen by the employee's employer;
2.7(3) any employee who was eligible at any time during the preceding two calendar
2.8years to participate in an automatic enrollment payroll deduction IRA maintained or
2.9offered by the employee's employer that the employer ceased to offer;
2.10(4) any employee covered by a collective bargaining agreement that expressly
2.11provides for the employer to contribute to a multiemployer retirement plan described in
2.12section 414(f) of the Code;
2.13(5) any employee who is an active member of a public employee retirement plan
2.14listed in section 356.20, subdivision 2; and
2.15(6) any employee who has not attained the age of 18 before the beginning of the
2.16calendar year.
2.17(b) A person who is an excluded employee with respect to employment by one
2.18employer is excluded only with respect to that employer, and is not an excluded employee
2.19with respect to another employer, or with respect to self-employment, if paragraph (a)
2.20does not apply to that employment. A person who becomes an excluded employee is
2.21excluded only for purposes of future contributions, and this exclusion does not affect the
2.22person's account with respect to prior contributions.
2.23 Subd. 8. IRA. "IRA" means an individual retirement account or individual
2.24retirement annuity under sections 408(a) or 408(b) of the Code.
2.25 Subd. 9. Participating employer. "Participating employer" means an eligible
2.26employer that provides a payroll deposit retirement savings arrangement under this
2.27chapter for eligible employees.
2.28 Subd. 10. Payroll deposit retirement savings arrangement. "Payroll deposit
2.29retirement savings arrangement" means an arrangement by which an employer allows
2.30employees to remit payroll deduction contributions to the plan.
2.31 Subd. 11. Plan. "Plan" means the Minnesota secure choice retirement savings plan
2.32established in section 352G.02.
2.33 Subd. 12. Plan administrator. "Plan administrator" means the person selected by
2.34the board to administer the daily operations of the plan and to provide record keeping
2.35and other services for the plan.
3.1 Subd. 13. Trust. "Trust" means the Minnesota Secure Choice Retirement Savings
3.2Trust.
3.3 Sec. 2. [352G.02] MINNESOTA SECURE CHOICE RETIREMENT SAVINGS
3.4PLAN.
3.5 Subdivision 1. Plan established. There is hereby established a retirement savings
3.6plan known as the Minnesota secure choice retirement savings plan that shall meet all of
3.7the requirements to qualify for the favorable federal income tax treatment ordinarily
3.8accorded to IRAs under the Code, and that must not be determined to be an employee
3.9benefit plan under the federal Employee Retirement Income Security Act.
3.10 Subd. 2. Purpose. The plan is established for the purposes of:
3.11(1) promoting greater retirement income for private employees;
3.12(2) maximizing participation by private employees who have no access to retirement
3.13savings through their place of employment by minimizing barriers to participation;
3.14(3) minimizing fees;
3.15(4) portability across private employers; and
3.16(5) providing for stable income through retirement, while incurring no state liability
3.17for payment of benefits.
3.18 Sec. 3. [352G.03] MINNESOTA SECURE CHOICE RETIREMENT SAVINGS
3.19TRUST.
3.20 Subdivision 1. Trust established. (a) All assets of the plan, including contributions
3.21paid by employees and employers and investment earnings, shall be held in trust for the
3.22exclusive purposes of paying benefits to the participants of the plan, paying for the cost of
3.23administration of the plan, and making investments for the benefit of the plan participants.
3.24(b) Assets of the plan shall be held in a separate account in the state treasury known
3.25as the Minnesota Secure Choice Retirement Savings Trust to be invested by the State
3.26Board of Investment consistent with applicable rules, or may be invested by third-party
3.27investment management under contract with the State Board of Investment.
3.28(c) Plan participants may not direct the investment of contributions to the plan or
3.29plan earnings.
3.30(d) Plan assets are not subject to claims by creditors of the state, are not part of the
3.31general fund, and are not subject to appropriations by the state.
3.32 Subd. 2. Investment by the State Board of Investment. (a) The State Board of
3.33Investment shall establish the plan's investment requirements.
4.1(b) The State Board of Investment shall invest the money in the trust with care, skill,
4.2prudence, and diligence under the circumstances then prevailing that a prudent person
4.3acting in a like capacity and familiar with those matters would use in the conduct of
4.4an enterprise of a like character and with like aims, subject to the provision of section
4.511A.24, except that the accounts may be invested without limit in investment options from
4.6open-ended investment companies registered under the federal Investment Company Act
4.7of 1940, United States Code, title 15, sections 80a-1 to 80a-64.
4.8(c) The State Board of Investment may arrange for collective, common, and pooled
4.9investment of assets of the retirement savings program or arrangements, including
4.10investments in conjunction with other funds with which those assets are permitted to be
4.11collectively invested, with a view to saving costs through efficiencies and economies
4.12of scale.
4.13(d) The State Board of Investment may contract with one or more third parties,
4.14pursuant to subdivision 1, paragraph (b), for investment management or related services
4.15in connection with investing the money in the trust, subject to the responsibilities in
4.16subdivision 2, paragraphs (b) and (c). The State Board of Investment and the board may
4.17jointly contract with third-party providers, if the board and the State Board of Investment
4.18jointly determine that it is desirable to contract with the same entity or entities for
4.19administration, record keeping, and investment management services.
4.20 Subd. 3. Fees. The board and the State Board of Investment may establish an
4.21annual fee, equal to a percentage of the average daily net assets of the plan, to be imposed
4.22on participants to recover the costs of administration, record keeping, and investment
4.23management. The board and the State Board of Investment must use best efforts to keep
4.24these fees as low as possible, consistent with efficient administration and high-quality
4.25investment management, so that the returns on savings invested in the plan will be as
4.26high as possible.
4.27 Subd. 4. Risk management. The State Board of Investment shall adopt a written
4.28statement of investment policy that includes a risk management and oversight program.
4.29The investment policy shall mitigate risk by maintaining a diversified investment portfolio.
4.30 Subd. 5. Benefits. Interest, earnings, and losses shall be allocated to plan accounts
4.31as prescribed by the board. An individual's retirement savings benefit under the program
4.32shall be an amount equal to the balance in the individual's plan account on the date the
4.33retirement savings benefit becomes payable.
4.34 Subd. 6. State liability limited. The state shall have no liability for the payment of
4.35any benefit to any participant in the program.
5.1 Sec. 4. [352G.04] OPTIONAL EMPLOYER CONTRIBUTIONS.
5.2 Subdivision 1. Employer contributions. The board shall evaluate, and to the extent
5.3allowed under the federal Employee Retirement Income Security Act and the Code, shall
5.4establish a separate 401(a) trust fund to accept profit-sharing contributions from employers
5.5to individual accounts of their employees, meeting the following conditions:
5.6(1) employer contributions must be in cash or cash equivalents only; securities must
5.7not be accepted as contributions;
5.8(2) 401(a) accounts must be segregated from the trust;
5.9(3) the board must act as a fiduciary under the federal Employee Retirement Income
5.10Security Act with respect to the 401(a) accounts, and may, to the extent permitted by
5.11federal law, direct their investment in the same manner, with the same managers and
5.12asset allocations as the assets of the trust;
5.13(4) employer participation in the 401(a) profit-sharing trust fund is strictly voluntary;
5.14(5) the investments in the 401(a) accounts, comprised of employer contributions plus
5.15credited earnings, may mirror the investments in the individuals' plan accounts, comprised
5.16of employee contributions plus credited earnings, to the extent permitted by federal law; and
5.17(6) 401(a) accounts must provide for immediate vesting.
5.18 Subd. 2. Rollover. Upon the occurrence of a condition permitting a distribution
5.19of benefits under the Code, the plan participant, or beneficiary, may elect to roll over the
5.20account balance in his or her 401(a) account into his or her plan account for the purpose of
5.21obtaining secure retirement income or annuitization, to the extent permitted by law.
5.22 Sec. 5. [352G.05] MINNESOTA SECURE CHOICE RETIREMENT SAVINGS
5.23BOARD.
5.24 Subdivision 1. Minnesota Secure Choice Retirement Savings Board established.
5.25There is established the Minnesota Secure Choice Retirement Savings Board to administer
5.26the Minnesota secure choice retirement savings plan.
5.27 Subd. 2. Membership. (a) The board shall have nine members, and shall be
5.28comprised of the commissioner of management and budget or a designee, who shall serve
5.29as both treasurer and chair, and the following members:
5.30(1) four members appointed by the governor;
5.31(2) two members appointed by the speaker of the house who are not members of
5.32the legislature; and
5.33(3) two members appointed by the majority leader of the senate who are not
5.34members of the legislature.
5.35(b) Of the four members appointed under paragraph (a), clause (1):
6.1(1) one must have retirement savings or investment expertise;
6.2(2) one must represent an eligible employer with between five and 50 eligible
6.3employees; and
6.4(3) one must be an eligible employee.
6.5 Subd. 3. Appointments; membership terms; compensation; removal. (a)
6.6Section 15.0597 shall apply to all appointments and filling of vacancies, except for the
6.7commissioner.
6.8(b) Membership terms, compensation, and removal of members are as provided
6.9in section 15.0575.
6.10(c) Initial appointments to the board must be made by July 1, 2014.
6.11(d) Initial terms are as follows:
6.12(1) for members appointed under paragraph (a), clause (1), the governor shall
6.13designate two to an initial term of two years and two to an initial term of four years;
6.14(2) for members appointed under paragraph (a), clause (2), the speaker of the house
6.15shall designate one to an initial term of one year and one to an initial term of three years; and
6.16(3) for members appointed under paragraph (a), clause (3), the majority leader of
6.17the senate shall designate one to an initial term of one year, and one to an initial term
6.18of three years.
6.19 Subd. 4. Quorum. A majority of the members appointed and serving shall
6.20constitute a quorum for the transaction of any business.
6.21 Subd. 5. Initial meeting. The commissioner of management and budget must
6.22convene the initial meeting of the board by August 1, 2014.
6.23 Subd. 6. Board duties and powers. The board shall have the power and authority
6.24to do all of the following:
6.25(1) appoint a plan administrator, employ staff, determine the duties of the plan
6.26administrator and other staff as necessary, and set their compensation;
6.27(2) make provisions for the payment of costs of administration and operation of
6.28the trust;
6.29(3) allocate administrative fees to each individual retirement account on a pro rata
6.30basis;
6.31(4) design and establish the process for the enrollment of plan participants;
6.32(5) evaluate and establish the process by which an eligible employer is able to
6.33forward contributions and related information to the plan or its agents, which may include,
6.34but is not limited to:
6.35(i) existing processes and arrangements used for the deposit and administration
6.36of tax required to be deducted and withheld relating to the collection of income tax at
7.1source on wages, or for the deposit of tax required to be paid under the unemployment
7.2insurance system; or
7.3(ii) financial services companies and third-party administrators with the capability to
7.4receive and process information on plan participants and contributions by payroll deposit
7.5retirement savings arrangement or other arrangements authorized by this chapter;
7.6(6) determine the eligibility of employers, employees, or other individuals to
7.7participate in the plan as necessary;
7.8(7) evaluate and establish the process by which an individual or an employee of a
7.9nonparticipating employer may enroll in and make contributions to the plan;
7.10(8) determine the means and plan conditions by which to maximize eligible
7.11employee participation in the plan;
7.12(9) set minimum and maximum contribution levels in accordance with contribution
7.13limits set for IRAs and 401(a) accounts by the Code;
7.14(10) explore and establish investment policies that offer employees returns on
7.15contributions and the conversion of individual plan account balances to secure retirement
7.16income or annuitization, without incurring debt or liabilities to the state;
7.17(11) procure insurance indemnifying each member of the board from personal loss
7.18or liability resulting from a member's action or inaction as a member of the board;
7.19(12) evaluate and recommend appropriate incentives for compliance and penalties
7.20for noncompliance with the rules and requirements for participation in the plan;
7.21(13) promulgate rules to implement this act and to govern the trust, the plan, and
7.22participation in the plan; and
7.23(14) report the following annually beginning December 1, 2015, to the majority
7.24leader of the senate, the speaker of the house, and the chairs of the house of representatives
7.25and senate committees with primary jurisdiction over retirement systems and associations:
7.26(i) estimates of the average amount of savings and other financial resources that are
7.27recommended for a financially secure retirement in Minnesota;
7.28(ii) estimates of the relative progress toward achieving the savings recommended for
7.29a financially secure retirement by age, gender, race, ethnicity, and plan eligibility;
7.30(iii) the number of eligible employees, participating employers, and plan participants
7.31in Minnesota;
7.32(iv) the total assets in the trust and average plan account assets by age;
7.33(v) the annual fee as a percentage of the average daily net assets of the plan; and
7.34(vi) the estimated impact on publicly funded social safety net programs attributable
7.35to insufficient retirement savings.
7.36 Subd. 7. Expiration. The board expires January 1, 2020.
8.1 Sec. 6. [352G.06] INFORMATION, DATA, AND DISCLOSURE.
8.2 Subdivision 1. Employee information packet. Prior to opening the plan for
8.3enrollment, the board shall design and disseminate an employee information packet to
8.4all eligible employers. The packet must include background information on the plan and
8.5appropriate disclosures for employees, as well as a sample enrollment form to be used by
8.6employees to provide written authorization for payroll deductions for plan contributions.
8.7 Subd. 2. Disclosure form. (a) The disclosure form must include, but not be limited
8.8to, all of the following:
8.9(1) the benefits and risks associated with making contributions to the plan;
8.10(2) how to make contributions to the plan;
8.11(3) how to suspend contributions to the plan;
8.12(4) the process for withdrawal of retirement savings; and
8.13(5) how to obtain additional information on the plan.
8.14(b) In addition, the disclosure form must clearly articulate the following:
8.15(1) employees seeking financial advice must be instructed to contact a financial
8.16advisor for financial advice, and employees must be advised that employers are not in
8.17a position to provide financial advice, and that employers are not liable for decisions
8.18employees make pursuant to this chapter;
8.19(2) the plan is not an employer-sponsored retirement plan; and
8.20(3) the trust is not guaranteed by the state.
8.21 Subd. 3. Data. Data on plan participants and individuals' plan accounts and 401(a)
8.22accounts are private data on individuals or nonpublic data as defined in section 13.02.
8.23 Sec. 7. [352G.08] SEVERABILITY.
8.24Should any part of this act be declared invalid or unenforceable, or the enforcement
8.25or compliance with it is suspended, restrained, or barred, either by the state or by the final
8.26judgment of a court of competent jurisdiction, the remainder of this act shall remain
8.27in full force and effect.
8.28 Sec. 8. REPORT.
8.29The board must report the following no later than December 1, 2014, to the majority
8.30leader of the senate, the speaker of the house, and the chairs of the house of representatives
8.31and senate committees with primary jurisdiction over retirement systems and associations:
8.32(1) estimates of the average amount of savings and other financial resources that
8.33residents of Minnesota have upon retirement;
9.1(2) estimates of the average amount of savings and other financial resources that are
9.2recommended for a financially secure retirement in Minnesota;
9.3(3) estimates of the relative progress toward achieving the savings recommended for
9.4a financially secure retirement by age, gender, race, ethnicity, and plan eligibility;
9.5(4) the number of eligible employees in Minnesota;
9.6(5) the estimated impact on publicly funded social safety net programs attributable
9.7to insufficient retirement savings;
9.8(6) options for structuring contributions to the plan that achieve the purposes in
9.9Minnesota Statutes, section 352G.02, subdivision 2, including contribution mechanism
9.10and applicability of the Code, and portability under the Code;
9.11(7) options for ensuring that benefits provide for stable income throughout
9.12beneficiaries' retirement years, including the use of insurance against loss in connection
9.13with the property, assets, or activities of the trust, or private underwriting or reinsurance to
9.14manage risk and ensure a minimum rate of return;
9.15(8) projected fees, pursuant to Minnesota Statutes, section 352G.03, subdivision
9.163, relative to asset size and plan structure, with estimates of investment-related fees
9.17determined in consultation with the State Board of Investment;
9.18(9) the cost to participating employers relative to plan structure;
9.19(10) the aggregate economic effect of plan options within the state; and
9.20(11) any changes to state law required to:
9.21(i) implement the plan;
9.22(ii) open the plan to enrollment;
9.23(iii) achieve the purpose in Minnesota Statutes, section 352G.02; and
9.24(iv) facilitate the responsibilities of the board in Minnesota Statutes, section 352G.05.
9.25 Sec. 9. EFFECTIVE DATE.
9.26Sections 1 to 8 are effective the day following final enactment.
