Bill Text: NJ S3417 | 2024-2025 | Regular Session | Introduced
Bill Title: Establishes loan program in DCRP.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Introduced) 2024-06-10 - Introduced in the Senate, Referred to Senate State Government, Wagering, Tourism & Historic Preservation Committee [S3417 Detail]
Download: New_Jersey-2024-S3417-Introduced.html
Sponsored by:
Senator SHIRLEY K. TURNER
District 15 (Hunterdon and Mercer)
SYNOPSIS
Establishes loan program in DCRP.
CURRENT VERSION OF TEXT
As introduced.
An Act establishing a loan program in the Defined Contribution Retirement Program and amending P.L.2007, c.92.
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. Section 3 of P.L.2007, c.92 (C.43:15C-3) is amended to read as follows:
3. a. The employer shall reduce the compensation of each participant in the Defined Contribution Retirement Program and pay over to the plan provider for the benefit of the participant an employee contribution for the retirement benefit contract or contracts equal to 5.5% of the participant's base salary. At the option and request of a participant, the employer shall reduce the compensation of the participant for additional contributions as permitted by the federal Internal Revenue Code. The intervals for reductions and payments shall be determined by the Division of Pensions and Benefits.
All participant contributions shall be made in accordance with section 414(h) of the federal Internal Revenue Code (26 U.S.C. s.414(h)).
b. The employer shall make payment of the employer contributions to the program at a rate equal to 3% of the employee's base salary, which moneys shall be paid to the designated provider for the benefit of each participant. Additionally, employers shall pay their share of the administrative costs of the program. The intervals for all payments and the allocation of administrative costs shall be determined by the Division of Pensions and Benefits including due dates and penalties for noncompliance.
c. No employer contributions shall be vested in a participant until after the participant commences the second year of employment unless the participant, at the time of initial employment, either (1) participates in a program substantially similar to the retirement program, or (2) is a member of another State-administered pension fund or retirement system.
d. The Defined Contribution Retirement Program Board shall establish a loan program within the Defined Contribution Retirement Plan to permit participants to take loans from the retirement plan in a manner that is not a withdrawal or a distribution under program rules.
Loans shall be made to a participant from the participant's mandatory, voluntary, or rollover contribution subaccounts established for the benefit of the participant based on the value of the subaccounts at the time of the loan. Interest on the loan shall be credited to the participant's mandatory contribution subaccount consistent with the interest rates established by the board.
The board shall establish the criteria for loan eligibility, loan amounts, loan intervals, interest rates, and repayment schedules, and shall establish such other requirements as may be necessary in accordance with the program's status as a qualified governmental plan. This subsection shall be implemented in a manner that maintains the program's status as a qualified governmental defined contribution plan pursuant to sections 401(a) and 414(d) of the federal Internal Revenue Code of 1986 (26 U.S.C. ss.401(a) and 414(d)), as amended, or such other provision of the federal Internal Revenue Code, as applicable, regulations of the U.S. Treasury Department, and other guidance of the federal Internal Revenue Service.
(cf: P.L.2007, c.103, s.6)
2. This act shall take effect immediately.
STATEMENT
This bill requires the Defined Contribution Retirement Program Board to create a loan program in the Defined Contribution Retirement Plan to permit participants to take loans from the plan in a manner that is not a withdrawal or distribution under program rules. The board will establish the criteria for loan eligibility, loan amounts, loan intervals, interest rates, and repayment schedules, and such other requirements as may be necessary in accordance with the program's status as a qualified governmental plan. The bill states that loans can only be made to a participant from the balance of the participant's mandatory, voluntary, and rollover contribution subaccounts established for the benefit of the individual participant. Under the bill, interest on the loan will be credited to the participant's mandatory contribution subaccount consistent with the interest rates established by the board.
