HOUSE DOCKET, NO. 2958        FILED ON: 1/18/2019

HOUSE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 1075

The Commonwealth of Massachusetts

_________________

PRESENTED BY:

Tram T. Nguyen

_________________

To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
Court assembled:

The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:

An Act to establish the Massachusetts secure choice retirement program and expand the Massachusetts CORE plan to all employers.

_______________

PETITION OF:

HOUSE DOCKET, NO. 2958        FILED ON: 1/18/2019

HOUSE  .  .  .  .  .  .  .  .  .  .  .  .  .  .  .  No. 1075

The Commonwealth of Massachusetts

_______________

In the One Hundred and Ninety-First General Court
(2019-2020)

_______________

An Act to establish the Massachusetts secure choice retirement program and expand the Massachusetts CORE plan to all employers.

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:
 

SECTION 1. Section 64E of chapter 29 of the General Laws, as appearing in the 2018 Official Edition, is hereby amended by striking out subsection (a)

SECTION 2. Said section 64E of chapter 29, as so appearing, is hereby further amended by striking out the words “not for profit” in the first sentence of the first paragraph of subsection (c)

SECTION 3. Said section 64E of chapter 29, as so appearing, is hereby further amended by striking out the words “not for profit” in the first, third, and fourth sentences of the second paragraph of subsection (c)

SECTION 4. Said section 64E of chapter 29, as so appearing, is hereby further amended by striking out the words “not for profit” in the fourth sentence of the first paragraph of subsection (d)

SECTION 5. Said section 64E of chapter 29, as so appearing, is hereby further amended by striking out the words “not for profit” in the first sentence of subsection (e)

SECTION 6. Said section 64E of chapter 29, as so appearing, is hereby further amended by striking out the words “of the non profit community” and “be currently employed by non for profit corporations” in the second sentence of subsection (e)

SECTION 7. Chapter 29 of the Massachusetts General Laws, as appearing in the 2018 Official Edition, is hereby amended by inserting after Section 64E the following sections:

Section 64F Massachusetts Secure Choice Program

1. For purposes of this section, the following definitions shall apply:

“Administrative Fund” means the Massachusetts Secure Choice Administrative Fund described in Section 10.

“Board” means the Massachusetts Secure Choice Board.

“Covered Employee” means an individual who is employed by a Covered Employer, who has wages or other compensation that is allocable to the State, and who is at least [18 years of age. “Covered Employee” does not include –

(A) Any employee covered under the federal Railway Labor Act (45 U.S.C. sec. 151).

(B) Any employee on whose behalf an employer makes contributions to a Taft-Hartley multiemployer pension trust fund.

(C) Any individual who is an employee of the Federal government, the State or any other State, any country or municipal corporation, or any of the State’s or any other State’s units or instrumentalities.

“Covered Employer” means a person or entity engaged in a business, industry, profession, trade, or other enterprise in the State, whether for profit or not for profit, excluding the federal government, the state, any county, any municipal corporation, or any of the state’s units or instrumentalities; and provided that “Covered Employer” does not include an employer that maintains a Specified Tax-Favored Retirement Plan for its employees or has done so effective in form and operation at any time within the current or two preceding calendar years. If an employer does not maintain a Specified Tax-Favored Retirement Plan for a portion of a calendar year ending on or after the effective date of this title and adopts such a plan effective for the remainder of that calendar year, the employer is exempt from “Covered Employer” status for that remainder of the year.

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended (29 United States Code 1001 et seq.).

“Internal Revenue Code” means the Internal Revenue Code of 1986, as amended (Title 26 of the United States Code).

“IRA” means a traditional or Roth individual retirement account or individual retirement annuity under section 408(a), 408(b), or 408A of the Internal Revenue Code.

“Participant” means an individual who is contributing to an IRA under the Program or has an IRA account balance under the Program.

“Participating Employer” means a Covered Employer that provides for Covered Employees a Payroll Deduction IRA provided for by this title.

“Payroll Deduction IRA Arrangement” or “Payroll Deduction IRA” means an arrangement by which an employer allows employees to contribute to an IRA by means of payroll deduction.

“Program” or “Massachusetts Secure Choice Program” means the retirement savings program established by this title.

“Roth IRA” means a Roth individual retirement account or individual retirement annuity under section 408A of the Internal Revenue Code.

“Specified Tax-Favored Retirement Plan” means a retirement plan that is tax-qualified under or is described in and satisfies the requirements of subsection 401(a), 401(k), 403(a), 403(b), 408(k)(Simplified Employee Pension), or 408(p)(SIMPLE-IRA) of the Internal Revenue Code.

“Total Fees and Expenses” means all fees, costs, and expenses, including but not limited to administrative expenses, investment expenses, investment advice expenses, accounting costs, actuarial costs, legal costs, marketing expenses, education expenses, trading costs, insurance annuitization costs, and other miscellaneous costs.

“Traditional IRA” means a traditional individual retirement account or traditional individual retirement annuity under section 408(a) or (b) of the Internal Revenue Code.

“Trust” means the trust in which the assets of the Program are held.  Where applicable, except as may be otherwise specified, references throughout this title to the Program generally are intended to refer also to the Trust (including the assets, facilities, costs and expenses, receipts, expenditures, activities, operations, administration, or management).

“Massachusetts Secure Choice Administrative Fund” or “Fund” is the fund described in Section 10, below, that is established for the sole purpose of paying the administrative costs and expenses of the Board and the Program.

2. Establishment of Board

(1)     The Massachusetts Secure Choice Board is established in the Office of the State Treasurer.

(2)     The Board will consist of the following [nine] members, with the State Treasurer or the designee of the State Treasurer serving as chair:

(a)     The State Treasurer or the designee of the State Treasurer.

(b)     An individual, appointed by the Governor, who has a favorable reputation for skill, knowledge, and experience in the field of retirement saving and investments appointed by the Governor.

(c)     An individual, appointed by the Governor, who has a favorable reputation for skill, knowledge, and experience relating to small business.

(d)     An individual, appointed by the Speaker of the House, who is a representative of an association representing employees or who has a favorable reputation for skill, knowledge, and experience in the interests of employees in retirement saving.

(e)     An individual, appointed by the President of the Senate, who has a favorable reputation for skill, knowledge, and experience in the interests of employers in retirement saving.

(f)     A retired individual, appointed by the Speaker of the House of Representatives, to be a representative of the interests of retirees.

(g)     An individual, appointed by the President of the Senate, who has a favorable reputation for skill, knowledge, and experience in retirement investment products or retirement plan designs.

(h)     A member of the House of Representatives appointed by the Speaker of the House of Representatives to be a nonvoting advisory member of the Board.

(i)     A member of the Senate appointed by the President of the Senate to be a nonvoting advisory member of the Board.

(3)     The Governor, the Senate President, and the Speaker of the House shall first make appointments to the Board for terms of office beginning no later than July 1, 2021

(4)     Members of the Board appointed by the Governor, the Senate President, and the Speaker of the House shall serve at the pleasure of the appointing authority.

(5)     The term of office of each member of the Board is four years.  A member is eligible for reappointment.  If there is a vacancy for any reason, the appropriate appointing authority shall make an appointment to become immediately effective for the unexpired term.

(6)     All members of the Board shall serve without compensation, and shall be reimbursed from the Administrative Fund for necessary travel expenses incurred in carrying out their Board duties.

(7)     A majority of the voting members of the Board constitutes a quorum for the transaction of business.

3. Powers, Authority, and Duties of the Board.

(1)     The Board, subject to its authority and fiduciary duty, shall design, develop, and implement the Program, and, to that end, may conduct market, legal, and feasibility analyses.

(2)     The Board shall have the powers, authority, and duties to --

(a)     Establish, implement, and maintain the Program.

(b)     Cause the Program, Trust, and arrangements and accounts established under the Program to be designed, established, and operated --

(1)     In accordance with best practices for retirement saving vehicles;

(2)     To encourage participation, saving, sound investment practices, and appropriate selection of default investments,

(3)     To maximize simplicity and ease of administration for Covered Employers,

(4)     To minimize costs, including by collective investment and economies of scale,

(5)     To promote portability of benefits, and

(6)     To avoid preemption of the Program by Federal law.

(c)     Arrange for collective, common, and pooled investment of assets of the Program and Trust, including investments in conjunction with other funds with which these assets are permitted to be collectively invested, with a view to saving costs through efficiencies and economies of scale.

(d)     Develop and disseminate educational information designed to educate participants and citizens about the benefits of planning and saving for retirement and information to help them decide the level of participation and savings strategies that may be appropriate for them, including information in furtherance of financial capability and financial literacy.

(e)     If necessary, determine the eligibility of an employer, employee, or other individual to participate in the Program.

(f)     Adopt rules and regulations it deems necessary or advisable for the implementation of this title and the administration and operation of the Program consistent with the Internal Revenue Code and regulations thereunder, including to ensure that the Program satisfies all criteria for favorable Federal tax treatment and complies, to the extent necessary, with any other applicable Federal or State law.

(g)     Arrange for and facilitate compliance by the Program or arrangements established under the Program with all applicable requirements for the Program under the Internal Revenue Code, including requirements for favorable tax treatment of the IRAs, and under any other applicable Federal or State law and accounting requirements, including using its best efforts to implement procedures minimizing the risk that Covered Employees will contribute more to an IRA than the amount they are eligible under the Internal Revenue Code to contribute to the IRA on a tax-favored basis, and otherwise providing or arranging for assistance to Covered Employers and Covered Employees in complying with applicable law and tax-related requirements in a cost-effective manner. The Board may establish any processes that the Board reasonably deems to be necessary or advisable to verify whether an employer is a Covered Employer (including reference to on-line data and possible use of questions in employer State tax fillings), consistent with the objective of avoiding to the fullest extent practicable any requirement that an employer that is not a Covered Employer register with the Program or take other action to demonstrate that it maintains a Specified Tax-Favored Retirement Plan or is exempt for other reasons from being treated as a Covered Employer.

(h)     Employ or retain program administrator, executive director, staff, trustee, recordkeeper, investment managers, investment advisors, other administrative, professional, expert advisors and service providers,  none of whom shall be members of the Board and all of whom shall serve at the pleasure of the Board, and determine their duties and compensation.  The Board may authorize the executive director and other officials to oversee requests for proposals or other public competitions and enter into contracts, as described in paragraph (m) of this subsection (2), on behalf of the Board or conduct any business necessary for the efficient operation of the Board.

(i)     Establish procedures for the timely and fair resolution of participant and other disputes related to accounts or program operation.

(j)     Develop and implement an investment policy that defines the Program’s investment objectives, consistent with the objectives of the Program, and that provides for policies and procedures consistent with those investment objectives.  The Board shall designate appropriate default investments that include a mix of asset classes, such as target date and balanced funds. The Board shall seek to minimize participant fees and expenses of investment and administration.  The Board shall strive to design and implement investment options available to holders of accounts established as part of the Program and other Program features that are intended to achieve maximum possible income replacement balanced with an appropriate level of risk in an IRA-based environment consistent with the investment objectives under the policy.  The investment options may encompass a range of risk and return opportunities and allow for a rate of return commensurate with an appropriate level of risk in view of the investment objectives under the policy. The menu of investment options shall be determined taking into account the nature and objectives of the Program, the desirability (based on behavioral research findings) of limiting investment choices under the Program to a reasonable number, and the extensive investment choices available to Participants in the event that they roll over to an IRA outside the Program.  In accordance with paragraph (h) of this subsection (2), the Board, to the extent it deems it necessary or advisable, in its discretion, in carrying out its responsibilities and exercising its powers under this and other paragraphs and provisions of this title, shall employ or retain appropriate entities or personnel to assist or advise it or to whom to delegate the carrying out of such responsibilities and exercise of such powers. 

(k)     Discharge its duties and see to it that the members of the Board discharge their duties as fiduciaries with respect to the Program solely in the interest of the  Participants as follows:

(i)     for the exclusive purpose of providing benefits to Participants and defraying reasonable expenses of administering the Program; and

(ii)     with the care, skill, prudence, and diligence under the circumstances then prevailing 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. 

(l)     Cause expenses incurred to initiate, implement, maintain, and administer the Program to be paid from contributions to, or investment returns or assets of, the Program or other money collected by or for the Program or pursuant to arrangements established under the Program to the extent permitted under Federal and State law.

(m)     Collect application, account, or administrative fees and to accept any grants, gifts, legislative appropriation, loans, and other moneys from the State, any unit of Federal, State, or local government, or any other person, firm, or entity to defray the costs of administering and operating the Program.

(n)     Make and enter into competitively procured contracts, agreements, or arrangements, to collaborate and cooperate with, and to retain, employ, and contract with or for any of the following to the extent necessary or desirable, for the effective and efficient design, implementation, and administration of the Program consistent with the purposes set forth in this title and to maximize outreach to Covered Employers and Covered Employees: 

(i)     Services of private and public financial institutions, depositories, consultants, actuaries, counsel, auditors, investment advisers, investment administrators, investment management firms, other investment firms, third-party administrators, other professionals and service providers, and State public retirement systems.

(ii)     Research, technical, financial, administrative, and other services.

(iii)     Services of other State agencies to assist the Board in the exercise of its powers and duties.

(o)     Develop and implement an outreach plan to gain input and disseminate information regarding the Program and retirement savings in general, including timely information to Covered Employers regarding the Program and how it applies to them, with special emphasis on their ability at any time to sponsor a Specified Tax-Favored Retirement Plan which would exempt them from any responsibilities under the Program.

(p)     Cause moneys to be held and invested and reinvested under the Program.

(q)     Ensure that all contributions to IRAs under the Program may be used only to (i) pay benefits to Participants under the Program, (ii) pay the cost of administering the Program, and (iii) make investments for the benefit of the Program, and that no assets of the Program or Trust are transferred to the general fund of the State or to any other fund of the State or are otherwise encumbered or used for any purpose other than those specified in this subsection (2)(p).

(r)     Make provision for the payment of costs of administration and operation of the Program and Trust.

(s)     Consider whether or not procedures should be issued to allow employers that are not Covered Employers because they are exempt from Covered Employer status to voluntarily participate in the Program by automatically enrolling their employees, taking into account, among other considerations, the potential legal consequences and the degree of employer demand to participate or facilitate participation by employees.

(t)     Evaluate the need for, and procure if and as needed, insurance against any and all loss in connection with the property, assets, or activities of the Program. Evaluate the need for, and procure if and as deemed necessary, pooled private insurance.

(u)     Indemnify, including procurement of insurance if and as needed for this purpose, each member of the Board from personal loss or liability resulting from a member’s action or inaction as a member of the Board.

(v)     Collaborate with, and evaluate the role of, financial advisors or other financial professionals, including in assisting and providing guidance for Covered Employees.

(w)     Carry out its powers and duties under the Program pursuant to this title and exercise any and all other powers as are appropriate for the effectuation of the purposes, objectives, and provisions of this title pertaining to the Program.

(3)     A Board member, program administrator, and other staff of the Board shall not --

(a)     Directly or indirectly have any interest in the making of any investment under the Program or in gains or profits accruing from any such investment.

(b)     Borrow any Program-related funds or deposits, or use any such funds or deposits in any manner, for himself or herself or as an agent or partner of others.

(c)     Become an endorser, surety, or obligor on investments made under the Program.

4. Requirements for the Massachusetts Secure Choice Program.

The Program developed and established by the Board under this title must –

(a)     Allow eligible individuals in the State to voluntarily choose whether or not to contribute to an IRA under the Program, including allowing Covered Employees in the State the choice to contribute to an IRA through payroll deduction under the Program.

(b)     Require each Covered Employer to offer its employees the voluntary choice whether or not to contribute to a Payroll Deduction IRA by automatically enrolling them in the Payroll Deduction IRA with the opportunity to opt out.

(c)     Provide that the IRA to which contributions are made will be a Roth IRA, except that the Board shall have the authority at any time, to add an option for all participants to affirmatively elect to contribute to a traditional IRA as an alternative to the Roth IRA.

(d)     Provide that, unless otherwise specified by a Covered Employee, the Covered Employee shall automatically contribute 6% of the Covered Employee’s salary or wages to the Program or may elect to opt out of the Program or contribute at a higher or lower rate (expressed as a percentage of salary or wages), subject in all cases to the IRA contribution dollar limits applicable under the Internal Revenue Code.  The Board is authorized to change the default contribution rate in its discretion.

(e)     Provide on a uniform basis, if and when the Board so determines, in its discretion, for annual increases of each Participant’s contribution rate, by not more than 1% of salary or wages per year up to a maximum of 10%.  Any such increases shall apply to Participants, as determined by the Board, by default or only if initiated by affirmative Participant election, in either case subject to the IRA contribution limits applicable under the Internal Revenue Code.

(f)     Provide for direct deposit of contributions into investments under the Program.

(g)     Be professionally managed.

(h)     Permit no employer contributions by Covered Employers.

(i)     Provide for reports on the status of each Participant’s account to be provided to each Participant at least annually.

(j)     When possible and practicable, use existing employer and public infrastructure to facilitate contributions, recordkeeping, and outreach and use pooled or collective investment arrangements.

(k)     Provide that each account holder owns the contributions to or earnings on amounts contributed to his or her account under the Program and that the State and employers have no proprietary interest in those contributions or earnings.

(l)     Be designed and implemented in a manner consistent with Federal law to the extent that it applies and consistent with the Program not being preempted by ERISA.

(m)      Make provision for the participation in the Program of individuals who are not employees, as provided in subsection 5(1), below.

(n)     Keep Total Fees and Expenses as low as practicable and in any event each year not in excess of 0.75 of one percent (75 basis points) of the total assets of the Program, except that this limit shall not apply during a start-up period of three years beginning with the initial implementation of the Program.

(o)     Establish rules and procedures governing the distribution of funds from the Program, including such distributions as may be permitted or required by the Program and any applicable provisions of tax laws, with the objectives of maximizing financial security in retirement, helping to protect spousal rights, and assisting Participants with the challenges of decumulation of savings.  The Board shall have the authority, in its discretion, to provide for one or more reasonably priced distribution options to provide a source of fixed retirement income, including income for life or for the Participant’s life expectancy (or for joint lives and life expectancies, as applicable).

(p)     Establish rules and procedures promoting portability of benefits, including the ability to make tax-free rollovers or transfers from IRAs under the Program to other IRAs or to tax-qualified plans that accept such rollovers or transfers provided any roll-over is initiated by participants and not solicited by agents or brokers.

5. Responsibilities of Covered Employers

(1)     A covered employer satisfies its obligations to its eligible employees under this Act by doing any one of the following:

a. Establishing an employer-sponsored retirement plan, such as a single-employer defined benefit plan or a 401(k), Simplified Employee Pension (SEP) plan, or Savings Incentive Match Plan for Employees (SIMPLE) plan, or to offer an automatic enrollment payroll deduction IRA, or becoming a contributing employer to a multiemployer pension plan described in Sec. 414(f) of Title 26 of the United States Code;

b. Becoming a participating employer in the CORE plan as described in 29 MGL 64E; or

c. Automatically enrolling eligible employees in the Massachusetts Secure Choice Program, as described in 29 MGL 64F.

(2)     The Program developed and established by the Board under this title must provide that, if a Covered Employer fails without reasonable cause to enroll a Covered Employee as required under subsection 5(1) above:

(i)     the Covered Employer shall be subject to a penalty equal to $250 for each Covered Employee for each calendar year or portion thereof during which the Covered Employee neither was enrolled in the Program nor had elected out of participation in the Program; and the Covered Employee or any appropriate official of the State may bring a civil action to require the Covered Employer to enroll the Covered Employee and shall recover such costs and reasonable attorney’s fees as may be allowed by the court; and

(ii) for each calendar year beginning after the date on which a penalty has been assessed with respect to a Covered Employee, $500 for any portion of that calendar year during which the Covered Employee continues to be unenrolled without electing out of participation in the Program.

(3) No penalty shall be imposed under subsection 5(2) on any failure for which it is established that the Covered Employer subject to liability for the penalty did not know that the failure existed and exercised reasonable diligence to meet the requirements of paragraph 1 of this subsection 5(1) above.

(4) No penalty shall be imposed under subsection 5(2)on any failure if (A) the Covered Employer subject to liability for the penalty exercised reasonable diligence to meet those requirements and (B) the Covered Employer complies with those requirements with respect to each Covered Employee by the end of the 90-day period beginning on the first date the Covered Employer knew, or exercising reasonable diligence would have known, that the failure existed.

(5) In the case of a failure that is due to reasonable cause and not to willful neglect, all or part of the penalty may be waived to the extent that the payment of the penalty would be excessive or otherwise inequitable relative to the failure involved.

(6) Provide that, if a Covered Employer fails to transmit a payroll deduction contribution to the Program on the earliest date the amount withheld from the Covered Employee’s compensation can reasonably be segregated from the Covered Employer’s assets, but not later than the 15th day of the month following the month in which the Covered Employee’s contribution amounts are withheld from his or her paycheck, the failure to remit such contributions on a timely basis shall be subject to the same sanctions as employer misappropriation of employee wage withholdings and to the penalties specified in subsection 5(2), above.   

6. Rules for the Massachusetts Secure Choice Program.

The Board shall adopt rules to implement the Program that --

(1)     Establish the processes for enrollment and contributions to IRAs under the Program, including withholding by Covered Employers of employee payroll deduction contributions from wages and remittance for deposit to IRAs, automatic enrollment in Payroll Deduction IRAs and opt-outs by Covered Employees, voluntary contributions by others, including self-employed individuals and independent contractors, through payroll deduction or otherwise, the making of default contributions using default investments, and participant selection of alternative contribution rates or amounts and alternative investments from among the options offered under the Program.

(2)     Establish the processes for withdrawals, rollovers, and direct transfers from IRAs under the Program in the interest of facilitating portability and maximization of benefits.

(3)     Establish processes for phasing in enrollment of eligible individuals, including phasing in enrollment of Covered Employees by size or type of Covered Employer, beginning with the initial applicability date specified in this Act.

(4)     Conduct outreach to individuals, employers, other stakeholders, and the public regarding the Program.  Specify the contents, frequency, timing, and means of required disclosures from the Program to Covered Employees, Participants, other individuals eligible to participate in the Program, Covered Employers, and other interested parties.  These disclosures shall include, but need not be limited to –

(a)     The benefits associated with tax-favored retirement saving;

(b)     The potential advantages and disadvantages associated with contributing to Roth IRAs and, if applicable, traditional IRAs under the Program;

(c)     The eligibility rules for Roth IRAs and, if applicable, traditional IRAs;

(d)     That the individual (and not the employer, the State, the Board, any Board member or other State official, or the Program) will be solely responsible for determining whether, and, if so, how much, the individual is eligible to contribute on a tax-favored basis to an IRA;

(e)     The penalty for excess contributions to IRAs and the method of correcting excess contributions;

(f)     Instructions for enrolling, making contributions, and opting out of participation;

(g)     Instructions for opting out of each of the Roth IRA, the default contribution rate, and the default investment if the Covered Employee prefers a traditional IRA (including the possibility of contributing to a traditional IRA if offered as an option under the Program or, whether or not offered under the Program, by means other than auto enrollment in payroll deduction IRAs), a higher or lower contribution rate, or a different investment alternative;

(h)     The potential availability of a saver’s tax credit, including the eligibility conditions for the credit and instructions on how to claim it;

(i)     That employees seeking tax, investment, or other financial advice should contact appropriate professional advisors, and that Covered Employers are not in a position to provide such advice and are not liable for decisions individuals make in relation to the Program;

(j)     That the Payroll Deduction IRAs are intended not to be employer-sponsored retirement plans and that the Program is not an employer-sponsored retirement plan;

(k)     The potential implications of account balances under the Program for the application of asset limits under certain public assistance programs;

(l)     That the account owner is solely responsible for investment performance, including market gains and losses, and that IRA accounts and rates of return are not guaranteed by any employer, the State, the Board, any Board member or State official, or the Program;

(m)     Additional information about retirement and saving and other information designed to promote financial literacy and capability (which may take the form of links to, or explanations of how to obtain, such information), and

(n)     How to obtain additional information about the Program.

(5)     Nothing in this legislation prohibits the state from entering into an arrangement with other governmental entities, including other states or their agencies or instrumentalities, to implement this program. 

7. Protection from Liability for Employers.

(1)     A Covered Employer or other employer is not and shall not be liable for or bear responsibility for --

(a)     An employee’s decision to participate in or opt out of the Program;

(b)     Participants’ or the Board’s investment decisions;

(c)     The administration, investment, investment returns, or investment performance of the Program, including without limitation any interest rate or other rate of return on any contribution or account balance, provided they played no role;

(d)     The Program design or the benefits paid to Participants;

(e)     Individuals’ awareness of or compliance with the conditions and other provisions of the tax laws that determine which individuals are eligible to make tax-favored contributions to IRAs, in what amount, and in what time frame and manner;

(f)     Any loss, failure to realize any gain, or any other adverse consequences, including without limitation any adverse tax consequences or loss of favorable tax treatment, public assistance, or other benefits, incurred by any person as a result of participating in the Program.

(2)     No Covered Employer or other employer shall be, or shall be considered to be, a fiduciary in relation to the Program or Trust or any other arrangement under the Program.

8. Protection from Liability for the State.

(1)     The State, the Board, each member of the Board or other State official, other State boards, commissions, or agencies, any member, officer, or employee thereof, and the Program --

(a)     have no responsibility for compliance by individuals with the conditions and other provisions of the Internal Revenue Code that determine which individuals are eligible to make tax-favored contributions to IRAs, in what amount, and in what time frame and manner,

(b)     have no duty, responsibility, or liability to any party for the payment of any benefits under the Program, regardless of whether sufficient funds are available under the Program to pay such benefits,  

(c)     do not and shall not guarantee any interest rate or other rate of return on or investment performance of any contribution or account balance, and

(d)     are not and shall not be liable or responsible for any loss, deficiency, failure to realize any gain, or any other adverse consequences, including without limitation any adverse tax consequences or loss of favorable tax treatment, public assistance or other benefits, incurred by any person as a result of participating in the Program.

(2)     The debts, contracts, and obligations of the Program or the Board are not the debts, contracts, and obligations of the State, and neither the faith and credit nor the taxing power of the State is pledged directly or indirectly to the payment of the debts, contracts, and obligations of the Program or the Board.

9.  Confidentiality of Participant and Account Information.

Individual account information relating to accounts under the Program and relating to individual Participants (including but not limited to names, addresses, telephone numbers, email addresses, personal identification information, investments, contributions, and earnings) is confidential and must be maintained as confidential –

(1)     Except to the extent necessary to administer the Program in a manner consistent with this title, the tax laws of this state, and the Internal Revenue Code; or

(2)     Unless the individual who provides the information or is the subject of the information expressly agrees in writing to the disclosure of the information.

10.  Intergovernmental Collaboration and Cooperation.

The Board may enter into an intergovernmental agreement or memorandum of understanding with the State and any agency of the State to receive outreach, technical assistance, enforcement and compliance services, collection or dissemination of information pertinent to the Program (subject to such obligations of confidentiality as may be agreed or required by law), or other services or assistance.  The State and any agencies of the State that enter into such agreements or memoranda of understanding shall collaborate to provide the outreach, assistance, information, and compliance or other services or assistance to the Board. The memoranda of understanding may cover the sharing of costs incurred in gathering and disseminating information and the reimbursement of costs for any enforcement activities or assistance.

11.  Funding of Program.

(1)     The Massachusetts Secure Choice Administrative Fund is established in the State Treasury, to be held in trust separate and distinct from the General Fund.  Interest earned by the Administrative Fund shall be credited to the Administrative Fund.  Moneys in the Administrative Fund are continuously appropriated to the Board.

(2)     The Massachusetts Secure Choice Administrative Fund consists of –

(a)     Moneys appropriated to the Administrative Fund by the State legislature;

(b)     Moneys transferred to the Administrative Fund from the Federal government, other State agencies, or local governments;

(c)     Moneys from the payment of application, account, administrative, or other fees and the payment of other moneys due the Board;

(d)     Any gifts, donations, or grants made to the State for deposit in the Administrative Fund;

(e)     Moneys collected for the Administrative Fund from contributions to, or investment returns or assets of, the Program or other moneys collected by or for the Program or pursuant to arrangements established under the Program to the extent permitted under Federal and State law; and

(f)      Earnings on moneys in the Administrative Fund.

(3)     The Board shall accept any grants, gifts, appropriations, or other moneys from the State, any unit of federal, State, or local government, or any other person, firm, partnership, corporation, or other entity solely for deposit into the Administrative Fund, whether for investment or administrative expenses.

(4)     To enable or facilitate the start-up and continuing operation, maintenance, administration, and management of the Program until the Program accumulates sufficient balances and can generate sufficient funding through fees assessed on Program accounts for the Program to become financially self-sustaining, (i) the Board may borrow from the State, any unit of federal, State, or local government, or any other person, firm, partnership, corporation, or other entity working capital funds and other funds as may be necessary for this purpose, provided that such funds are borrowed in the name of the Program and Board only and that any such borrowings shall be payable solely from the revenues of the Program; and (ii) the Board may enter into long-term procurement contracts with one or more financial providers that provide a fee structure that would assist the Program in avoiding or minimizing the need to borrow or to rely upon general assets of the State.

(5)     Subject to appropriation, the State may pay administrative costs associated with the creation, maintenance, operation, and management of the Program and Trust until sufficient assets are available in the Administrative Fund for that purpose.  Thereafter, all administrative costs of the Administrative Fund, including any repayment of start-up funds provided by the State, shall be repaid only out of moneys on deposit therein.  However, private funds or Federal funding received in order to implement the Program until the Administrative Fund is self-sustaining shall not be repaid unless those funds were offered contingent upon the promise of such repayment.

(6)     The Board may use the moneys in the Administrative Fund solely to pay the administrative costs and expenses of the Program and the administrative costs and expenses the Board incurs in the performance of its duties under this title.

Section 12.  Audits and Annual Reports.

(1)     The Board shall cause an accurate account of all of the Program’s, Trust’s, and Board’s activities, operations, receipts, and expenditures to be maintained. Each year, a full audit of the books and accounts of the Board pertaining to those activities, operations, receipts and expenditures, personnel, services, or facilities shall be conducted by a certified public accountant and shall include, but not be 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.  For the purposes of the audit, the auditors shall have access to the properties and records of the Program and Board and may prescribe methods of accounting and the rendering of periodic reports in relation to projects undertaken by the Program.

(2)     By August 1 of each year, the Board shall submit to the Governor, the State Treasurer, and the appropriate committees of the Senate and House an audited financial report, prepared in accordance with generally accepted accounting principles, detailing the activities, operations, receipts, and expenditures of the Program and Board during the preceding calendar year. The report shall also include projected activities of the Program for the current calendar year.

(3)     The Board shall prepare an annual report on the operation of the program to be available to all citizens and provided to appropriate state officials.

Section 13.  Effective Date and Applicability Dates.

(1)     This Act takes effect on the date on which it is signed into law.

(2)     The Board shall establish the Program so that  individuals can begin contributing under the Program not later than January 1st 2022.

(3)     The Board may in its discretion phase in the Program so that the ability to contribute first applies on different dates for different classes of individuals, including employees of employers of different sizes or types and individuals who are not employees (self-employed, independent contractors, etc.). However, any such staged or phased-in implementation schedule must be substantially completed not later than January 1st 2024.

(4)     The Board shall not implement the Program if and to the extent that it determines that the Program is preempted by ERISA.  Accordingly, if and as needed, the Board shall implement the Program in a severable fashion to the extent practicable: if and to the extent that the Board determines --

(a)     that a portion or aspect of the Program is preempted by ERISA, the Board shall not implement that portion or aspect of the Program but shall proceed to implement the remainder of the Program to the extent practicable; or

(b)     that some but not all of the Payroll Deduction IRA Arrangements or other arrangements under the Program are or would be employee benefit plans under ERISA, the Board shall proceed to implement the Program with respect to the other arrangements under the Program to the extent practicable.

14.  Severability.

The provisions of this Section and this title shall be severable and, if any of these provisions is held to be unconstitutional or invalid, the validity of the remaining provisions of this Section and this title will not be affected.