Amendment #509 to H5500

Secure Choice Retirement Savings

Mr. Donato of Medford moves to amend the bill by adding the following:

SECTION 13A. Said chapter 29 is hereby further amended by inserting after section 2JJJJJJ, inserted by section 7 of chapter 248 of the acts of 2024, the following section:-

Section 2KKKKKK. (a) There is hereby established in the office of the state treasurer a separate, non-budgeted special revenue fund known as the Massachusetts Secure Choice Savings Fund which shall be administered by the state treasurer. The fund shall be credited with: (i) money from the payment of fees, penalties and other payments due to the Massachusetts secure choice savings program established in section 64H; (ii) appropriations or other money authorized or transferred by the general court and specifically designated to be credited to the fund and any funds appropriated by the federal or local governments; (iii) private contributions and publicly or privately-funded grants; and (iv) any interest earned on the assets of the fund. Monies in the fund that are unexpended at the end of the fiscal year shall not revert to the General Fund and shall be available for expenditure in the subsequent fiscal year. Section 38 shall not apply to any investment of the fund.

(b)The fund shall cover all expenses associated with the administration of the Massachusetts secure choice savings program not otherwise covered by the program, including, but not limited to, expenses related to program compliance and oversight responsibilities.

(c)The Massachusetts secure choice savings board, as established in section 64G, shall establish guidelines regarding administration of the fund.

SECTION 16A. Said chapter 29 is hereby further amended by inserting after section 64E the following 5 sections:-

Section 64F. For the purposes of this section and sections 64G through 64J, inclusive, the following words shall, unless the context clearly requires otherwise, have the following meanings:

“Board”, the Massachusetts secure choice savings board established pursuant to section 64G.

“Client” or “client company”, as defined in section 192 of chapter 149.

“Code”, as defined in section 1 of chapter 62.

“Commissioner”, the commissioner of revenue.

“Client” or “client company”, as defined in section 192 of chapter 149.

“Department”, the department of revenue.

“Employee”, any individual who: (i) is 18 years of age or older; (ii) is employed by an employer; and (iii) has wages that are allocable to the commonwealth during a calendar year under chapter 62. For purposes of this section, an employee who is a covered employee under a professional employer agreement shall be treated as employed by the client company and not by the PEO.

“Employer”, a person or entity engaged in a business, industry, profession, trade or other enterprise in the commonwealth, whether for-profit or not-for-profit, that has: (i) at no time during the previous calendar year employed fewer than 25 employees in the commonwealth; (ii) been in business not less than 2 years; and (iii) not offered a qualified retirement plan, including, but not limited to, a plan qualified under sections 401(a), 401(k), 403(a), 403(b), 408(k), 408(p) or 457(b) of the Code, or a qualified retirement plan sponsored by a PEO with which the client company has a professional employer agreement as such terms are defined in section 192 of chapter 149, in the preceding 2 calendar years.

“Enrollee”, any employee or former employee who is enrolled in the program.

“Fund”, the Massachusetts Secure Choice Savings Fund, established pursuant to section

2KKKKKK.

“IRA”, an individual retirement account that is either a: (i) Roth IRA, under section 408A of the Code; or (ii) individual retirement account under section 408 of the Code.

“Participating employer”, an employer that provides a payroll deposit retirement savings arrangement as provided for by section 64I for its employees who are enrolled in the program.

“Payroll deposit retirement savings arrangement”, an arrangement by which a participating employer allows enrollees to remit payroll deduction contributions to the program.

“Professional employer organization” or “PEO”, as defined in section 192 of chapter 149.

“Program”, the Massachusetts secure choice savings program, established pursuant to section 64H.

“Wages”, any compensation within the meaning of section 219(f)(1) of the Code that is received by an enrollee from a participating employer during the calendar year. For purposes of a professional employer agreement as such term is defined in section 192 of chapter 149, any wages paid to a covered employee by the PEO shall be treated as wages received from the client company.

Section 64G. (a)(1) There is hereby established the Massachusetts secure choice savings board. The board shall consist of the following 5 members: the state treasurer or a designee, who shall serve as chair; the comptroller or a designee; the secretary of the commonwealth or a designee; a public representative with expertise in retirement savings plan administration or investment, or both, who is representative of participating employees, appointed by the governor; and a public representative with expertise in retirement savings plan administration or investment, or both, who is representative of participating employers, appointed by the state treasurer.

(2)Each member shall be appointed for a term of 4 years; provided, however, that the public representative of employers shall be appointed initially for a term of 3 years; and provided further, that all members shall be eligible for reappointment. A vacancy in the term of an appointed board member shall be filled for the balance of the unexpired term in the same manner as the original appointment. Members of the board shall serve without compensation but shall be reimbursed for reasonable expenses incurred in the performance of their official duties.

(3)The board may appoint or engage agents. The board, the individual members of the board, 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.

(b)The board shall be responsible for ongoing fiduciary administrative oversight of the program for the purpose of promoting greater retirement savings for private-sector employees in a convenient, low-cost and portable manner, pursuant to paragraph (1) of subsection (a) of section 64H.

(c)The board shall report annually to the state treasurer, governor, comptroller, secretary of the commonwealth and the house and senate committees on ways and means. The report shall include, but shall not be limited to: (i) an audited financial report, prepared in accordance with generally accepted accounting principles; (ii) a summary of the benefits provided by the program, including the number of enrollees; and (iii) the percentage and amounts of investment options and rates of return.

(d)All agencies of the commonwealth shall cooperate as requested by the board in the performance of their duties under this section, including, unless otherwise prohibited, the sharing of relevant data as the parties shall mutually agree.

Section 64H. (a) There is hereby established in the office of the state treasurer the Massachusetts secure choice savings program, subject to appropriation. The program shall be developed and administered by the state treasurer with ongoing fiduciary administrative oversight provided by the board for the purpose of promoting greater retirement savings for private-sector employees in a convenient, low-cost and portable manner.

(b)(1) The state treasurer shall design, establish and operate the program in a manner that: (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; and (v) ensures the portability of benefits.

(2) The state treasurer and the department shall maintain, on their websites, information for employers on the requirements of the program and information on retirement plans an employer may offer as an alternative to the program, including, but not limited to, a defined benefit plan, 401(k) plan, a Simplified Employee Pension (SEP) plan or a Savings Incentive Match Plan for Employees (SIMPLE) plan.

(a)The state treasurer shall prepare a written statement of investment policy that includes a risk management and oversight program for consideration and adoption by the board.

(b)The state treasurer may contract with practitioners, administrators, investment managers and other entities to design, administer and provide investment options under the program. Any practitioner, administrator, investment manager or other entity with which the state treasurer contracts 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. Any practitioner, administrator, investment manager or other entity with which the state treasurer contracts shall provide such reports as the board deems necessary to assess performance.

(c)The state treasurer shall assess the feasibility of multistate or regional agreements to administer the program through shared administrative and operational resources and may enter into those agreements if deemed beneficial to the program.

(f)(1) The commonwealth, the board, each member of the board or other commonwealth official, other commonwealth boards, commissions or agencies, or any member, officer or employee thereof, and the program: (i) shall have no responsibility for compliance by individuals with the conditions and other provisions of the Code that determine which individuals are eligible to make tax-favored contributions to IRAs, in what amount and in what time frame and manner; (ii) shall 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; (iii) 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 (iv) are not and shall not be liable or responsible for any loss, deficiency, failure to realize any gain or any other adverse consequences, including, but not limited to, 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 shall not be considered the debts, contracts and obligations of the commonwealth, and neither the faith and credit nor the taxing power of the commonwealth shall be pledged directly or indirectly to the payment of the debts, contracts and obligations of the program.

(3)Participating employers shall not have any liability 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.

(4)A participating employer shall not be a fiduciary, or considered to be a fiduciary, over the program. A participating employer shall not bear responsibility for the administration, investment options or investment performance of the program. A participating employer shall not be liable with regard to investment returns, program design and benefits paid to program participants.

(g) All agencies of the commonwealth shall cooperate as requested by the state treasurer in the performance of their duties under this section, including, unless otherwise prohibited, the sharing of relevant data as the parties shall mutually agree.

Section 64I. (a) The Program shall be implemented, and enrollment of employees shall begin, within 24 months after the effective date of this Act. The provisions of this Section shall be in force after the Board opens the Program for enrollment.

(1) Each employer shall establish a payroll deposit retirement savings arrangement to allow each employee to participate in the program on a timeline set by the board.

(2)Employers shall automatically enroll each employee, who has not opted out of participation, in the program and shall provide payroll deduction retirement savings arrangements and deposit, on behalf of each such employee, these funds into the program.

(3)Employers shall retain the option at all times to set up any type of employer-sponsored retirement plan, including, but not limited to, a defined benefit plan, a 401(k), a Simplified Employee Pension (SEP) plan, a Savings Incentive Match Plan for Employees (SIMPLE) plan, or a plan sponsored by a PEO with which the client company has a professional employer agreement as such terms are defined in section 192 of chapter 149, instead of having a payroll deposit retirement savings arrangement to allow employee participation in the program.

(b)(1) Enrollees shall have the ability to: (i) select a contribution level into the program; or (ii) opt out of participation in the program. The contribution 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 Code. Enrollees may change their contribution level at any time and that election shall be honored as soon as administratively feasible. If an enrollee fails to select a contribution level using the form prescribed, the enrollee shall contribute the default contribution rate of 6 per cent, with an annual escalation of 1 per cent and up to 10 per cent, of their wages to the program.

(2)Enrollees may select an investment option from the permitted investment options available under the program. Enrollees may change their investment option at any time. If an enrollee fails to select an investment option, the enrollee shall be placed in a qualified default investment alternative specified by the program.

(3)An enrollee may terminate their participation in the program at any time in a manner prescribed by the program.

(c)(1) In the case of a PEO relationship as such term is defined in section 192 of chapter 149:

(i)if a PEO offers a qualified retirement plan to a covered employee, the client company is considered as offering a qualified retirement plan and shall not be considered an employer required to automatically enroll each employee in the program as described in this section; and

(ii)if a client company is an employer required to automatically enroll each employee in the program, the client company, not the PEO, shall be responsible for complying with all applicable requirements under this section.

(2) Nothing in this section shall prevent an employer from entering into a professional employer agreement with a PEO under which the PEO agrees to assist the client company with the performance of some or all of the client company’s responsibilities under this section.

Section 64J. (a) An employer who fails without reasonable cause to enroll an employee, who has not elected out of participation, in the program within the time prescribed by the state treasurer, in consultation with the department, shall be subject to a penalty equal to:

(i)$250 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, and any appropriate official of the commonwealth may bring a civil action to require the employer to enroll the 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 a penalty has been assessed with respect to an employee, $500 for any portion of that calendar year during which such employee continues to be unenrolled without electing out of participation in the program, and any appropriate official of the commonwealth may bring a civil action to require the employer to enroll the employee and shall recover such costs and reasonable attorney’s fees as may be allowed by the court.

(b) No penalty shall be imposed under subsection (a) for any failure for which it is established that the employer, subject to liability for the penalty, did not know that the failure existed and exercised reasonable diligence to meet the requirements of this section or where:

(i)the employer subject to liability for the penalty exercised reasonable diligence to meet those requirements; and

(ii)the employer complies with those requirements with respect to each employee by the end of the 90-day period beginning on the first date the employer knew, or exercising reasonable diligence would have known, that the failure existed.

(c)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.

(d)If a participating employer fails to transmit a payroll deduction contribution to the program on the earliest date the amount withheld from the enrollee’s compensation may reasonably be segregated from the participating employer’s assets, but not later than the 15th day of the month following the month in which the enrollee’s contribution amounts are withheld from their 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, including those pursuant to sections 148 and 150 of chapter 149 and to the penalties specified in subsection (a).

(e)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 section shall be confidential, except for official purposes within the department or pursuant to official procedures for collection of penalties assessed under this section. Nothing contained in this section shall prevent the commissioner from publishing or making available to the public reasonable statistics concerning the operation of this section wherein the contents of returns are grouped into aggregates in such a way that the specific information of any employer shall not be disclosed. Nothing contained in this section shall prevent the commissioner 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.

(f)Civil penalties and fees collected under this section shall be deposited into the fund.

(g)The department may promulgate rules and regulations as necessary or proper for the administration and enforcement of this section.