Section 64E: Qualified defined contribution plan for employees of not-for-profit employer
Section 64E. (a) As used in this section, the term ''not-for-profit employer'' shall include eligible organizations incorporated under section 501(c) of the Internal Revenue Code, that are established, organized or chartered under the laws of the commonwealth and doing business in the commonwealth and employing not more than 20 persons, but shall not include a governmental employer.
(b) The state treasurer may conduct research regarding the current status of retirement programs available to not-for-profit employees and the appeal of creating a program for their benefit.
(c) The treasurer and receiver general, on behalf of the commonwealth, may sponsor a qualified defined contribution plan within the meaning of section 414(i) of the Internal Revenue Code, in this section called the Code, that may be adopted by not-for-profit employers for their employees in accordance with section 401(a) of the Code, regulations provided under that section and applicable guidance from the Internal Revenue Service. The treasurer shall obtain approval from the Internal Revenue Service with respect to the plan and shall ensure the administration of the plan is in compliance with the Code and other applicable federal and state laws including the Employee Retirement Income Security Act of 1974, in this section called ERISA.
The plan shall provide for a qualified trust under said section 401(a), with contributions made to the trust by the not-for-profit employer, the employer's employees, or both. Under the trust instrument, any part of the corpus or income shall not be used for, or diverted to, purposes other than the exclusive benefit of employees or their beneficiaries at any time prior to the satisfaction of all liabilities with respect to employees and their beneficiaries. In order to participate in the plan, a not-for-profit employer shall execute a participation agreement, agree to the terms of the plan and operate the plan in compliance with the Code and ERISA. The treasurer may require that the not-for-profit employer sign a service agreement and use forms and procedures prescribed by the treasurer. The treasurer may also require that certain employers seek approval of their plans from the Internal Revenue Service.
(d) The treasurer may contract with practitioners, administrators, investment managers and other entities, including the pension reserves investment management board, in order to design, administer and provide investment options under the plan. The treasurer shall, before making any such contract, solicit bids from companies authorized to conduct business within the commonwealth, which shall be sealed and opened at a time and place designated by the treasurer. A submitted bid shall, if applicable, clearly indicate the interest rate which shall be paid on the deferred funds, any commissions which shall be paid to salespersons, any load imposed for the purpose of administering the funds, mortality projections, expected payouts, tax implications for participating employees and such other information as the treasurer may require. A contract entered into between an employee and the not-for-profit employer under this section shall include all such information in terms the employee can reasonably be expected to understand. Upon a determination by the treasurer as to which provider offers the investment options most beneficial to the employee in each category for which bids were solicited, the employee may choose the investment option for the employee's account.
Notwithstanding any general or special law to the contrary, the treasurer shall not be required to solicit bids to invest the contributed portion of an employee's income into the employee's defined contribution plan account provided: (i) that the treasurer is authorized by the employee to pay that portion of the employee's compensation into the employee's defined contribution plan account in the same investment products as provided through a deferred compensation plan for employees of the commonwealth administered by the treasurer, and (ii) that such plan resulted from the solicitation of bids in accordance with the requirements under this section.
(e) There shall be in the office of the treasurer and receiver general a not-for-profit defined contribution committee. The committee shall consist of the treasurer or a designee, who shall serve as chairperson, and 4 persons to be appointed by the treasurer, 2 of whom shall have practical experience in the human services, educational or public and societal benefit sector of the non-profit community, and 2 of whom shall be currently employed by not-for-profit corporations. Each member shall be appointed for a term of 3 years, except 1 of whom who is currently employed by not-for-profit corporations shall be appointed initially for a term of 2 years and all of whom shall be eligible for reappointment. In the case of a vacancy, a successor shall be appointed for a full term or for the unexpired portion thereof, as the case may be. A member of the committee shall be eligible for reappointment. The committee shall annually elect 1 of its members to serve as vice-chairperson.
The committee shall meet from time to time and assist the treasurer in the development of general policy regarding the program and shall provide technical advice and input to the state treasurer. The members of the committee shall serve without compensation but shall be reimbursed for necessary expenses incurred in the performance of their duties.
(f) The treasurer may adopt rules and regulations related to this section and do all things convenient to carry out this section.