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S.F. No. 2078 - Minnesota Secure Choice Retirement Savings Plan Establishment
 
Author: Senator Sandra L. Pappas
 
Prepared By: Stephanie James, Senate Counsel (651/296-0103)
 
Date: March 10, 2014



 

Section 1 [Definitions] defines terms used in this act.

Section 2 [Minnesota Secure Choice Retirement Savings Plan] establishes a retirement savings plan that meets the requirements to qualify for favorable tax treatment that applies to IRAs.  This plan is not an employee benefit plan under the federal Employee Retirement Income Security Act.

Section 3 [Minnesota Secure Choice Retirement Savings Trust], subdivision 1 [Trust established] requires all assets of the plan to be held in trust for the exclusive purpose of paying benefits to the plan’s participants, paying for the costs to administer the plan, and making investments for the benefit of the plan participants.  This section requires that assets of the plan be held in a separate account in the state treasury to be invested by the Board of Investment or by a third-party investment manager under contract with the Board of Investment.  Plan participants are not permitted to direct the investment of contributions.  Plan assets are not subject to claims by creditors of the state, are not part of the general fund, and are not subject to appropriation by the state.

Subdivision 2 [Investment by the State Board of Investment] sets parameters for the Board of Investment for investing the assets of the plan.

Subdivision 3 [Fees] permits charging plan participants a fee as a percentage of the plan assets, to cover the costs of administration and management of the plan.

Subdivision 4 [Risk management] requires the Board of Investment to adopt an investment policy with a risk management and oversight program.

Subdivision 5 [Benefits] allocates interest, earnings, and losses to plan accounts, as prescribed by the board.  Sets an individual’s retirement savings benefit equal to the balance in the individual’s plan account on the date the benefit becomes payable.

Subdivision 6 [State liability limited] provides that the state has no liability for the payment of benefits to plan participants.

Section 4 [Optional Employer Contributions], subdivision 1 [Employer contributions], directs the board to establish a 401(a) trust fund to accept profit-sharing contributions from employers to individual accounts of their employees under certain conditions.

Subdivision 2 [Rollover] permits a plan participant or beneficiary to roll their account balance in the participant’s 401(a) account into the participant’s plan account.

Section 5 [Minnesota Secure Choice Retirement Savings Board], subdivision 1 [Minnesota Secure Choice Retirement Savings Board established] establishes a board to administer the savings plan.

Subdivision 2 [Membership] specifies board membership, including appointees made by the Governor and the Legislature. The Commissioner of Management and Budget serves as chair.

Subdivision 3 [Appointments; membership terms; compensation; removal] specifies details for appointments (notice to Secretary of State; nomination procedure), membership terms (four years, except for certain initial members), compensation ($55 per day, plus expenses) and removal from the board (for cause after notice and hearing, or after missing three consecutive meetings).  This subdivision sets initial terms of certain members at one, two, three, and four years, so that terms are staggered.

Subdivision 4 [Quorum] requires a majority of board members for transacting board business.

Subdivision 5 [Initial meeting] requires the Commissioner of Management and Budget to convene a first board meeting by August 1, 2014.

Subdivision 6 [Board duties and powers] authorizes the board to take certain actions to administer the plan.  The board is required to report annually to the Legislature on details regarding the plan performance.

Subdivision 7 [Expiration] sets an expiration date for the board of January 1, 2020.

Section 6 [Information, Data, and Disclosure] requires the board to design and disseminate employee information packets to eligible employers.  The information packet must include specified information about the plan and an enrollment form permitting automatic payroll deductions for plan contributions. Makes data on plan participants and individuals’ plan accounts and 401(a) accounts private data on individuals or nonpublic data.

Section 7 [Severability] states that parts of this act are severable.

Section 8 [Report] requires the board to report by December 1, 2014, to the Legislature on specified topics relating to retirement savings and financial resources, options for structuring contributions to the plan, projected fees to be imposed on plan participants for plan management, and other items.

Section 9 [Effective Date] makes this act effective the day following enactment.

 

SJJ/rdr

 
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