PRIOR PRINTER'S NO. 551
PRINTER'S NO. 1137
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
577
Session of
2023
INTRODUCED BY MULLINS, GALLAGHER, SIEGEL, SAPPEY, MADDEN,
SCHLOSSBERG, VENKAT, SANCHEZ, DELLOSO, SOLOMON, WARREN,
STURLA, HILL-EVANS, D. WILLIAMS, PARKER, DEASY, FREEMAN,
NEILSON, CIRESI, CONKLIN, N. NELSON, E. NELSON, SHUSTERMAN,
KHAN, DONAHUE, RABB, BOROWSKI, PISCIOTTANO, GILLEN, FRANKEL
AND KENYATTA, MARCH 20, 2023
AS REPORTED FROM COMMITTEE ON COMMERCE, HOUSE OF
REPRESENTATIVES, AS AMENDED, MAY 3, 2023
AN ACT
Establishing the Keystone Saves Program, the Keystone Saves
Program Fund, the Keystone Saves Administrative Fund and the
Keystone Saves Program Advisory Board; and providing for
powers and duties of the Treasury Department, for investment
and fiduciary responsibilities and for program
implementation.
TABLE OF CONTENTS
Chapter 1. Preliminary Provisions
Section 101. Short title.
Section 102. Legislative intent (Reserved).
Section 103. Definitions.
Chapter 3. Keystone Saves Program
Section 301. Establishment of program.
Section 302. Keystone Saves Program Fund.
Section 303. Keystone Saves Administrative Fund.
Section 304. Administration and funding.
Chapter 5. Keystone Saves Program Advisory Board
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
Section 501. Establishment of board.
Section 502. Composition of board.
Section 503. Terms of board members.
Section 504. Meetings of board.
Section 505. Duties of board.
Section 506. Limitations on board members.
Chapter 7. Department Powers and Duties
Section 701. Powers and duties of department.
Chapter 9. Investment and Fiduciary Responsibilities
Section 901. Fiduciary duties.
Section 902. Investment policies.
Section 903. Additional investment options.
Section 904. Investment managers.
Chapter 11. Program Implementation
Section 1101. Commencement of program activities.
Section 1102. Registration and certification of qualified
payroll deposit retirement savings arrangements.
Section 1103. Participating employer plans.
Section 1104. Roth IRAs and traditional IRAs.
Section 1105. Implementation of qualified arrangements.
Section 1106. Registration and certification.
Section 1107. Payroll deductions.
Section 1108. Withdrawals, rollovers and transfers.
Section 1109. Distribution of funds from program.
Section 1110. Outreach and information.
Section 1111. Contributions, interest and investment earnings.
Section 1112. Duties and liability of Commonwealth.
Section 1113. Protection from liability for employers.
Section 1114. Risk management.
Section 1115. Audit and reports.
20230HB0577PN1137 - 2 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Section 1116. Confidentiality of information.
Section 1117. Temporary regulations.
Chapter 13. (Reserved).
Chapter 15. Miscellaneous Provisions
Section 1501. Regulations.
Section 1502. Provision of information.
Section 1503. Notice of program implementation.
Section 1504. Effective date.
The General Assembly of the Commonwealth of Pennsylvania
hereby enacts as follows:
CHAPTER 1
PRELIMINARY PROVISIONS
Section 101. Short title.
This act shall be known and may be cited as the Keystone
Saves Program Act.
Section 102. Legislative intent (Reserved).
Section 103. Definitions.
The following words and phrases when used in this act shall
have the meanings given to them in this section unless the
context clearly indicates otherwise:
"Administrative fund." The Keystone Saves Administrative
Fund established under section 303.
"Board." The Keystone Saves Program Advisory Board
established under section 501.
"Covered employee." As follows:
(1) An individual who:
(i) is employed by a covered employer;
(ii) has gross wages or other compensation that are
allocable to the Commonwealth in a calendar year; and
(iii) is at least 18 years of age.
20230HB0577PN1137 - 3 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(2) The term does not include any of the following:
(i) An employee covered under 45 U.S.C. § 151 et
seq. (Railway Labor Act).
(ii) An employee on whose behalf an employer makes
contributions to a multi-employer pension trust fund.
(iii) An employee of the Federal Government.
(iv) An employee of this Commonwealth or any other
state.
(v) An employee of a political subdivision,
municipal corporation or school district in this
Commonwealth or any other state.
"Covered employer." As follows:
(1) A person engaged in a business, industry,
profession, trade or other enterprise in this Commonwealth
that employs individuals, whether for profit or not for
profit.
(2) The term does not include any of the following:
(i) An employer that has four or fewer employees:
(A) as of July 1 or later of a current calendar
year, for at least six months of that calendar year;
and
(B) for at least six consecutive months of the
preceding calendar year.
(ii) An employer that has been in business at all
times for less than 15 consecutive months.
(iii) An employer that maintains or contributes to a
specified tax-favored retirement plan for the employer's
employees or has done so effective in form and operation
at any time within the current or three preceding
calendar years. If an employer does not maintain a
20230HB0577PN1137 - 4 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
specified tax-favored retirement plan for a portion of a
calendar year ending on or after the effective date of
this definition and adopts a specified tax-favored
retirement plan for the remainder of the calendar year,
the employer is not included in this term for the
remainder of the calendar year.
"Department." The Treasury Department of the Commonwealth.
"ERISA." 29 U.S.C. § 1001 et seq. (The Employee Retirement
Income Security Act of 1974).
"Internal Revenue Code." 26 U.S.C. § 1 et seq. (The Internal
Revenue Code of 1986).
"IRA." An individual retirement account or individual
retirement annuity, including a traditional IRA or a Roth IRA,
under one of the following sections of the Internal Revenue
Code:
(1) 26 U.S.C. § 408(a) or (b) (relating to individual
retirement accounts).
(2) 26 U.S.C. § 408A (relating to Roth IRAs).
"Participant." An individual who is contributing to an IRA
under the program or has an IRA account balance under the
program.
"Participating employer." An employer that participates in
the program, including a covered employer and INCLUDES A COVERED
EMPLOYER OR a noncovered employer that voluntarily participates
in the program.
"Payroll service." A third party that provides payroll
system activities to other persons, generally pursuant to a
contractual or similar arrangement, for compensation.
"Payroll system." A system that uses software to
automatically process payroll, including calculating total wage
20230HB0577PN1137 - 5 -
<--
<--
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
earnings, withholding and remitting of deductions, filing
payroll taxes, and delivering payment of net wages to employees.
"Person." A corporation, partnership, limited liability
company, business trust, other association, estate, trust,
foundation or natural person, including natural persons doing
business as sole proprietors.
"Program." The Keystone Saves Program established under
section 301.
"Program fund." The Keystone Saves Program Fund established
under section 302.
"Qualified payroll deposit retirement savings arrangement" or
"qualified arrangement." An arrangement facilitated by a
participating employer that allows employees to contribute to an
IRA by processing employer payroll deductions and contributing
the deductions to the program in accordance with section 1102.
"Quarter." Any of the following periods:
(1) January 1 to March 31 of each year.
(2) April 1 to June 30 of each year.
(3) July 1 to September 30 of each year.
(4) October 1 to December 31 of each year.
"Roth IRA." A Roth individual retirement account or
individual retirement annuity under section 408A of the Internal
Revenue Code.
"Specified tax-favored retirement plan." A retirement plan
that is tax-qualified under or intended to satisfy the
requirements of section 401(a) or (k), 403(a) or (b) or 408(k)
or (p) of the Internal Revenue Code.
"Total fees and expenses." All fees, costs and expenses of
operating the program, including, but not limited to, any of the
following:
20230HB0577PN1137 - 6 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(1) Initial planning and organizational costs.
(2) Administrative expenses.
(3) Investment expenses.
(4) Investment advice expenses.
(5) Accounting costs, actuarial costs, legal costs,
marketing expenses, education expenses, trading costs,
insurance annuitization costs and other costs reasonably
related to the program.
"Traditional IRA." A traditional individual retirement
account or traditional individual retirement annuity under
section 408(a) or (b) of the Internal Revenue Code.
CHAPTER 3
KEYSTONE SAVES PROGRAM
Section 301. Establishment of program.
There is established a retirement savings program in the form
of an automatic enrollment payroll deduction IRA, known as the
Keystone Saves Program, within the department. The program shall
be administered by the department for the purposes of promoting
greater retirement savings for covered employees in a
convenient, low-cost and portable manner.
Section 302. Keystone Saves Program Fund.
(a) Establishment.--The Keystone Saves Program Fund is
established as a separate fund in the State Treasury. The
following shall apply:
(1) The program fund shall be used for the exclusive
benefit of participants and the payment of program expenses.
(2) The construction of a participant's program account
as self-settled shall not cause the program account to be
treated as other than a trust.
(3) The program fund shall include the individual
20230HB0577PN1137 - 7 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
retirement accounts of participants, which shall be accounted
for as individual accounts.
(4) Money in the program fund shall include money
received from participants through participating employers.
(5) Investment earnings and interest that are
attributable to money in the program fund shall be deposited
in the program fund and credited appropriately to individual
accounts.
(b) Amounts on deposit.--Except as provided under section
304(c), the following shall apply:
(1) The money deposited into the program fund, or any
earnings thereof, does not constitute property of the
Commonwealth.
(2) Money deposited into the program fund may not be
commingled with Commonwealth funds.
(3) The Commonwealth shall have no claim to or against,
or interest in, the money deposited into the program fund.
(c) Exemption from securities laws.--The program fund shall
be construed to be an agency or instrumentality of the
Commonwealth and shall be exempt from any statute regulating
securities, including the act of December 5, 1972 (P.L.1280,
No.284), known as the Pennsylvania Securities Act of 1972.
Section 303. Keystone Saves Administrative Fund.
(a) Establishment.--The Keystone Saves Administrative Fund
is established as a separate trust fund in the State Treasury.
Money in the administrative fund shall be segregated from the
program fund and accounted for separately from the program fund.
(b) Use of money.--The department shall use money in the
administrative fund to pay for all administrative and operating
costs, fees and expenses incurred solely in performing the
20230HB0577PN1137 - 8 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
duties of the department under this act.
(c) Sources of money.--The administrative fund shall receive
deposits from the individual account assessments under section
304(c) and funds designated for administrative purposes from the
Federal Government, the Commonwealth or a local government
entity or in the form of gifts, donations or grants made by any
other person, firm, partnership or corporation for deposit into
the administrative fund.
(d) Earnings and interest.--Investment earnings and interest
that are attributable to money in the administrative fund shall
be deposited into the administrative fund.
(e) Appropriation.--All money in the administrative fund is
appropriated to the department on a continuing basis to carry
out the provisions of this act.
Section 304. Administration and funding.
(a) Duties of department.--Subject to the provisions of this
act, the department shall implement and administer the program.
(b) Operating and administrative costs.--
(1) The department shall, through the Governor, annually
submit to the General Assembly a budget covering the total
fees and expenses for the program. Upon approval by the
General Assembly in an appropriation bill, total fees and
expenses as incurred by the program and the department shall
be paid from the fees, charges and investment earnings of the
administrative fund or from other available money.
(2) Beginning five years after participants are enrolled
in the program and upon approval by the General Assembly in
an appropriation bill, total fees and expenses as incurred by
the program shall be paid from the fees, charges, investment
earnings and interest of the administrative fund or from
20230HB0577PN1137 - 9 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
other available money.
(c) Program costs.--All fees, costs and expenses of
administering and operating the program and investing the assets
of the program fund shall be incurred by the participants and
paid from assessments against the balances of the individual
program accounts as established by the State Treasurer and
deposited in the administrative fund. All fees, costs and
expenses of administering and operating the program shall be
paid by the Commonwealth through annual appropriations from the
administrative fund. The assessment for an individual program
account shall not exceed an amount equivalent to 75 basis points
per year calculated on the individual program account balance as
of the date of each assessment, which shall be calculated pro
rata. The assessment limitation under this subsection shall not
apply during the five-year period commencing with the enrollment
of participants in the program and during the repayment period
under subsection (d) of an appropriation provided during the
five-year period.
(d) Repayment of appropriation.--The department shall over
time repay to the General Fund money appropriated covering the
total costs, fees and expenses for the program. The repayment
shall be made from the fees, charges, investment earnings and
interest of the administrative fund or from any other available
money.
CHAPTER 5
KEYSTONE SAVES PROGRAM ADVISORY BOARD
Section 501. Establishment of board.
The Keystone Saves Program Advisory Board is established
within the department.
Section 502. Composition of board.
20230HB0577PN1137 - 10 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(a) Members.--The board shall consist of the following
members:
(1) The Governor, or a designee.
(2) The State Treasurer, or a designee.
(3) Four members, one each appointed by the President
pro tempore of the Senate, the Speaker of the House of
Representatives, the Minority Leader of the Senate and the
Minority Leader of the House of Representatives. The four
appointed members must have knowledge, skill and expertise in
financial planning and saving for retirement.
(b) Chairperson.--The State Treasurer, or a designee, shall
serve as chairperson of the board.
Section 503. Terms of board members.
(a) Term generally.--Each appointed board member shall serve
a term of four years.
(b) Vacancy.--A vacancy on the board shall be filled for the
unexpired term of an appointed member of the board in the same
manner as the original appointment.
Section 504. Meetings of board.
(a) Organizational meeting.--The State Treasurer, or the
designee under section 502(a)(2), shall call the organizational
meeting of the board.
(b) Subsequent meetings.--Meetings of the board shall be
held at the call of the chairperson, but no less frequent than
once every quarter.
(c) Employees.--The department shall have the power and its
duty shall be to provide the board with experts, stenographers
and assistants as necessary to carry out the work of the board.
In addition, the board may enlist voluntary assistance as
available from citizens, research organizations and other
20230HB0577PN1137 - 11 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
agencies.
Section 505. Duties of board.
(a) Mandatory duties.--The board shall:
(1) Consider, study and review the work of the program.
(2) Advise the department upon request.
(3) Make recommendations on the board's own initiative
for the improvement of the program.
(b) Discretionary duties.--The board may make interim
reports as the board deems advisable.
Section 506. Limitations on board members.
A board member may not:
(1) Directly or indirectly have an interest in the
making of an investment under the program or in gains or
profits accruing from an investment under the program.
(2) Borrow program-related money or deposits or use
program-related money or deposits in any manner, for the
board member or as an agent or partner of another person.
(3) Become an endorser, surety or obligor on an
investment made under the program.
CHAPTER 7
DEPARTMENT POWERS AND DUTIES
Section 701. Powers and duties of department.
The department shall have the following duties:
(1) Administer the program and the funds.
(2) Enter into individual retirement account contracts
with individuals for the establishment of retirement savings
accounts.
(3) Contract for goods and services and employing
personnel, including contracts with private consultants,
actuaries, investment advisors and managers, record keepers,
20230HB0577PN1137 - 12 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
legal counsel, auditors and such others as the department
determines necessary for the rendering of professional,
managerial and technical assistance and advice. In awarding
contracts for goods and services under this paragraph, the
department may consider, where relevant, the following
regarding an applicant:
(i) Staffing capabilities and capacity.
(ii) Experience and performance in supplying similar
goods and services to governmental or private-sector
programs.
(iii) Reputation for preserving the confidentiality
and integrity of sensitive information.
(iv) Length of time in the current or comparable
lines of business.
(v) Financial strength and record of
creditworthiness.
(vi) Other factors as the department may deem
material to evaluating the suitability of the applicant
for any of the categories of contracts and personnel
described in this paragraph.
(4) Solicit and accept gifts, grants, loans and other
aid from any person, government entity, corporation or other
entity and participate in any Federal, State or local
government program that results in additional money being
available for establishment and implementation of the
program.
(5) Collect administrative fees and charges in
connection with any transaction, including continued
participation in the program.
(6) Contract for insurance, letters of credit and
20230HB0577PN1137 - 13 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
collateral agreements.
(7) Solicit answers from appropriate Federal agencies
regarding the application of security laws or other Federal
laws to the program.
(8) Promulgate rules and regulations and develop
policies and procedures that the department deems necessary
or advisable for the implementation of this act and the
administration and operation of the program.
(9) Notwithstanding any other provision of this act,
cause the program to be designed, established and operated in
a manner that:
(i) accords with best practices for retirement
saving vehicles;
(ii) is effective, efficient and low-cost;
(iii) encourages participation, saving, sound
investment practices and appropriate selection of default
investments;
(iv) maximizes simplicity and ease of administration
for employers, minimizes financial costs for employers,
and minimizes interactions between covered employees and
covered employers;
(v) minimizes or eliminates costs for employers and
employees;
(vi) promotes portability of benefits;
(vii) complies with all applicable sections of the
Internal Revenue Code and regulations thereunder,
including ensuring 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;
20230HB0577PN1137 - 14 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(viii) ensures that accounts of participants meet
the requirements for an IRA under the Internal Revenue
Code; and
(ix) avoids preemption of the program by ERISA or
other Federal law.
(10) Adopt, and periodically review, a written
investment policy to ensure, among other considerations, that
investment risks are prudent and properly managed and are
appropriate in comparison to applicable performance
benchmarks and standards.
(11) Develop and disseminate educational information to
educate participating employers, covered employees,
participants and others about the program, including all of
the following information:
(i) The benefits of planning and saving for
retirement.
(ii) Savings strategies that may be appropriate,
including information describing the potential value of
continuing income streams during retirement that might be
derived from current account balances and products
relating to generating such income.
(iii) The challenges of decumulating funds and
managing spending during retirement.
(12) In addition to the materials described under
paragraph (11), develop and deliver to each covered employee
whose name is provided to it by the covered employer an
information packet that provides details about the program
and the choices available to the covered employee regarding
participation in the program.
(13) Promulgate rules to allow employers who are not
20230HB0577PN1137 - 15 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
covered employers to voluntarily participate in the program,
as modified for the noncovered employers as may be necessary
and in a manner that does not cause any portion of the
program to be considered a plan regulated by ERISA. An
employer that maintains or contributes to a specified tax-
favored retirement plan for the employer's employees or has
done so effective in form and operation at any time within
the current or three preceding calendar years shall not be
eligible to participate in the program.
(14) Promulgate rules to allow independent contractors,
self-employed individuals and other workers who are not
covered employees to voluntarily participate in the program,
modified for the individuals as may be necessary.
(15) Make and enter into contracts, agreements or other
arrangements to collaborate or cooperate with other State and
local government agencies and governmental entities of other
states that maintain retirement savings programs compatible
with the program regarding the sharing of investment and
administrative functions, including prudent collective,
common or pooled investments with funds of other states'
programs, in order to achieve economies of scale and other
efficiencies designed to minimize costs for the program.
(16) Request from the Department of Labor and Industry
and other State agencies information necessary for the
department to implement this act, and share such data,
pursuant to appropriate safeguards, with any of the entities
or individuals retained under paragraph (3) as necessary for
implementation of this act.
(17) Exercise any other powers reasonably necessary for
the effectuation of the purposes, objectives and provisions
20230HB0577PN1137 - 16 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
of this act pertaining to the program.
CHAPTER 9
INVESTMENT AND FIDUCIARY RESPONSIBILITIES
Section 901. Fiduciary duties.
The department, and investment managers engaged by the
department, shall be in a fiduciary relationship with
participants and shall discharge their duties under this act
solely in the interest of participants:
(1) for the exclusive purposes of providing benefits to
participants and defraying reasonable expenses of
administering the program; and
(2) by exercising that degree of judgment, skill and
care under the circumstances then prevailing that persons of
prudence, discretion and intelligence who are familiar with
the matters exercise in the management of their own affairs,
not in regard to speculation but in regard to the pursuit of
reasonable income and preservation of capital.
Section 902. Investment policies.
(a) Policies.--The department shall develop and adopt
investment policies that define the investment objectives of the
program consistent with the objectives of the program.
(b) Options.--The investment policies shall guide the
department in identifying and making investment options
available to participants that are intended to provide, in
addition to other appropriate options, an economical income
replacement balanced with an appropriate level of risk in an
IRA-based environment consistent with the investment objectives
of the program. 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 consistent with
20230HB0577PN1137 - 17 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
the investment objectives of the program.
(c) Recommendations.--The investment policies shall include
recommendations regarding the desirability of limiting
investment choices under the program to a reasonable number in
the interest of simplicity and in consideration of the extensive
investment choices available to participants if the participants
roll over to an IRA existing outside of the program. The
recommendations shall conform to the program objectives of
minimizing participant fees and administration and investment
expenses and maximizing participation.
Section 903. Additional investment options.
(a) Options.--As part of or in addition to investment
options under section 902(b), the department shall, at a
minimum, establish the following investment options for the
program:
(1) Life-cycle fund with a target date based upon the
age of the participant.
(2) Equity index fund.
(3) Bond index fund.
(4) Capital preservation fund.
(b) Distribution options.--The department may establish
other investment options as the department deems necessary or
desirable in accordance with the investment policies developed
under section 902(a). The department shall evaluate whether to
offer one or more distribution options for the program to
provide for a source of fixed retirement income that includes
spousal protection for all or a portion of a participant's
retirement.
(c) Default option.--The department shall select a default
investment option for participants who do not elect an
20230HB0577PN1137 - 18 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
investment option. From time to time, the department may change
the default option for future participants.
Section 904. Investment managers.
(a) Engagement.--The department shall have the sole and
exclusive discretion to engage investment managers.
(b) Fees and charges.--An investment manager's fees and
charges shall not exceed 60 basis points of program fund assets
under management.
(c) Compliance.--An investment manager shall comply with
applicable Federal and State laws and regulations, rules,
policies and guidelines promulgated by the department regarding
the program and the investment of money in a fund, including,
but not limited to, investment policies.
(d) Oversight.--An investment manager shall provide reports
to and appear before department personnel as the department
deems necessary for the department to oversee the investment
manager's performance and the performance of the fund.
(e) Performance reviews.--The department shall periodically
conduct a performance review of each investment manager,
including a review of fees and customer service. A copy of each
performance review shall be made available on the department's
publicly accessible Internet website.
CHAPTER 11
PROGRAM IMPLEMENTATION
Section 1101. Commencement of program activities.
No later than 24 months from the effective date of this
section, the department shall begin implementation of the
program and allow a participating employer to register with the
department and certify that the participating employer has
facilitated a qualified arrangement. The department may delay
20230HB0577PN1137 - 19 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
the start of implementation, including the deadlines specified
in section 1106(b), for up to one year if the department
determines that a delay would be in the best interests of the
program.
Section 1102. Registration and certification of qualified
payroll deposit retirement savings arrangements.
(a) General rule.--No later than the deadlines established
under section 1106(b), a participating employer shall facilitate
a qualified arrangement and register with the department,
certifying that the participating employer has facilitated a
qualified payroll deposit retirement savings arrangement.
(b) Arrangement requirements.--A participating employer's
qualified arrangement shall include the following components and
features:
(1) Offer a covered employee the opportunity to
participate in the program.
(2) In compliance with procedures established by the
department, the qualified arrangement shall:
(i) Provide the department with the name of the
covered employee and other information as may be required
by the department.
(ii) Make available to a covered employee
information regarding the program provided by the
department.
(iii) Automatically enroll a covered employee in the
payroll deposit retirement savings arrangement, unless
the covered employee opts out of the program.
(iv) Regularly take deductions from a participant's
gross wages and remit the deductions to the participant's
program account.
20230HB0577PN1137 - 20 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(3) Allow a participant to select the rate of deduction
from the participant's gross wages for the program, subject
to the annual contribution limit permitted by the Internal
Revenue Code. For a participant who does not identify a
deduction rate, the department shall establish a default
contribution equal to 4% of gross wages, or another default
percentage as the department may prescribe for the program,
subject to the annual contribution limit permitted by the
Internal Revenue Code.
(4) Automatically increase the deduction rate by an
amount equal to 1% of gross wages each year, or such other
annual increase as the department may prescribe for the
program, to a maximum of 10% of gross wages or the annual
contribution limit permitted by the Internal Revenue Code,
whichever is greater.
(5) Allow a participant to completely opt out of
deductions, increase or decrease the deduction rate, freeze
automatic annual deduction rate increases or increase the
deduction rate, subject to the annual contribution limit
permitted by the Internal Revenue Code.
(6) Allow a participant to select one or more investment
options from the investment options offered by the department
through the program. A participant may change the selected
investment option or options at any time, subject to the
program rules. For a participant who does not select any
investment option, the deductions from the participant's
gross wages will be invested in a default option established
by the department for the program.
(7) Allow a participant to terminate participation in
the program at any time in accordance with Internal Revenue
20230HB0577PN1137 - 21 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Code requirements.
(8) At least once each calendar year, provide an open
enrollment period of not less than two weeks, or such longer
time period as may be prescribed by the department, during
which a covered employee who previously opted out of the
program or who terminated prior participation in the program
may enroll or re-enroll in the program.
(9) Allow a participant to roll over the program account
balance into specified tax-favored retirement plans or
traditional IRAs.
(10) Prohibit a participating employer from making
contributions to the program.
(11) Prohibit a participating employer from taking any
actions that constitute an explicit or direct endorsement or
promotion of the arrangement or the program.
Section 1103. Participating employer plans.
Nothing in this act shall prohibit a participating employer
from replacing a qualified arrangement with a specified tax-
favored retirement plan.
Section 1104. Roth IRAs and traditional IRAs.
(a) Roth IRAs.--Subject to the requirements for a Roth IRA
under the Internal Revenue Code, participant contributions,
including contributions from a participant who does not select
an investment option, shall be made to a Roth IRA.
(b) Alternative structures for emergency savings.--The
department may offer an alternative investment option for a
participant to select that facilitates access, in the event of
emergency, to the participant's contributions comparable to that
allowed by a Roth IRA.
(c) Traditional IRAs.--The department may make a traditional
20230HB0577PN1137 - 22 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
IRA available for a participant who selects the participant's
investment options.
Section 1105. Implementation of qualified arrangements.
The department shall establish procedures regarding the
facilitation of a qualified arrangement by a participating
employer.
Section 1106. Registration and certification.
(a) Procedures.--The department shall establish procedures
for a participating employer to register in the program and
provide the registration information to the department. A
participating employer shall certify to the department
implementation of a qualified arrangement at the time of
registration.
(b) Registration deadlines.--Unless otherwise specified by
the department, the registration deadlines for a covered
employer to register as a participating employer shall be as
follows, so long as nothing in this subsection shall prevent the
department from implementing a limited pilot program earlier
than any time periods described below to enable volunteer-
covered employers to register with the department and certify
having facilitated the implementation of qualified arrangements:
(1) A covered employer employing 100 or more employees
shall register no later than 24 months after the effective
date of this subsection.
(2) A covered employer employing at least 20 but no more
than 99 employees shall register no later than 30 months
after the effective date of this subsection.
(3) A covered employer employing at least 10 but no more
than 19 employees shall register no later than 36 months
after the effective date of this subsection.
20230HB0577PN1137 - 23 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(4) A covered employer employing at least 5 but no more
than 9 employees shall register no later than 48 months after
the effective date of this subsection.
(5) Notwithstanding any of the preceding registration
deadlines of this subsection, covered employers that pay
their employees through a payroll system or payroll service
shall register no later than 24 months after the effective
date of this subsection. A covered employer shall not be
subject to a penalty for not participating in the program.
Section 1107. Payroll deductions.
(a) Payroll deduction deposits.--The department shall
establish procedures for payroll deduction deposits, including
time periods within which a participating employer must notify
the department of the hiring of a new covered employee, must
enroll the new covered employee in the program and must begin
taking deductions from the participant's gross wages for the
program.
(b) Retirement savings.--The department shall establish
procedures for the remittance by a participating employer of
payroll deductions through a qualified arrangement.
(c) Deductions held in trust.--All deductions collected by a
person from a covered employee in accordance with or under color
of this act that have not been properly returned by the person
to the covered employee shall constitute a trust fund for the
covered employee until contributed to the covered employee's
program account. The trust shall be enforceable by the covered
employee or the Commonwealth against the person, the person's
representatives and any person, other than the covered employee,
who knowingly or unknowingly receives any part of the fund
without consideration.
20230HB0577PN1137 - 24 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
Section 1108. Withdrawals, rollovers and transfers.
The department shall establish procedures relating to a
participant's ability to make withdrawals, arrange for rollovers
of funds, make direct transfers from program IRAs and otherwise
facilitate portability of program account balances.
Section 1109. Distribution of funds from program.
(a) Procedures.--The department shall establish procedures
governing the distribution of funds from the program, including
distributions as may be permitted or required by the program or
any applicable provisions of Federal or State law, with the
following objectives:
(1) Maximizing financial security in retirement.
(2) Assisting a participant with the challenges of the
decumulation of savings.
(b) Consideration.--The department shall consider the
benefits, feasibility and cost-effectiveness of the following
when establishing the procedures under subsection (a):
(1) Designating a lifetime income investment product for
the program to provide a participant and the participant's
spouse with a source of retirement income for life, and, if
determined by the department to be prudent, to provide
benefits, where available, to other designated beneficiaries.
(2) Establishing distribution procedures for
participants that encourage participants to elect, in
combination with the designation of a lifetime income
investment product, that at least 50% of a participant's
program account balance on the date the participant attains
the normal retirement age be invested in the lifetime income
investment product.
Section 1110. Outreach and information.
20230HB0577PN1137 - 25 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
The department shall develop, periodically update and
distribute educational content to all of the following:
(1) A participating employer, as follows:
(i) General information about the requirements and
procedures of the program.
(ii) Information describing the opportunity to and
benefits of a participating employer sponsoring a
specified tax-favored retirement plan that would exempt
the participating employer from the requirements of the
program.
(iii) Explanatory materials to be made available to
a covered employee regarding the program and the choices
available to the covered employee. The explanatory
materials shall include all required disclosures relating
to participating in an IRA and instructions for how to
enroll in the program.
(2) A covered employee, as follows:
(i) Information explaining the advantages of early
savings activity that benefits from compound interest.
(ii) Descriptions of investment options offered by
the program.
(iii) Strategies for increasing long-term financial
security for an individual and a family unit.
(3) A participant, as follows:
(i) Information that will assist a participant in
the prudent decumulation of savings during retirement.
(ii) Descriptions of asset distribution products
that may provide predictable and fixed income for a
period of time, including for all or a portion of the
retirements of the participant and the participant's
20230HB0577PN1137 - 26 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
spouse.
Section 1111. Contributions, interest and investment earnings.
(a) Ownership.--A participant shall be the owner of the
contributions, interest and investment earnings in the
associated program account. The Commonwealth or the
participating employer may not have any proprietary interest in
the contributions, interest or investment earnings.
(b) Prohibited uses.--The department shall ensure that no
assets of the program are used for purposes other than the
following:
(1) Paying benefits to a participant.
(2) Paying the cost of administering the program.
(3) Making investments for the benefit of a participant
and the program.
(c) Prohibited transfers.--The General Assembly may not
transfer contributions in an IRA under the program, or the
interest or investment earnings of any associated program
accounts, to the General Fund or another Commonwealth fund or
otherwise encumber or use the contributions, interest or
investment earnings for a purpose other than the ones specified
under this section.
(d) Procedures.--The department shall establish procedures
to allocate interest, investment earnings and investment losses
to the program account of a participant. A participant's
retirement savings benefit under the program shall be an amount
equal to the balance in the participant's account on the date
the retirement savings benefit becomes payable.
Section 1112. Duties and liability of Commonwealth.
(a) Excess amounts.--The Commonwealth shall have no duty or
liability to a person for the payment of any amount in excess of
20230HB0577PN1137 - 27 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
the amount of a participant's retirement savings benefit and the
amount shall be made available to the participant or beneficiary
in accordance with the requirements of the program and the
Internal Revenue Code.
(b) Losses or deficiencies.--A Commonwealth agency,
commission or board or any officer, employee or member of a
Commonwealth agency, commission or board shall not be liable for
the loss or deficiency resulting from particular investments
selected under this act, except for liability that arises out of
a breach of fiduciary duty under section 901 as determined by a
competent court of law.
Section 1113. Protection from liability for employers.
(a) Liability.--A participating employer or another employer
shall not be liable for any of the following:
(1) An employee's decision to participate in or opt out
of the program.
(2) The investment decision of a participant or the
department.
(3) The administration, investment, investment returns
or investment performance of the program, including any
interest rate or other rate of return on any contribution or
account balance.
(4) The design of the program or benefits paid to a
participant.
(5) An individual's awareness of or compliance with the
conditions and other provisions of Federal and State tax laws
that determine whether the individual is eligible to make
tax-favored contributions to IRAs, including the amount of
the contributions and the time frame and manner of the
contributions.
20230HB0577PN1137 - 28 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(6) A loss, a failure to realize any gain or any other
adverse consequences, including adverse tax consequences or a
loss of favorable tax treatment, public assistance or other
benefits incurred by an individual resulting from
participating in the program.
(b) Fiduciaries.--A participating employer or another
employer shall not be a fiduciary in relation to the program or
any other arrangement under the program.
Section 1114. Risk management.
(a) Program.--The department shall annually prepare and
adopt a written risk management and oversight program as a part
of the investment policies of the department developed under
section 902. The risk management and oversight program shall be
designed to:
(1) ensure that an effective risk management system is
in place to monitor the risk levels of the program and
program fund portfolio;
(2) ensure that the risks taken are prudent and properly
managed;
(3) provide an integrated process for overall risk
management; and
(4) assess investment returns and risks to determine if
the risks taken are adequately compensated compared to
applicable performance benchmarks and standards.
(b) Insurance.--In preparing the risk management and
oversight program under subsection (a), the department shall
evaluate whether to obtain insurance against any and all losses
in connection with the property, assets or activities of the
program.
Section 1115. Audit and reports.
20230HB0577PN1137 - 29 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
(a) Reports to Governor and General Assembly.--The
department shall annually submit the following reports to the
Governor and the General Assembly:
(1) An audited financial report, prepared by the Auditor
General in accordance with generally accepted accounting
principles, of the program by July 1 of each calendar year
for the prior calendar year.
(2) A report prepared by the department, which shall
include, but not be limited to, the following:
(i) A summary of the benefits provided by the
program, including the number of participants and
participating employers in the program.
(ii) The percentage and amount of funds in the
program's investment options and rates of return, net of
fees.
(iii) Any other information that is relevant to make
a full, fair and effective disclosure of the operations
of the program and the program fund.
(b) Reports to participating employers.--In addition to
other statements or reports required by Federal or State law, at
least annually, the department shall provide a report to each
participating employer that contains a list of the names of each
participant employed by the participating employer and the
amounts of deductions taken by the participating employer and
contributed to the program on behalf of each participant during
the reporting period.
(c) Reports to participants.--In addition to other
statements or reports required by Federal or State law, the
department shall provide the following to each participant:
(1) At least annually, a report of contributions and
20230HB0577PN1137 - 30 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
investment income allocated and withdrawals from and balances
in the participant's account for the reporting period,
including, but not limited to, the participant's rate of
contribution and any change in the rate of contribution
during the preceding calendar year or as required under
section 1102(b)(4).
(2) At least quarterly, all of the following:
(i) The account balance in a participant's program
account, including the value of the participant's
investment in each investment option selected by the
participant.
(ii) The investment options available to a
participant and the process by which a participant may
select from the investment options for the participant's
contributions to the program.
(iii) The amount of fees charged to a participant
program account and a description of the services to
which each charge relates.
(iv) An estimate of the amount of income the
participant's program account could reasonably be
expected to generate over the course of the participant's
retirement, based upon reasonable assumptions.
(d) Additional information.--The department may include any
other information in the reports under subsection (c) regarding
the program as the department may determine appropriate and
useful.
Section 1116. Confidentiality of information.
Notwithstanding any other provision of law, account
information under the program relating to a participant,
including, but not limited to, the participant's name, address,
20230HB0577PN1137 - 31 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
telephone number, email address, personal identification
information, investments, contributions and earnings, shall be
confidential and shall be maintained by the department and the
department's agents as confidential, except in any of the
following circumstances:
(1) It is necessary to administer the program in a
manner consistent with this act or Federal or State tax laws.
(2) The participant who provides the information or is
the subject of the information expressly agrees in writing to
the disclosure of the information.
(3) The information is demanded pursuant to a subpoena,
court order or other legal obligation.
Section 1117. Temporary regulations.
(a) Promulgation.--In order to facilitate the prompt
implementation of this act, the department may promulgate
temporary regulations that shall expire not later than two years
after publication of the temporary regulations in the
Pennsylvania Bulletin. The promulgated temporary regulations
shall not be subject to any of the following:
(1) Section 612 of the act of April 9, 1929 (P.L.177,
No.175), known as The Administrative Code of 1929.
(2) Sections 201, 202, 203, 204 and 205 of the act of
July 31, 1968 (P.L.769, No.240), referred to as the
Commonwealth Documents Law.
(3) Sections 204(b) and 301(10) of the act of October
15, 1980 (P.L.950, No.164), known as the Commonwealth
Attorneys Act.
(4) The act of June 25, 1982 (P.L.633, No.181), known as
the Regulatory Review Act.
(b) Expiration.--The authority of the department to
20230HB0577PN1137 - 32 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
promulgate temporary regulations under subsection (a) shall
expire two years after the effective date of this section.
CHAPTER 13
(Reserved)
CHAPTER 15
MISCELLANEOUS PROVISIONS
Section 1501. Regulations.
The department shall promulgate regulations and adopt
policies or guidelines as necessary to implement this act.
Section 1502. Provision of information.
The Department of Labor and Industry and other State agencies
shall coordinate, cooperate and share data and information with
the department to facilitate implementation of this act.
Section 1503. Notice of program implementation.
(a) Publication.--Upon the implementation of the program in
accordance with this act, the department shall submit a notice
to the Legislative Reference Bureau for publication in the
Pennsylvania Bulletin.
(b) Internet posting.--The department shall post a notice of
the date of implementation of the program on the department's
publicly accessible Internet website. The notice shall include a
statement that in lieu of enrolling employees in the program
employers may sponsor an alternative arrangement, including, but
not limited to, a defined benefit plan, 401(k) plan, simplified
employee pension (SEP) plan, savings incentive match plan for
employees (SIMPLE) or automatic payroll deduction IRA offered
through a private provider.
Section 1504. Effective date.
This act shall take effect immediately.
20230HB0577PN1137 - 33 -
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29