PRINTER'S NO. 3435
THE GENERAL ASSEMBLY OF PENNSYLVANIA
HOUSE BILL
No.
2021
Session of
2020
INTRODUCED BY PEIFER, DRISCOLL, CIRESI, SCHLEGEL CULVER,
T. DAVIS, DAY, DeLUCA, GILLEN, HERSHEY, JAMES, MILLARD,
NEILSON, PICKETT, SCHLOSSBERG, SOLOMON, THOMAS, TOEPEL,
WARREN AND YOUNGBLOOD, MARCH 10, 2020
REFERRED TO COMMITTEE ON FINANCE, MARCH 10, 2020
AN ACT
Establishing the Keystone Saves Program, the Keystone Saves
Program Fund, the Keystone Saves Program Administrative Fund
and the Keystone Saves Program Advisory Board; and providing
for powers and duties of the Treasury Department and the
Department of Labor and Industry, 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 Program Administrative Fund.
Section 304. Administration and funding.
Chapter 5. Keystone Saves Program Advisory Board
Section 501. Establishment of board.
Section 502. Composition of board.
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
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. 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.
Section 1116. Confidentiality of information.
Section 1117. Temporary regulations.
20200HB2021PN3435 - 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
Chapter 13. (Reserved)
Chapter 15. Miscellaneous Provisions
Section 1501. Regulations.
Section 1502. Notice of program implementation.
Section 1503. 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 Program
Administrative Fund established under section 303.
"Board." The Keystone Saves Program Advisory Board
established under section 501.
"Calendar 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.
"Covered employee." As follows:
(1) An individual who:
(i) is employed by a participating employer;
(ii) has wages or other compensation that are
20200HB2021PN3435 - 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
allocable to the Commonwealth; and
(iii) is at least 18 years of age.
(2) The term does not include any of the following:
(i) An employee covered under the Railway Labor Act
(Public Law 69-257, 44 Stat. 577).
(ii) An employee on whose behalf an employer makes
contributions to a multiemployer 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 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
20200HB2021PN3435 - 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
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 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." The Employee Retirement Income Security Act of 1974
(Public Law 93-406, 88 Stat. 829).
"Fund." The Keystone Saves Program Fund established under
section 302.
"Internal Revenue Code." The Internal Revenue Code of 1986
(Public Law 99-514, 26 U.S.C. § 1 et seq.).
"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) Section 408(a) or (b).
(2) Section 408A.
"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 a noncovered
employer that voluntarily participates in the program.
"Program." The Keystone Saves Program established under
section 301.
"Qualified payroll deposit retirement savings arrangement" or
20200HB2021PN3435 - 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
"Qualified arrangement." An arrangement by which an employer
allows employees to contribute to an IRA by processing payroll
deductions and contributing the deductions to the program in
accordance with section 1102.
"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 satisfies 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:
(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
20200HB2021PN3435 - 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
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 special fund in the State Treasury. The
following shall apply:
(1) The fund shall be used for the exclusive benefit of
participants.
(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 fund shall include the individual retirement
accounts of participants, which shall be accounted for as
individual accounts.
(4) Money in the fund shall include money received from
participants through participating employers and any gifts,
donations or grants made to the Commonwealth for deposit in
the fund.
(5) Investment earnings and interest that are
attributable to money in the fund shall be deposited in the
fund and credited appropriately to individual accounts.
(b) Amounts on deposit.--
(1) The money deposited in the fund does not constitute
property of the Commonwealth.
(2) The fund shall be construed to be an agency or
instrumentality of the Commonwealth.
(3) Money deposited in the fund may not be commingled
with Commonwealth funds.
20200HB2021PN3435 - 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
(4) The Commonwealth shall have no claim to or against,
or interest in, the money deposited in the fund.
Section 303. Keystone Saves Program Administrative Fund.
(a) Establishment.--The Keystone Saves Program
Administrative Fund is established as a separate trust fund in
the State Treasury.
(b) Use of money.--The department shall use money in the
administrative fund to pay for start-up and ongoing
administrative expenses incurred in performing the duties of the
department under this act.
(c) Sources of money.--The administrative fund may receive
money 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 in 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.
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) 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.
(2) Beginning three 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
20200HB2021PN3435 - 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
and investment earnings of the fund or from other available
money.
(c) Program costs.--Total fees and expenses, inclusive of
investment management fees, shall not exceed 75 basis points of
fund assets under management, except that this limit shall not
apply during a three-year start-up period commencing with the
enrollment of participants in the program.
(d) Repayment of appropriation.--The department shall repay
to the General Fund money appropriated covering the total fees
and expenses for the program for the first three years of the
program after participants are enrolled in the program. The
repayment shall be made from the fees, charges, investment
earnings and interest of the fund within 10 years of the
effective date of this section.
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.
(a) Members.--The board shall consist of the following
members:
(1) The State Treasurer or a designee.
(2) The following individuals appointed by the State
Treasurer:
(i) A participant.
(ii) An individual who has a favorable reputation
for advancing the interests of those individuals who are
approaching, or who have already achieved, retirement.
(iii) An individual who has a favorable reputation
20200HB2021PN3435 - 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
for skill, knowledge and experience in the field of
retirement saving products and investments.
(3) The following individuals appointed by the Governor:
(i) An individual who has a favorable reputation for
skill, knowledge and experience in the field of
retirement saving.
(ii) An individual who has a favorable reputation
for skill, knowledge and experience in the interests of
employees in retirement planning and saving.
(iii) An individual who has a favorable reputation
for skill, knowledge and experience relating to the
interests of small businesses and employers in retirement
saving.
(4) The following individuals appointed by the President
pro tempore of the Senate:
(i) Upon the recommendation of the Majority Leader
of the Senate, an individual who has a favorable
reputation for skill, knowledge and experience in the
field of retirement saving.
(ii) Upon the recommendation of the Minority Leader
of the Senate, an individual who has a favorable
reputation for skill, knowledge and experience in the
field of retirement saving.
(5) The following individuals appointed by the Speaker
of the House of Representatives:
(i) Upon the recommendation of the Majority Leader
of the House of Representatives, an individual who has a
favorable reputation for skill, knowledge and experience
in the field of retirement saving.
(ii) Upon the recommendation of the Minority Leader
20200HB2021PN3435 - 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
of the House of Representatives, an individual who has a
favorable reputation for skill, knowledge and experience
in the field of retirement saving.
(b) Chairperson.--The State Treasurer or designee under
subsection (a)(1) shall serve as the chairperson of the board.
Section 503. Terms of board members.
(a) Term generally.--Each board member appointed by the
State Treasurer, the President pro tempore of the Senate, the
Speaker of the House of Representatives and the Governor 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. The State Treasurer's
appointees under section 502(a)(2) shall be appointed 12 months
after initial implementation of the program and their seats
shall be vacant until their appointment.
Section 504. Meetings of board.
(a) Organizational meeting.--The State Treasurer or the
designee under section 502(a)(1) shall call the organizational
meeting of the board.
(b) Subsequent meetings.--Meetings of the board shall be
held at least quarterly or at the call of the chairperson.
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.
(4) Report annually to the Governor and to the General
Assembly.
20200HB2021PN3435 - 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
(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 fund.
(2) Enter into individual retirement account contracts
with individuals for the establishment of retirement savings
accounts.
(3) Contract for goods and services and employ
personnel, including contracts with private consultants,
actuaries, investment advisors and managers, record keepers,
legal counsel and auditors for the rendering of professional,
managerial and technical assistance and advice. In awarding
contracts for goods and services under this paragraph, the
department shall consider, where relevant, the following
regarding an applicant:
(i) Staffing capabilities and capacity.
(ii) Experience and performance in supplying similar
20200HB2021PN3435 - 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
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 strong 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
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.
20200HB2021PN3435 - 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
(9) 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;
(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;
(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) 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.
20200HB2021PN3435 - 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
(ii) How to decide on the level of participation in
the program and savings strategies that may be
appropriate, including information describing income
streams that might be derived from current account
balances and products relating to generating such income.
(11) 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 the participants. The General Assembly may
not transfer contributions to an IRA under the program to
the General Fund or another Commonwealth fund or
otherwise encumber or use the contributions for a purpose
other than one specified under this section.
(12) Promulgate rules to allow eligible employers who
are not participating employers to voluntarily participate in
the program, as modified for such employers as may be
necessary.
(13) 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 such individuals as may be necessary.
(14) 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'
20200HB2021PN3435 - 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
programs, in order to achieve economies of scale and other
efficiencies designed to minimize costs for the program.
(15) Exercise any other powers reasonably necessary for
the effectuation of the purposes, objectives and provisions
of this act pertaining to this program.
CHAPTER 9
INVESTMENT AND FIDUCIARY RESPONSIBILITIES
Section 901. Fiduciary duties.
Department personnel and investment managers engaged by the
department shall be in a fiduciary relationship with
participants and shall discharge their duties with respect to
the program 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 exercised 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 implement
investment policies that define the program's investment
objectives 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 an
economical income replacement balanced with an appropriate level
of risk in an IRA-based environment consistent with the
20200HB2021PN3435 - 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
program's investment objectives. 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 the program's investment objectives.
(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, including identifying
products that may be particularly relevant for independent
contractors, self-employed individuals and other workers who are
not covered employees.
Section 903. Additional investment options.
(a) Options.--In addition to the investment options under
section 902(b), the department shall establish the following
investment options for the program:
(1) A life-cycle fund with a target date based upon the
age of the participant.
(2) An equity index fund.
(3) A bond index fund.
(4) A 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
20200HB2021PN3435 - 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
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
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 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 the 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.
20200HB2021PN3435 - 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
No later than 24 months from the effective date of this
section, the department shall implement the program and allow a
participating employer to register with the department and the
Department of Labor and Industry and certify that the
participating employer has established a qualified arrangement.
Nothing in this section shall be construed to prevent the
department from prescribing a reasonably phased schedule for
registration and certification that extends later than 24 months
from the effective date of this section or authorizes different
categories of participating employers to comply with the
registration and certification requirements by different
deadlines.
Section 1102. Qualified payroll deposit retirement savings
arrangements.
(a) Registration and certification.--No later than six
months after the date the program is implemented under section
1101, a participating employer shall register with the
department and certify that the participating employer has
established a qualified arrangement.
(b) Compliance.--A participating employer shall comply with
all of the following requirements to establish a qualified
arrangement:
(1) The participating employer shall offer a covered
employee the opportunity to participate in the program.
(2) In compliance with procedures established by the
department, the participating employer shall:
(i) Provide the department with the name and other
required information regarding a covered employee.
(ii) Provide a covered employee with department-
provided information regarding the program.
20200HB2021PN3435 - 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
(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
wages and contribute the deduction to the participant's
program account.
(3) The participating employer shall allow a participant
to select the rate of deduction from the participant's wages
for the program, subject to the annual contribution limit
permitted by the Internal Revenue Code. For a participant who
fails to select a deduction rate, the participating employer
shall deduct a default contribution equal to 4% of 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) The participating employer shall 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, on the anniversary
of the covered employee's enrollment in the program, to a
maximum of 8% of wages or the annual contribution limit
permitted by the Internal Revenue Code, whichever is greater.
(5) The participating employer shall 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) The participating employer shall allow a participant
to select one or more investment options from the investment
20200HB2021PN3435 - 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
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 wages will be invested in a
default option established by the department for the program.
(7) The participating employer shall allow a participant
to terminate participation in the program at any time in
accordance with Internal Revenue Code requirements.
(8) At least once each calendar year, the participating
employer shall provide an open enrollment period of not less
than two weeks during which a covered employee who previously
opted out of the program or who terminated prior
participation in the program may enroll in the program.
(9) The participating employer shall allow a participant
to roll over the program account balance into specified tax-
favored retirement plans or traditional IRAs.
(10) The participating employer may not make
contributions to the program.
(11) The participating employer may not take any actions
that constitute an 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.--Except as provided under subsection (b),
participant contributions, including contributions from a
participant who does not select an investment option, shall be
20200HB2021PN3435 - 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
made to a Roth IRA.
(b) Traditional IRAs.--The department may make a traditional
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
implementation 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 such registration information to the department. A
participating employer shall certify to the department
implementation of qualified arrangements.
(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:
(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 50 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 20 but no more
than 49 employees shall register no later than 36 months
after the effective date of this subsection.
(4) A covered employer employing at least 10 but no more
than 19 employees shall register no later than 42 months
after the effective date of this subsection.
20200HB2021PN3435 - 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
(5) 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.
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 wages for the program.
(b) Retirement savings.--The department shall establish
procedures for the payment by a participating employer of
payroll deductions through a payroll deposit retirement savings
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, and 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, knowingly or unknowingly receiving any part of the
fund without consideration.
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.
20200HB2021PN3435 - 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
(a) Establishment.--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 laws,
with all of the following objectives:
(1) Maximizing financial security in retirement.
(2) Protecting spousal rights.
(3) Assisting a participant with the challenges of the
decumulation of savings.
(b) Consideration.--The department shall consider the
benefits, feasibility and cost-effectiveness of all 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.
(2) Requiring, 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.
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
20200HB2021PN3435 - 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
program.
(iii) Explanatory materials for distribution 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
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 transfers.--The department shall ensure that
no assets of the program are transferred to the General Fund or
20200HB2021PN3435 - 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
any other fund of the Commonwealth or otherwise encumbered or
used for purposes other than any of 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) 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
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 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.
Section 1113. Protection from liability for employers.
(a) Liability.--A participating employer or other employer
shall not be liable for any of the following:
(1) An employee's decision to participate in or opt out
of the program.
20200HB2021PN3435 - 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
(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.
(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 other 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 department's investment policies 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 fund
20200HB2021PN3435 - 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
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, 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.
(a) Reports to Governor and General Assembly.--The
department shall submit annually 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 is not limited to, all of 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
20200HB2021PN3435 - 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
of the program and the 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 a
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 all of the following to a participant:
(1) At least annually, a report of contributions and
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
20200HB2021PN3435 - 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
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,
telephone number, e-mail 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.
Section 1117. Temporary regulations.
(a) Promulgation.--In order to facilitate the prompt
implementation of this act, the department and the Department of
Labor and Industry may promulgate temporary regulations that
shall expire not later than two years after the publication of
the temporary regulations in the Pennsylvania Bulletin. The
promulgated temporary regulations shall not be subject to any of
20200HB2021PN3435 - 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
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
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. The
Department of Labor and Industry and other State agencies shall
coordinate, cooperate and share data and information with the
department as necessary to implement this act.
Section 1502. 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
20200HB2021PN3435 - 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
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 1503. Effective date.
This act shall take effect immediately.
20200HB2021PN3435 - 32 -
1
2
3
4
5
6
7
8
9
10