Iowa-2023-SF2232-Introduced

S.F. 2232 Section 1. NEW SECTION . 12L.1 Purpose and definitions. 1 1. The general assembly finds that the general welfare and 2 well-being of the state are directly related to the ability 3 of the citizens of the state to save for their retirement 4 years, and that a vital and valid public purpose is served by 5 the creation and implementation of programs which encourage 6 and make possible the attainment of financial security by 7 the greatest number of citizens of the state. According to 8 a study conducted in 2019 by the Iowa insurance division in 9 conjunction with other partners, thirty-nine percent of people 10 in this state are relying on social security for retirement 11 and thirty-seven percent have less than five thousand dollars 12 saved or invested for retirement. In order to make available 13 to the citizens of the state an opportunity to fund future 14 retirement savings needs, it is necessary that a public trust 15 be established in which moneys may be invested for retirement. 16 2. As used in this chapter, unless the context otherwise 17 requires: 18 a. “Administrative fund” means the administrative fund 19 established under section 12L.8. 20 b. “Employer” means a person or entity engaged in a 21 business, industry, profession, trade, or other enterprise in 22 Iowa. 23 c. “Internal Revenue Code” means the same as defined in 24 section 422.3. 25 d. “Iowa retirement savings plan trust” or “trust” means the 26 trust created under section 12L.2. 27 e. “Participant” means an individual that has entered into a 28 participation agreement under this chapter to contribute to an 29 Iowa retirement savings plan. 30 f. “Participation agreement” means an agreement between a 31 participant and the trust entered into under this chapter. 32 g. “Program fund” means the program fund established under 33 section 12L.8. 34 Sec. 2. NEW SECTION . 12L.2 Creation of the Iowa retirement 35 -1- LSB 5193XS (4) 90 sc/ns 1/ 8

S.F. 2232 savings plan trust. 1 An Iowa retirement savings plan trust for persons employed 2 for compensation in this state, as allowed by the Internal 3 Revenue Code, is created for the purpose of helping Iowans save 4 for retirement. The trust shall function according to the 5 provisions of the federal SECURE 2.0 Act of 2022, Pub. L. No. 6 117-328. The treasurer of state is the trustee of the trust, 7 and has all powers necessary to carry out and effectuate the 8 purposes, objectives, and provisions of this chapter pertaining 9 to the trust, including the power to do all of the following: 10 1. Make and enter into contracts necessary for the 11 administration of the trust. 12 2. Enter into agreements with any financial institution, 13 the state, or any federal or other state agency, or other 14 entity as required to implement this chapter. 15 3. Carry out the duties and obligations of the trust 16 pursuant to this chapter. 17 4. Accept any grants, gifts, legislative appropriations, 18 and other moneys from the state, any unit of federal, state, or 19 local government, or any other person, firm, partnership, or 20 corporation which the treasurer of state shall deposit into the 21 administrative fund or the program fund. 22 5. Carry out studies and projections so the treasurer of 23 state may advise participants regarding present and estimated 24 future retirement needs and levels of financial participation 25 in the trust required in order to enable participants to 26 achieve their retirement funding objectives. 27 6. Participate in any federal, state, or local governmental 28 program for the benefit of the trust. 29 7. Procure insurance against any loss in connection with the 30 property, assets, or activities of the trust. 31 8. Enter into agreements with participants and employers. 32 9. Make distributions and refunds to participants pursuant 33 to participation agreements as prescribed by the Internal 34 Revenue Code. 35 -2- LSB 5193XS (4) 90 sc/ns 2/ 8

S.F. 2232 10. Invest moneys from the program fund in any investments 1 which are determined by the treasurer of state to be 2 appropriate. 3 11. Engage investment advisors, if necessary, to assist in 4 the investment of trust assets. 5 12. Contract for goods and services and engage personnel 6 as necessary, including consultants, actuaries, managers, 7 legal counsel, and auditors, for the purpose of rendering 8 professional, managerial, and technical assistance and advice 9 to the treasurer of state regarding trust administration and 10 operation. 11 13. Establish, impose, and collect administrative fees 12 and charges in connection with transactions of the trust, and 13 provide for reasonable service charges, including penalties for 14 cancellations and late payments with respect to participation 15 agreements. 16 14. Administer the funds of the trust. 17 15. Adopt rules pursuant to chapter 17A for the 18 administration of the trust. 19 Sec. 3. NEW SECTION . 12L.3 Enrollment and contributions. 20 1. The treasurer of state shall automatically enroll an 21 individual employed for compensation in this state in the 22 trust with a default contribution rate set by the treasurer. 23 Participants shall be able to maintain an account regardless of 24 place of employment and shall be able to roll over moneys into 25 other retirement accounts. A participant may opt out of the 26 trust at any time. 27 2. Participants shall deposit contributions to the trust 28 directly with the treasurer of state. An individual employed 29 for compensation in this state may contribute to the trust 30 through payroll deductions. An employer need not offer its 31 employees the opportunity to contribute to the trust through 32 payroll deductions if the employer has fewer than five 33 employees or offers a qualified retirement plan, including but 34 not limited to a plan qualified under section 401(a), 401(k), 35 -3- LSB 5193XS (4) 90 sc/ns 3/ 8

S.F. 2232 403(a), 403(b), 408(k), 408(p), or 457(b) of the Internal 1 Revenue Code. Employer contributions to employee accounts 2 are not required. An employer that participates in the trust 3 shall have no proprietary interest in the contributions to or 4 earnings on amounts contributed to accounts established under 5 the trust. 6 Sec. 4. NEW SECTION . 12L.4 Participant reports. 7 The treasurer of state shall provide reports on the status of 8 trust accounts to participants at least annually. 9 Sec. 5. NEW SECTION . 12L.5 Confidentiality of account 10 information. 11 Except to the extent necessary to administer the trust, 12 a participant’s account information for accounts in the 13 trust, including but not limited to names, addresses, 14 telephone numbers, personal identification information, 15 amounts contributed, and earnings on amounts contributed, 16 is confidential. The treasurer of state shall maintain the 17 information as confidential unless the person who provides the 18 information or is the subject of the information expressly 19 agrees in writing that the information may be disclosed. 20 Sec. 6. NEW SECTION . 12L.6 Preemption. 21 A local government shall not establish or offer any 22 retirement plan for persons other than public employees. 23 Sec. 7. NEW SECTION . 12L.7 Limitation of liability. 24 The trust, the treasurer of state, and the state of Iowa may 25 not guarantee any rate of return or any interest rate on any 26 contribution to the trust. The trust, treasurer of state, and 27 the state of Iowa are not liable for any loss incurred by any 28 person as a result of participating in the trust. 29 Sec. 8. NEW SECTION . 12L.8 Program and administrative funds 30 —— investment and payments. 31 1. The treasurer of state shall segregate moneys received 32 by the trust into two funds: the program fund and the 33 administrative fund. 34 2. All moneys paid by participants in connection with 35 -4- LSB 5193XS (4) 90 sc/ns 4/ 8

S.F. 2232 participation agreements shall be deposited as received into 1 separate accounts within the program fund. 2 3. Contributions to the trust made by participants shall 3 only be made in the form of cash and shall be made pretax. 4 Sec. 9. NEW SECTION . 12L.9 Cancellation of agreements. 5 A participant may cancel a participation agreement at will. 6 Upon cancellation of a participation agreement, a participant 7 shall be entitled to the return of the participant’s account 8 balance subject to penalties prescribed by the Internal Revenue 9 Code. 10 Sec. 10. NEW SECTION . 12L.10 Annual audited financial 11 report. 12 1. The treasurer of state shall submit an annual audited 13 financial report, prepared in accordance with generally 14 accepted accounting principles, on the operations of the trust 15 by January 1 to the governor and the general assembly. 16 2. The annual audit shall be made either by the auditor 17 of state or by an independent certified public accountant 18 designated by the auditor of state and must include direct and 19 indirect costs attributable to the use of outside consultants, 20 independent contractors, and any other persons who are not 21 state employees. 22 3. The annual audit must be supplemented by all of the 23 following information prepared by the treasurer of state: 24 a. Any related studies or evaluations prepared in the 25 preceding year. 26 b. A summary of the benefits provided by the trust, 27 including the number of participants in the trust. 28 c. A list of the companies that are participating in the 29 trust and the contributions the companies made. 30 d. Any other information which is relevant in order to make 31 a full, fair, and effective disclosure of the operations of the 32 trust. 33 Sec. 11. NEW SECTION . 12L.11 Tax considerations. 34 For federal tax purposes, the Iowa retirement savings plan 35 -5- LSB 5193XS (4) 90 sc/ns 5/ 8

S.F. 2232 trust shall conform to the requirements established by the 1 Internal Revenue Code to be able to operate as a retirement 2 plan. The plan may conform to the requirements under section 3 401(a), section 408, or another section of the Internal Revenue 4 Code which allows Iowans the best retirement option under the 5 trust as determined by the treasurer of state. 6 Sec. 12. NEW SECTION . 12L.12 Property rights to assets in 7 trust. 8 1. The assets of the trust shall at all times be preserved, 9 invested, and expended solely and only for the purposes of the 10 trust and shall be held in trust for the participants. 11 2. No property rights in the trust shall exist in favor of 12 the state. 13 3. The assets of the trust shall not be transferred or used 14 by the state for any purposes other than the purposes of the 15 trust. 16 Sec. 13. NEW SECTION . 12L.13 Exemption from execution and 17 other process or assignment —— exceptions. 18 The right of any person to any future payment under this 19 chapter is not transferable or assignable, at law or in 20 equity, and the moneys paid or payable or rights existing under 21 this chapter are not subject to execution, levy, attachment, 22 garnishment, or other legal process, or to the operation of 23 any bankruptcy or insolvency law except for the purposes of 24 enforcing child, spousal, or medical support obligations or 25 marital property orders. For the purposes of enforcing child, 26 spousal, or medical support obligations, the garnishment or 27 attachment of or the execution against compensation due a 28 person under this chapter shall not exceed the amount specified 29 in 15 U.S.C. §1673(b). 30 Sec. 14. NEW SECTION . 12L.14 Construction. 31 This chapter shall be construed liberally in order to 32 effectuate its purpose. 33 Sec. 15. IMPLEMENTATION PROVISION. The treasurer of state 34 shall provide that when the requirements of chapter 12L are 35 -6- LSB 5193XS (4) 90 sc/ns 6/ 8

S.F. 2232 enacted, individuals may begin making contributions to the Iowa 1 retirement savings plan trust, as created by section 12L.2, as 2 enacted in this Act, no earlier than July 1, 2025. 3 EXPLANATION 4 The inclusion of this explanation does not constitute agreement with 5 the explanation’s substance by the members of the general assembly. 6 This bill creates the Iowa retirement savings plan trust 7 under the office of treasurer of state for the purpose of 8 helping Iowans save for retirement. The bill provides that 9 the trust be operated so that, for federal tax purposes, it 10 meets the requirements of a retirement plan as provided by the 11 Internal Revenue Code and functions according to other federal 12 law. 13 The state treasurer is the trustee of the trust and has 14 numerous powers, as specified in the bill, for the purpose of 15 carrying out the purpose of the trust. Powers granted the 16 treasurer of state to effectuate the purpose of the trust 17 include entering into agreements with trust participants and 18 employers, investing moneys in the trust, and entering into any 19 agreements or contracts necessary to carry out the purposes of 20 the trust. 21 The bill provides that individuals who are employed for 22 compensation in this state are automatically enrolled in the 23 trust by the treasurer of state with a default contribution 24 rate set by the treasurer. A participant may opt out of the 25 trust at any time. Employers may allow employees to have 26 their contributions deducted from their paychecks. Employer 27 contributions to the trust are not required, and if an employer 28 chooses to make contributions, the employer has no proprietary 29 right to the moneys in the trust. 30 The bill requires the treasurer of state to provide 31 participants with reports on the trust fund at least once per 32 year. The bill also requires that all participant account 33 information be maintained as confidential, except as necessary 34 to administer the trust or as agreed to in writing by the 35 -7- LSB 5193XS (4) 90 sc/ns 7/ 8

S.F. 2232 person who provides the information or is the subject of the 1 information. 2 The bill prohibits local governments from establishing 3 or offering retirement plans for anyone other than public 4 employees. 5 The bill provides that the state, the treasurer of state, 6 and the trust may not guarantee any rate of return on any 7 contributions to the trust and are not liable for any loss 8 incurred by any person as a result of participating in the 9 trust. The bill requires the treasurer to submit an annual 10 audited financial report on the operations of the trust. 11 The bill provides that when the requirements of the bill 12 are enacted, the treasurer shall not allow individuals to make 13 contributions to the trust earlier than July 1, 2025. 14 -8- LSB 5193XS (4) 90 sc/ns 8/ 8