Bill Text: NJ S70 | 2018-2019 | Regular Session | Introduced
Bill Title: Concerns State-administered retirement savings plan; establishes "Garden State MEP."
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Introduced - Dead) 2018-01-09 - Introduced in the Senate, Referred to Senate Labor Committee [S70 Detail]
Download: New_Jersey-2018-S70-Introduced.html
Sponsored by:
Senator TROY SINGLETON
District 7 (Burlington)
SYNOPSIS
Concerns State-administered retirement savings plan; establishes "Garden State MEP."
CURRENT VERSION OF TEXT
Introduced Pending Technical Review by Legislative Counsel.
An Act concerning a State-administered retirement savings plan for private sector workers and supplementing P.L.2015, c.298 (C.43:23-1 et seq.).
Be It Enacted by the Senate and General Assembly of the State of New Jersey:
1. A retirement savings plan in the form of a multiple employer plan as described in section 210(a) of the "Employee Retirement Income Security Act of 1974" (29 U.S.C. 1060(a)), is hereby established in, and shall be administered by, the Department of the Treasury. The multiple employer plan established pursuant to this section shall be known as the "Garden State MEP." The Garden State MEP shall not be considered a governmental plan solely because it is established and administered by the State, provided that the plan is in compliance with the requirements of this act.
2. The Garden State MEP, established pursuant to section 1 of this act, shall:
a. be a 401(k)-type plan, defined benefit plan, or other tax favored retirement plan;
b. be open to all employers in the State, including any employer described in section 401(c)(4) of the Internal Revenue Code of 1986 (26 U.S.C. s.401(c)(4)), on a voluntary basis;
c. be subject to all requirements that apply to a plan described in section 210(a) of the "Employee Retirement Income Security Act of 1974" (29 U.S.C. s.1060(a)); and
d. provide for the ability to opt out for all employees of an employer participating in the plan, if the plan provides for automatic enrollment.
3. a. The plan sponsor, named fiduciary, and plan administrator of the Garden State MEP shall be the Department of the Treasury. As plan administrator, the department may directly administer the Garden State MEP or contract with private sector providers to administer the Garden State MEP.
b. The Department of the Treasury shall obtain tax qualification from the United States Internal Revenue Service for the Garden State MEP consistent with subsection a. of section 2 of this act.
c. The Department of the Treasury shall determine, prior to opening the plan for enrollment, the minimum criteria for participation in the Garden State MEP with respect to the following:
(1) automatic enrollment for employees;
(2) the default contribution rate;
(3) the default investment option;
(4) annuitization; and
(5) leakage.
4. a. The Garden State MEP may enroll individuals directly in the plan, if the individuals are employed by employers who do not participate in the plan.
b. The Garden State MEP shall not require employer participation in the form of contributions, bonuses, or monetary incentives in the case of individual employee participation pursuant to subsection a. of this section.
5. a. Contributions made to the Garden State MEP shall be treated in the same manner for purposes of section 401 of the Internal Revenue Code of 1986 (26 U.S.C. s.401) as contributions to any other multiple employer plan described in section 210(a) of the "Employee Retirement Income Security Act of 1974" (29 U.S.C. 1060(a)).
b. Any contributions made to the Garden State MEP shall be used exclusively for the purpose of paying benefits, administration costs, and for investments made for the benefit of the Garden State MEP.
c. The Garden State MEP shall be treated as a plan subject to section 413(c) of the Internal Revenue Code of 1986 (26 U.S.C. s.413(c)).
6. Notwithstanding any law or regulation to the contrary, the Garden State MEP shall be considered an approved plan pursuant to P.L.2015, c.298 (C.43:21-1 et seq.). The Department of the Treasury shall ensure that the Garden State MEP is available through the New Jersey Small Business Retirement Marketplace established pursuant to P.L.2015, c.298 (C.43:23-1 et seq.), or any successor program established to connect employers and employees with plans to increase retirement savings.
7. The Department of the Treasury shall design and make available to employers an employee information packet and marketing materials. The employee information packet shall include background information on the Garden State MEP and appropriate disclosures for employees. The department shall design and operate an Internet website that provides plan information for employers and employees, including information on how employers and employees may voluntarily participate in the Garden State MEP. Any information and marketing designed and made available pursuant to this section shall promote the benefits of retirement savings and provide information that promotes financial literacy.
8. This act shall take
effect on the first day of the sixth month next following enactment, except
that the Department of the Treasury may take such anticipatory administrative
action in advance as shall be necessary for the implementation of the act.
STATEMENT
This bill establishes the "Garden State MEP," a retirement savings plan for private sector employers and employees in the form of a multiple employer plan as described in the federal "Employee Retirement Income Security Act of 1974" (29 U.S.C. 1060(a)) (hereinafter, ERISA). Under the provisions of the bill, the Garden State MEP is established in, and will be administered by, the Department of the Treasury.
Established as a multiple employer plan fully subject to ERISA and the federal Internal Revenue Code of 1986, this State-sponsored multiple employer plan is not preempted under federal law. The Garden State MEP will operate as an "open MEP," meaning that it will not be required to demonstrate that employers participating in the plan share a common bond. Private sector sponsorship of such "open MEPs" is prohibited by federal law.
The bill provides that the Garden State MEP must:
(1) be a 401(k)-type plan, defined benefit plan, or other tax favored retirement plan;
(2) be open to all employers in the State on a voluntary basis;
(3) be subject to all requirements that apply to a plan described in section 210(a) of ERISA; and
(4) provide for the ability to opt out for all employees of an employer participating in the plan, if the plan provides for automatic enrollment.
The plan sponsor, named fiduciary, and plan administrator of the Garden State MEP shall be the Department of the Treasury. As plan administrator, the department may directly administer the Garden State MEP or contract with private sector providers to administer the Garden State MEP. The Department of the Treasury must obtain tax qualification from the United States Internal Revenue Service for the Garden State MEP. The bill requires the department to determine, prior to opening the plan for enrollment, the minimum criteria for participation in the Garden State MEP with respect to the following: automatic enrollment for employees; the default contribution rate; the default investment option; annuitization; and leakage.
The bill also requires that contributions made to the Garden State MEP will be treated in the same manner for purposes of section 401 of the federal Internal Revenue Code of 1986 as contributions to any other multiple employer plan described in section 210(a) of ERISA. Any contributions made to the Garden State MEP must be used exclusively for the purpose of paying benefits, administration costs, and for investments made for the benefit of the Garden State MEP.
Pursuant to the bill, and any law or regulation to the contrary, the Garden State MEP will be considered an approved plan pursuant to P.L.2015, c.298 (C.43:23-1 et seq.). The Department of the Treasury must ensure that the Garden State MEP is available through the New Jersey Small Business Retirement Marketplace established pursuant to P.L.2015, c.298 (C.43:23-1 et seq.), or any successor program established to connect employers and employees with plans to increase retirement savings.
Finally, the bill requires the Department of the Treasury to design and make available to employers an employee information packet. The employee information packet must include background information on the Garden State MEP and appropriate disclosures for employees. The department is required to design and operate an Internet website that provides plan information for employers and employees, including information on how employers and employees may voluntarily participate in the Garden State MEP.
