Bill Title: To create, if certain conditions are met, the Ohio Secure Choice Retirement Savings Program under which certain private employers must offer employees a payroll deposit retirement savings arrangement, to establish the Ohio Secure Choice Retirement Savings Trust from which retirement benefits are to be paid to Program participants, and to create the Ohio Secure Choice Retirement Savings Investment Board, chaired by the Treasurer of State, to oversee the operation of the Program.
Spectrum: Partisan Bill (Democrat 2-0)
Status: (Introduced - Dead) 2013-10-02 - To Finance
[SB199 Detail]Download: Ohio-2013-SB199-Introduced.html
As Introduced
| 130th General Assembly | | Regular Session | | 2013-2014 |
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A BILL
| To enact sections 113.51 to 113.78 of the Revised | 1 |
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Code to create, if certain conditions are met, the | 2 |
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Ohio Secure Choice Retirement Savings Program | 3 |
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under which certain private employers must offer | 4 |
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employees a payroll deposit retirement savings | 5 |
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arrangement, to establish the Ohio Secure Choice | 6 |
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Retirement Savings Trust from which retirement | 7 |
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benefits are to be paid to Program participants, | 8 |
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and to create the Ohio Secure Choice Retirement | 9 |
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Savings Investment Board, chaired by the Treasurer | 10 |
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of State, to oversee the operation of the Program. | 11 |
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF OHIO:
| Section 1. That sections 113.51, 113.52, 113.53, 113.54, | 12 |
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113.55, 113.56, 113.57, 113.58, 113.59, 113.60, 113.61, 113.62, | 13 |
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113.63, 113.64, 113.65, 113.66, 113.67, 113.68, 113.69, 113.70, | 14 |
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113.71, 113.72, 113.73, 113.74, 113.75, 113.76, 113.77, and 113.78 | 15 |
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of the Revised Code be enacted to read as follows: | 16 |
| Sec. 113.51. As used in sections 113.51 to 113.78 of the | 17 |
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Revised Code: | 18 |
| (A)(1) "Eligible employee" means a person who is employed by | 19 |
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an eligible employer. | 20 |
| (2) "Eligible employee" does not include: | 21 |
| (a) Any employee covered under the "Railway Labor Act," 44 | 22 |
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Stat. 577, 45 U.S.C. 151, as amended, or any employee engaged in | 23 |
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interstate commerce so as not to be subject to the legislative | 24 |
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powers of the state, except insofar as application of sections | 25 |
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113.51 to 113.77 of the Revised Code is authorized under the | 26 |
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United States Constitution or the laws of the United States; | 27 |
| (b) Any employee covered by a valid collective bargaining | 28 |
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agreement that expressly provides for a multiemployer Taft-Hartley | 29 |
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pension plan. | 30 |
| (B) "Eligible employer" means a person or entity engaged in a | 31 |
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business, industry, profession, trade, or other enterprise in this | 32 |
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state, whether for profit or not for profit, excluding any | 33 |
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governmental entity, that has twenty or more employees and that | 34 |
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satisfies the requirements to establish or participate in a | 35 |
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payroll deposit retirement savings arrangement. | 36 |
| (C) "IRA" means an individual retirement account or | 37 |
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individual retirement annuity under 26 U.S.C. 408(a) or 408(b). | 38 |
| (D) "Participating employer" means an eligible employer that | 39 |
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provides a payroll deposit retirement savings arrangement for | 40 |
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eligible employees under sections 113.51 to 113.77 of the Revised | 41 |
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Code. | 42 |
| (E) "Payroll deposit retirement savings arrangement" means an | 43 |
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arrangement by which an employer allows employees to remit payroll | 44 |
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deduction contributions to a retirement savings program. | 45 |
| (F) "Stated interest rate" means the rate of interest | 46 |
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allocated to participants' program accounts as determined by the | 47 |
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Ohio secure choice retirement savings investment board under | 48 |
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section 113.59 of the Revised Code. | 49 |
| (G) "Vendor" means a registered investment company or life | 50 |
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insurance company qualified to do business in this state that | 51 |
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provides retirement investment products. "Vendor" also includes a | 52 |
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company registered to do business in this state that provides | 53 |
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payroll services or recordkeeping services and offers retirement | 54 |
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plans or payroll deposit IRA arrangements using products of | 55 |
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regulated investment companies and insurance companies qualified | 56 |
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to do business in this state. "Vendor" does not include individual | 57 |
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registered representatives, brokers, financial planners, or | 58 |
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agents. | 59 |
| Sec. 113.52. (A) There is hereby established the Ohio secure | 60 |
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choice retirement savings program for the purpose of promoting | 61 |
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greater retirement savings for Ohio private employees in a | 62 |
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convenient, voluntary, low-cost, and portable manner. The program | 63 |
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shall be implemented and operated in accordance with sections | 64 |
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113.51 to 113.77 of the Revised Code. | 65 |
| (B)There is hereby established a retirement savings trust to | 66 |
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be known as the Ohio secure choice retirement savings trust, which | 67 |
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shall be in the custody of the treasurer of state but shall not be | 68 |
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part of the state treasury. All contributions paid by employees | 69 |
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and employers into the trust shall be used exclusively for the | 70 |
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purposes of paying benefits to the participants of the program, | 71 |
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paying the costs of administering the program, and making | 72 |
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investments for the benefit of the program. All interest earnings | 73 |
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of the trust shall be credited to the trust. | 74 |
| Sec. 113.53. (A) There is hereby created the Ohio secure | 75 |
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choice retirement savings investment board. The board shall | 76 |
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oversee the establishment and operation of the Ohio secure choice | 77 |
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retirement savings program. The board shall consist of seven | 78 |
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members, as follows: | 79 |
| (1) The treasurer of state, who shall serve as chairperson; | 80 |
| (2) The director of budget and management, or the director's | 81 |
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designee; | 82 |
| (3) The auditor of state, or the auditor's designee; | 83 |
| (4) A member representing small business, appointed by the | 84 |
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minority leader of the senate; | 85 |
| (5) A member representing the public, appointed by the | 86 |
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speaker of the house of representatives; | 87 |
| (6) A member with retirement savings and investment | 88 |
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expertise, appointed by the president of the senate; | 89 |
| (7) A member representing employees, appointed by the | 90 |
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minority leader of the house of representatives. | 91 |
| (B) Initial appointments to the board shall be made not later | 92 |
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than ninety days after the effective date of this section. Of the | 93 |
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initial appointments made to the board, two shall be for a term | 94 |
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ending one year after the date of the appointment, and two shall | 95 |
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be for a term ending two years after the date of the appointment. | 96 |
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Thereafter, members shall be appointed to terms of four years, | 97 |
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with each term of office ending on the same day of the same month | 98 |
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as did the term that it succeeded. Vacancies on the board shall be | 99 |
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filled in the same manner as the initial appointment. | 100 |
| (C) Members of the board who are appointed shall serve at the | 101 |
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pleasure of the appointing authority. | 102 |
| (D) All members of the board shall serve without | 103 |
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compensation. Members of the board shall be reimbursed for | 104 |
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necessary travel expenses incurred in connection with their board | 105 |
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duties. | 106 |
| Sec. 113.54. The Ohio secure choice retirement savings | 107 |
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investment board, in the capacity of trustee, shall have the power | 108 |
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and authority to do all of the following: | 109 |
| (A) Adopt a seal and amend it from time to time; | 110 |
| (C) Enter into contracts necessary for the administration of | 112 |
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the Ohio secure choice retirement savings trust, including the | 113 |
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investment of funds held in the trust; | 114 |
| (D) Set minimum and maximum investment levels in accordance | 115 |
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with contribution limits set for IRAs by the Internal Revenue | 116 |
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Code; | 117 |
| (E) Accept any grants, gifts, appropriations, and other money | 118 |
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from the federal government, from the state or any political | 119 |
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subdivision of the state, and from any other person, firm, | 120 |
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partnership, or corporation for deposit in the trust to the credit | 121 |
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of the administrative fund or the program fund. | 122 |
| (F) Retain and contract with private financial institutions, | 123 |
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other financial and service providers, consultants, actuaries, | 124 |
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counsel, auditors, third-party administrators, and other | 125 |
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professionals as necessary; | 126 |
| (G) Appoint an administrator of the Ohio secure choice | 127 |
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retirement savings program, the costs of which shall be paid out | 128 |
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of funds held in the trust and shall not be attributed to the | 129 |
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administrative costs of the board in operating the trust, and | 130 |
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determine the duties of the program administrator and other staff | 131 |
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as necessary and set their compensation; | 132 |
| (H) Procure insurance against any loss in connection with the | 133 |
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property, assets, or activities of the trust, and secure private | 134 |
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underwriting and reinsurance to manage risk and insure the | 135 |
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retirement savings rate of return; | 136 |
| (I) Procure insurance indemnifying each member of the board | 137 |
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from personal loss or liability resulting from a member's action | 138 |
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or inaction as a member of the board; | 139 |
| (J) Collaborate and cooperate with private financial | 140 |
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institutions, other financial service providers, and business, | 141 |
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financial, trade, membership, and other organizations to the | 142 |
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extent necessary or desirable for the effective and efficient | 143 |
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design, implementation, and administration of the program and to | 144 |
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maximize outreach to eligible employers and eligible employees; | 145 |
| (K) Cause expenses incurred to initiate, implement, maintain, | 146 |
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and administer the program to be paid from contributions to, or | 147 |
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investment returns or assets of, the program or arrangements | 148 |
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established under the program, to the extent permitted under state | 149 |
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and federal law; | 150 |
| (L) Facilitate compliance by the program or payroll deposit | 151 |
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retirement savings arrangements established under the program with | 152 |
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all applicable requirements under the Internal Revenue Code, | 153 |
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including tax qualification requirements or any other applicable | 154 |
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law and accounting requirements, including providing or arranging | 155 |
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for assistance to program sponsors and individuals in complying | 156 |
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with applicable law and tax qualification requirements in a | 157 |
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cost-effective manner; | 158 |
| (M) Carry out the duties and obligations of the trust | 159 |
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pursuant to sections 113.51 to 113.77 of the Revised Code and | 160 |
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exercise any and all other powers as may be reasonably necessary | 161 |
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for the effectuation of the purposes, objectives, and provisions | 162 |
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of those sections pertaining to the trust. | 163 |
| Sec. 113.55. (A) The Ohio secure choice retirement savings | 164 |
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investment board shall segregate moneys received by the Ohio | 165 |
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secure choice retirement savings trust into two funds, which shall | 166 |
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be identified as the program fund and the administrative fund. | 167 |
| (B) Moneys in the program fund may be invested or reinvested | 168 |
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by the treasurer of state or may be invested in whole or in part | 169 |
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under contract with private money managers, as determined by the | 170 |
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board. | 171 |
| (C) With the approval of the board, transfers may be made | 172 |
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from the program fund to the administrative fund for the purpose | 173 |
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of paying operating costs associated with administering the trust | 174 |
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and as required by sections 113.51 to 113.77 of the Revised Code. | 175 |
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On an annual basis, expenditures from the administrative fund | 176 |
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shall not exceed more than one per cent of the total program fund. | 177 |
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All costs of administration of the trust shall be paid out of the | 178 |
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administrative fund. Operating costs associated with administering | 179 |
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the trust do not include the procurement of private underwriting | 180 |
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for the retirement savings' return. | 181 |
| Sec. 113.56. (A) The Ohio secure choice retirement savings | 182 |
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investment board may establish a segregated account within the | 183 |
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program fund to be known as the gain and loss reserve account. The | 184 |
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board shall have sole authority over the account, if established. | 185 |
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The account may be used to allocate interest at the stated | 186 |
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interest rate for program years in which the board determines that | 187 |
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the stated interest rate cannot be met from investment earnings. | 188 |
| (B) The board shall establish a goal for the balance of the | 189 |
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account and shall periodically review the sufficiency of the | 190 |
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account based on the recommendations of the board's actuary. | 191 |
| (C) The board may allocate excess earnings of the Ohio secure | 192 |
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choice retirement savings program with respect to assets | 193 |
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attributable to the program to the account. In addition, the board | 194 |
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may allocate any liability gains and losses to the account. Based | 195 |
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on an actuarial valuation following each program year, the board | 196 |
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shall determine annually the amount, if any, that is to be | 197 |
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allocated to the account for that program year. In determining | 198 |
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whether to allocate excess earnings to the account, the board | 199 |
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shall consider all of the following: | 200 |
| (1) Whether or not the program has excess earnings; | 201 |
| (2) The sufficiency of the account in light of the goal | 202 |
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established under division (B) of this section; | 203 |
| (3) The amount required for the program's administrative | 204 |
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costs; | 205 |
| (4) The amount required for making allocations to | 206 |
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participants' accounts at the stated interest rate. | 207 |
| (D) In determining whether to allocate liability gains and | 208 |
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losses to the account, the board shall consider the matters | 209 |
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described in divisions (C)(2), (3), and (4) of this section. | 210 |
| Sec. 113.57. (A) The Ohio secure choice retirement savings | 211 |
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investment board shall annually prepare and adopt a written | 212 |
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statement of investment policy that includes a risk management and | 213 |
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oversight program. The board shall adopt the investment policy and | 214 |
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any changes to the investment policy at a public hearing. | 215 |
| (B) The investment policy shall adhere to the following | 216 |
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principles: | 217 |
| (1) The primary objective of the investment policy is to | 218 |
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preserve the safety of principal and provide a stable and low-risk | 219 |
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rate of return. | 220 |
| (2) The investment policy shall mitigate risk by maintaining | 221 |
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a balanced investment portfolio that provides assurance that no | 222 |
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single investment or class of investments will have a | 223 |
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disproportionate impact on the total portfolio. | 224 |
| (C)(1) The board may invest the funds held in the trust only | 225 |
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in the following types of investments: | 226 |
| (a) Domestic and international equities; | 227 |
| (b) Medium-term and long-term debt obligations of domestic | 228 |
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corporations; | 229 |
| (c) United States government and government-sponsored entity | 230 |
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debt obligations; | 231 |
| (d) Real estate commingled funds that invest in publicly | 232 |
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traded real estate securities; | 233 |
| (e) Money market instruments, cash, and money market mutual | 234 |
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funds that are registered in the United States and denominated in | 235 |
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United States dollars; | 236 |
| (f) Investments in existing, rated mutual funds that are | 237 |
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registered in the United States and denominated in United States | 238 |
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dollars; | 239 |
| (g) Insurance agreements; | 240 |
| (h) Bank products insured by the federal deposit insurance | 241 |
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corporation. | 242 |
| (2) Equities shall not exceed fifty per cent of the overall | 243 |
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asset allocation of the investment portfolio. | 244 |
| (D) The investment policy shall also adhere to all of the | 245 |
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following restrictions: | 246 |
| (1) Borrowing for investment purposes, or leverage, is | 247 |
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prohibited. | 248 |
| (2) Instruments known as variable rate demand notes, | 249 |
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floaters, inverse floaters, leveraged floaters, and equity-linked | 250 |
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securities are not permitted. Investment in any instrument that is | 251 |
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commonly considered a derivative instrument, including, but not | 252 |
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limited to, options, futures, swaps, caps, floors, and collars, is | 253 |
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prohibited. | 254 |
| (3) Contracting to sell securities not yet acquired in order | 255 |
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to purchase other securities for purposes of speculating on | 256 |
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developments or trends in the market is prohibited. | 257 |
| Sec. 113.58. (A) The Ohio secure choice retirement savings | 258 |
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investment board shall design the risk management and oversight | 259 |
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program required under section 113.57 of the Revised Code to | 260 |
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ensure that an effective risk management system is in place to | 261 |
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monitor the risk levels of the Ohio secure choice retirement | 262 |
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savings program investment portfolio and ensure that the risks | 263 |
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taken are prudent and properly managed. The program shall be | 264 |
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managed to provide an integrated process for overall risk | 265 |
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management on both a consolidated and disaggregated basis, and to | 266 |
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monitor investment returns as well as risk to determine if the | 267 |
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risks taken are adequately compensated compared to applicable | 268 |
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performance benchmarks and standards. | 269 |
| (B)(1) The board shall contract with an investment management | 270 |
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entity or entities, the costs of which shall be paid out of funds | 271 |
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held in the Ohio secure choice retirement savings trust and shall | 272 |
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not be attributed to the administrative costs of the board in | 273 |
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operating the trust. Not later than thirty days after the close of | 274 |
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each month, the board shall place on file for public inspection | 275 |
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during business hours a report with respect to investments made | 276 |
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for the program and a report of deposits in financial | 277 |
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institutions. | 278 |
| (2) The investment manager chosen by the board shall report | 279 |
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the following information to the board within twenty days | 280 |
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following the end of each month: | 281 |
| (a) The type of investment, name of the issuer, date of | 282 |
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maturity, and the par and dollar amount invested in each security, | 283 |
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investment, and money within the program fund; | 284 |
| (b) The weighted average maturity of the investments within | 285 |
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the program fund; | 286 |
| (c) Any amounts in the program fund that are under the | 287 |
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management of private money managers; | 288 |
| (d) The market value as of the date of the report and the | 289 |
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source of this valuation for each security within the program | 290 |
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fund; | 291 |
| (e) A description of compliance with the statement of | 292 |
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investment policy. | 293 |
| Sec. 113.59. (A) The Ohio secure choice retirement savings | 294 |
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program shall include one or more payroll deposit retirement | 295 |
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savings arrangements as determined by the Ohio secure choice | 296 |
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retirement savings investment board. | 297 |
| (B)(1) Prior to the first day of July of the initial program | 298 |
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year, and prior to the beginning of each program year thereafter, | 299 |
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the board shall adopt a program amendment in coordination with the | 300 |
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investment management entity or entities under contract with the | 301 |
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program to set the stated interest rate for the following program | 302 |
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year. | 303 |
| (2) Interest shall be allocated to program accounts and shall | 304 |
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be computed at the stated interest rate on the balance of an | 305 |
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individual's account and shall be compounded daily. | 306 |
| (C) An individual's retirement savings benefit under the | 307 |
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program shall be an amount equal to the balance in the | 308 |
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individual's program account on the date the retirement savings | 309 |
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benefit becomes payable. | 310 |
| Sec. 113.60. In addition to the powers and authority granted | 311 |
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to the Ohio secure choice retirement savings investment board | 312 |
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pursuant to section 113.54 of the Revised Code, the board shall | 313 |
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have the power and authority to do the following: | 314 |
| (A) Cause the Ohio secure choice retirement savings program | 315 |
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and payroll deposit retirement savings arrangements to be | 316 |
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designed, established, and operated in a manner consistent with | 317 |
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all of the following: | 318 |
| (1) In accordance with best practices for retirement savings | 319 |
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vehicles; | 320 |
| (2) To maximize participation, saving, and sound investment | 321 |
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practices, and appropriate selection of default investments; | 322 |
| (3) With simplicity, ease of administration for participating | 323 |
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employers, and portability of benefits. | 324 |
| (B) Arrange for collective, common, and pooled investment of | 325 |
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assets of the program or arrangements, including investments in | 326 |
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conjunction with other funds with which those assets are permitted | 327 |
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to be collectively invested, with a view to saving costs through | 328 |
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efficiencies and economies of scale; | 329 |
| (C) Explore and establish investment options that offer | 330 |
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employees returns on contributions and the conversion of | 331 |
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individual retirement savings account balances to secure | 332 |
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retirement income without incurring debt or liabilities to the | 333 |
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state; | 334 |
| (D) Disseminate educational information concerning saving and | 335 |
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planning for retirement; | 336 |
| (E) Disseminate information concerning the tax credits | 337 |
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available to small business owners for establishing new retirement | 338 |
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plans and the federal retirement savings contribution credit | 339 |
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available to lower and moderate income households for qualified | 340 |
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savings contributions; | 341 |
| (F) Submit progress and status reports to participating | 342 |
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employers and eligible employees; | 343 |
| (G) If necessary, determine the eligibility of an employer, | 344 |
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employee, or other individual to participate in the program; | 345 |
| (H) Evaluate and establish the process by which an eligible | 346 |
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employee of an eligible employer is able to contribute a portion | 347 |
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of the employee's salary or wages to the program for automatic | 348 |
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deposit of those contributions and the participating employer | 349 |
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provides a payroll deposit retirement savings arrangement to | 350 |
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forward the employee contribution and related information to the | 351 |
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program or its agents. This may include, but is not limited to, | 352 |
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financial services companies and third-party administrators with | 353 |
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the capability to receive and process employee information and | 354 |
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contributions for payroll deposit retirement savings arrangements | 355 |
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or other arrangements authorized under sections 113.51 to 113.77 | 356 |
|
of the Revised Code; | 357 |
| (I) Design and establish the process for the enrollment of | 358 |
|
program participants; | 359 |
| (J) Allow participating employers to use the program to remit | 360 |
|
employees' contributions to their individual retirement accounts | 361 |
|
on their employees' behalf; | 362 |
| (K) Allow participating employers to make their own | 363 |
|
contributions to their employees' individual retirement accounts, | 364 |
|
provided that the contributions would be permitted under the | 365 |
|
Internal Revenue Code and would not cause the program to be | 366 |
|
treated as an employee benefit plan under the "Employee Retirement | 367 |
|
Income Security Act," 88 Stat. 829, 29 U.S.C. 1001, as amended; | 368 |
| (L) Evaluate and establish the process by which an individual | 369 |
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or an employee of a nonparticipating employer may enroll in and | 370 |
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make contributions to the program. | 371 |
| Sec. 113.61. The Ohio secure choice retirement savings | 372 |
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investment board shall ensure that an insurance, annuity, or other | 373 |
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funding mechanism is in place at all times that protects the value | 374 |
|
of participants' accounts. The funding mechanism shall protect, | 375 |
|
indemnify, and hold the state harmless at all times against any | 376 |
|
and all liability in connection with funding retirement benefits | 377 |
|
under sections 113.51 to 113.77 of the Revised Code. The costs of | 378 |
|
the funding mechanism shall be paid out of the funds held in the | 379 |
|
Ohio secure choice retirement savings trust and shall not be | 380 |
|
attributed to the administrative costs of the board in operating | 381 |
|
the trust. | 382 |
| Sec. 113.62. (A) A member of the Ohio secure choice | 383 |
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retirement savings investment board, an administrator of the Ohio | 384 |
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secure choice retirement savings program, and an officer or | 385 |
|
employee of the program shall not do any of the following: | 386 |
| (1) Directly or indirectly have any interest in any | 387 |
|
investment made for the program or in the gains or profits | 388 |
|
accruing from any investment made for the program; | 389 |
| (2) Borrow any funds or deposits of the Ohio secure choice | 390 |
|
retirement savings trust, or use those funds or deposits in any | 391 |
|
manner, for the individual's own purpose or as an agent or partner | 392 |
|
of others; | 393 |
| (3) Become an endorser, surety, or obligor on any investment | 394 |
|
made for the program. | 395 |
| (B) The members of the board, the program administrators, and | 396 |
|
the officers and employees of the program shall discharge their | 397 |
|
duties with respect to the trust solely in the interest of the | 398 |
|
program participants, as follows: | 399 |
| (1) For the exclusive purposes of providing benefits to | 400 |
|
program participants and defraying reasonable expenses of | 401 |
|
administering the program; | 402 |
| (2) By investing with the care, skill, prudence, and | 403 |
|
diligence under the circumstances then prevailing that a prudent | 404 |
|
person acting in a like capacity and familiar with those matters | 405 |
|
would use in the conduct of an enterprise of a like character and | 406 |
|
with like aims. | 407 |
| Sec. 113.63. (A) Prior to opening the Ohio secure choice | 408 |
|
retirement savings program for enrollment, the Ohio secure choice | 409 |
|
retirement savings investment board shall design and disseminate | 410 |
|
to employers an employee information packet. The packet shall | 411 |
|
provide background information on the program, including, but not | 412 |
|
be limited to, all of the following: | 413 |
| (1) The benefits and risks associated with making | 414 |
|
contributions to the program; | 415 |
| (2) The mechanics of how to make contributions to the | 416 |
|
program; | 417 |
| (3) How to opt out of the program; | 418 |
| (4) The process for withdrawal of retirement savings; | 419 |
| (5) How to obtain additional information on the program. | 420 |
| (B)(1) The employee information packet shall include a | 421 |
|
disclosure form that clearly articulates the following: | 422 |
| (a) That employees seeking financial advice should contact | 423 |
|
financial advisors, that employers are not in a position to | 424 |
|
provide financial advice, and that employers are not liable for | 425 |
|
decisions employees make with respect to the program; | 426 |
| (b) That the program is not an employer-sponsored retirement | 427 |
|
plan; | 428 |
| (c) That the Ohio secure choice retirement savings trust is | 429 |
|
privately insured and is not guaranteed by the state. | 430 |
| (2) The disclosure form shall include a signature line for | 431 |
|
the employee to sign and date acknowledging that the employee has | 432 |
|
read all of the disclosures and understands their content. | 433 |
| (C) The employee information packet shall also include an | 434 |
|
opt-out form for an eligible employee to declare the employee's | 435 |
|
decision to opt out of participation in the program. The opt-out | 436 |
|
notation shall be simple and concise and drafted in a manner that | 437 |
|
the board deems necessary to appropriately evidence the employee's | 438 |
|
understanding that the employee is choosing not to automatically | 439 |
|
deduct earnings to save for retirement. | 440 |
| (D)(1) Individuals who are employed as of the date the | 441 |
|
program commences shall be given the employee information packet | 442 |
|
as soon as possible after that date. Employees shall review the | 443 |
|
packet and sign the disclosure form at that time. | 444 |
| (2) For employees hired on or after the commencement of the | 445 |
|
program, the employee information packet shall be supplied at the | 446 |
|
time of hiring. All new employees shall review the packet and sign | 447 |
|
the disclosure form at that time. | 448 |
| Sec. 113.64. (A) If, prior to opening the Ohio secure choice | 449 |
|
retirement savings program for enrollment, there is sufficient | 450 |
|
interest by vendors to participate and provide the necessary | 451 |
|
funding, the Ohio secure choice retirement savings investment | 452 |
|
board shall establish both of the following: | 453 |
| (1) A retirement investments clearinghouse on the board's | 454 |
|
internet web site; | 455 |
| (2) A vendor registration process through which information | 456 |
|
about employer-sponsored retirement plans, and payroll deduction | 457 |
|
IRAs offered by private sector providers, is made available on the | 458 |
|
clearinghouse for consideration by eligible employers. | 459 |
| (B) Vendors that would like to participate in the board's | 460 |
|
retirement investments clearinghouse and be listed on the board's | 461 |
|
internet web site as a registered vendor shall provide the board | 462 |
|
with all of the following: | 463 |
| (1) A statement of the vendor's experience in this and any | 464 |
|
other state in providing employer-sponsored retirement plans and | 465 |
|
payroll deduction IRAs; | 466 |
| (2) A description of the types of retirement investment | 467 |
|
products offered and their features, the services available to | 468 |
|
retirement plan participants, and the manner in which product | 469 |
|
prospectuses or other relevant product information may be | 470 |
|
accessed; | 471 |
| (3) A disclosure of all expenses paid directly or indirectly | 472 |
|
by retirement plan participants, including, but not limited to, | 473 |
|
penalties for early withdrawals, declining or fixed withdrawal | 474 |
|
charges, surrender or deposit charges, management fees, and annual | 475 |
|
fees, supported by documentation as required for prospectus | 476 |
|
disclosure by the national association of securities dealers and | 477 |
|
the securities and exchange commission. Vendors shall be required | 478 |
|
to provide information regarding the impact of product fees upon a | 479 |
|
hypothetical investment, as described in section 113.67 of the | 480 |
|
Revised Code. | 481 |
| (4) A discussion of the ability, experience, and commitment | 482 |
|
of the vendor to provide retirement counseling and education | 483 |
|
services, including, but not limited to, access to group meetings | 484 |
|
and individual counseling by various means, including telephone | 485 |
|
and telecommunications devices for the deaf, internet, and | 486 |
|
face-to-face consultations by registered representatives; | 487 |
| (5) A statement of the financial strength of the vendor by | 488 |
|
identifying its ratings assigned by nationally recognized rating | 489 |
|
services that evaluate the financial strength of similar | 490 |
|
companies; | 491 |
| (6) The location of offices and counselors, individual | 492 |
|
registered representatives, brokers, financial planners, agents, | 493 |
|
or other methods of distribution, of the vendor that would serve | 494 |
|
employers and their employees in this state; | 495 |
| (7) A description of the ability of the vendor to comply with | 496 |
|
all applicable provisions of federal and state law governing | 497 |
|
retirement plans, including minimum distribution requirements and | 498 |
|
contribution limits; | 499 |
| (8) To the extent applicable, a demonstration of the ability | 500 |
|
of the vendor to offer an appropriate array of accumulation | 501 |
|
funding options, including, but not limited to, investment options | 502 |
|
that offer guaranteed returns on contributions and the conversion | 503 |
|
of retirement savings account balances to secure retirement | 504 |
|
income, as well as a diversified mix of value, growth, growth and | 505 |
|
income, hybrid, and index funds or accounts across large, medium, | 506 |
|
and small capitalization asset classes, both domestic and | 507 |
|
international; | 508 |
| (9) A discussion of the range of administrative and customer | 509 |
|
services provided, including asset allocation, accounting and | 510 |
|
administration of benefits for individual participants, | 511 |
|
recordkeeping for individual participants, asset purchase, | 512 |
|
control, and safekeeping, execution of a participant's | 513 |
|
instructions as to asset and contribution allocation, calculation | 514 |
|
of daily net asset values, direct access for participants to their | 515 |
|
account information, periodic reporting that is not less than | 516 |
|
quarterly to participants on their account balances and | 517 |
|
transactions, and compliance with the standard of care consistent | 518 |
|
with federal law and applicable to the provision of investment | 519 |
|
services; | 520 |
| (10) Certification by the vendor that the information | 521 |
|
provided to the board accurately reflects the provisions of the | 522 |
|
retirement investment products it is registering. | 523 |
| (C) The board shall prescribe the format in which vendors are | 524 |
|
to supply the information and data required under division (B) of | 525 |
|
this section. | 526 |
| Sec. 113.65. Once annually, the Ohio secure choice | 527 |
|
retirement savings investment board shall offer vendors an | 528 |
|
opportunity to register to participate in the retirement | 529 |
|
investments clearinghouse. Renewal of registration shall be | 530 |
|
required at least once every five years thereafter for vendors | 531 |
|
that wish to continue to participate. The board shall provide | 532 |
|
public notice prior to the initial registration, annual | 533 |
|
registration, and registration renewal periods. | 534 |
| Sec. 113.66. (A) The Ohio secure choice retirement savings | 535 |
|
investment board may remove a vendor from the retirement | 536 |
|
investments clearinghouse if the vendor submits materially | 537 |
|
inaccurate information to the board, does not remit assessed fees | 538 |
|
within sixty days, or fails to submit notice of material changes | 539 |
|
to its registered investment products. Vendors found to have | 540 |
|
submitted materially inaccurate information to the board shall be | 541 |
|
allowed sixty days to correct the information. | 542 |
| (B) The board shall remove a vendor from the clearinghouse if | 543 |
|
investments offered by the vendor are products of a regulated | 544 |
|
investment company or insurance company that is not authorized to | 545 |
|
do business in this state. | 546 |
| (C) The board shall establish an appeals process for vendors | 547 |
|
that are denied registration or removed from the clearinghouse. | 548 |
| Sec. 113.67. (A) The retirement investments clearinghouse | 549 |
|
shall include information on investment performance based upon the | 550 |
|
investment's average annual total return as measured by a | 551 |
|
nationally recognized rating service selected by the Ohio secure | 552 |
|
choice retirement savings investment board for standard periods of | 553 |
|
time of not less than one year. | 554 |
| (B) The board's internet web site shall include a table | 555 |
|
showing, for each registered investment product, the total fee | 556 |
|
cost in dollars incurred by an investor who initially invested | 557 |
|
five thousand dollars and earned a five per cent rate of return | 558 |
|
for one-, five-, ten-, fifteen-, and twenty-year time periods. | 559 |
|
This table shall be accompanied by a disclaimer that the rate of | 560 |
|
return is for purposes of illustrating the respective impacts of | 561 |
|
different fee amounts on each investment, and is not to predict | 562 |
|
future investment returns. | 563 |
| (C) A vendor shall not charge a fee associated with a product | 564 |
|
registered on the retirement investments clearinghouse that is not | 565 |
|
disclosed therein. | 566 |
| Sec. 113.68. The Ohio secure choice retirement savings | 567 |
|
investment board shall notify eligible employers of the existence | 568 |
|
of, and the internet web site address for, the retirement | 569 |
|
investments clearinghouse. | 570 |
| Sec. 113.69. (A) The actual cost of establishing the | 571 |
|
retirement investments clearinghouse and the vendor registration | 572 |
|
system shall be borne equally by registered vendors, based on the | 573 |
|
total number of registered vendors. At the close of the initial | 574 |
|
registration period, each registered vendor shall pay a one-time | 575 |
|
establishment fee equal to a pro rata share of the establishment | 576 |
|
costs, as determined by the Ohio secure choice retirement savings | 577 |
|
investment board. The one-time establishment fee charged to | 578 |
|
vendors that register with the board after the close of the | 579 |
|
initial registration period shall be distributed equally among | 580 |
|
registered vendors that have paid the establishment fee and | 581 |
|
credited toward subsequent maintenance and administrative fees | 582 |
|
charged to each vendor. | 583 |
| (B) The actual cost of maintaining the retirement investments | 584 |
|
clearinghouse and the vendor registration system, and the costs | 585 |
|
associated with publicizing the availability of the clearinghouse | 586 |
|
to eligible employers, shall be borne equally by registered | 587 |
|
vendors, based on the total number of registered vendors. Each | 588 |
|
registered vendor shall pay a renewal fee equal to a pro rata | 589 |
|
share of the maintenance costs, as determined by the board. | 590 |
| (C) Each registered vendor shall pay an administrative fee | 591 |
|
for each retirement investment product it offers to employers, | 592 |
|
which fee shall represent the actual costs associated with | 593 |
|
processing the information related to the investment option and | 594 |
|
presenting it on the retirement investments clearinghouse, as | 595 |
|
determined by the board. | 596 |
| (D) The board shall not use funds held in the Ohio secure | 597 |
|
choice retirement savings trust to establish or maintain the | 598 |
|
retirement investments clearinghouse or the vendor registration | 599 |
|
system. | 600 |
| Sec. 113.70. (A) The Ohio secure choice retirement savings | 601 |
|
investment board and the Ohio secure choice retirement savings | 602 |
|
program, and its officers and employees, are not responsible for, | 603 |
|
and shall not be held liable for, the adequacy of the information | 604 |
|
provided by the participating vendors and contained in the | 605 |
|
retirement investments clearinghouse. The clearinghouse maintained | 606 |
|
by the board serves only to provide information supplied by the | 607 |
|
participating vendors for the consideration of the selection of | 608 |
|
retirement investment products. | 609 |
| (B) Participating vendors shall not utilize the program's | 610 |
|
logo, or claim or infer endorsement or recommendation by the board | 611 |
|
or the program with respect to products and services identified by | 612 |
|
the vendors in the clearinghouse. At the discretion of the board, | 613 |
|
a failure to comply with this division may lead to removal from | 614 |
|
the registry. | 615 |
| (C) The board and the program shall not be held liable for | 616 |
|
the actions of registered vendors. | 617 |
| Sec. 113.71. (A) Once the Ohio secure choice retirement | 618 |
|
savings program is open for enrollment, any employer may choose to | 619 |
|
have a payroll deposit retirement savings arrangement to allow | 620 |
|
employee participation in the program. | 621 |
| (B)(1) Beginning three months after the program is open for | 622 |
|
enrollment, eligible employers that have more than one hundred | 623 |
|
eligible employees and that do not offer an employer-sponsored | 624 |
|
retirement plan or automatic enrollment payroll deduction IRA | 625 |
|
shall have a payroll deposit retirement savings arrangement to | 626 |
|
allow employee participation in the program. | 627 |
| (2) Beginning six months after the program is open for | 628 |
|
enrollment, eligible employers that have more than fifty eligible | 629 |
|
employees and that do not offer an employer-sponsored retirement | 630 |
|
plan or automatic enrollment payroll deduction IRA shall have a | 631 |
|
payroll deposit retirement savings arrangement to allow employee | 632 |
|
participation in the program. | 633 |
| (3) Beginning nine months after the program is open for | 634 |
|
enrollment, all other eligible employers that do not offer an | 635 |
|
employer-sponsored retirement plan or automatic enrollment payroll | 636 |
|
deduction IRA shall have a payroll deposit retirement savings | 637 |
|
arrangement to allow employee participation in the program. | 638 |
| (C)(1) Each eligible employee shall be enrolled in the | 639 |
|
program unless the employee elects not to participate in the | 640 |
|
program by noting that decision on the opt-out form. | 641 |
| (2) Following initial implementation of the program, | 642 |
|
participating employers shall, at least once every two years, | 643 |
|
designate an open enrollment period during which eligible | 644 |
|
employees that previously opted out of the program may be enrolled | 645 |
|
in the program unless the employee again elects to opt out. | 646 |
| (3) An employee who elected to opt out of the program and who | 647 |
|
subsequently wants to participate may only enroll during the | 648 |
|
employer's designated open enrollment period or, if permitted by | 649 |
|
the employer, at an earlier time. | 650 |
| (4) An employee may terminate the employee's participation in | 651 |
|
the program at any time in a manner prescribed by the Ohio secure | 652 |
|
choice retirement savings investment board and, thereafter, by | 653 |
|
making a notation on the opt-out form. | 654 |
| (D)(1) A participating employee shall contribute at least | 655 |
|
three per cent of the employee's annual salary or wages to the | 656 |
|
program. | 657 |
| (2) The board may adjust the minimum contribution amount set | 658 |
|
forth in division (D)(1) of this section to no less than two per | 659 |
|
cent and no more than four per cent and may vary that amount | 660 |
|
within the two per cent to four per cent range for participating | 661 |
|
employees according to the length of time the employee has | 662 |
|
contributed to the program. | 663 |
| (E) Employers may, at any time, set up an employer-sponsored | 664 |
|
retirement plan, such as a defined benefit plan or a 401(k), | 665 |
|
simplified employee pension plan, or savings incentive match plan | 666 |
|
for employees plan, or offer an automatic enrollment payroll | 667 |
|
deduction IRA, instead of having a payroll deposit retirement | 668 |
|
savings arrangement to allow employee participation in the | 669 |
|
program. | 670 |
| Sec. 113.72. (A) Employers shall not be held liable for an | 671 |
|
employee's decision to participate in, or opt out of, the Ohio | 672 |
|
secure choice retirement savings program, or for the investment | 673 |
|
decisions of employees whose assets are deposited in the program. | 674 |
| (B) An employer shall not: | 675 |
| (1) Be considered a fiduciary of the Ohio secure choice | 676 |
|
retirement savings trust or the program; | 677 |
| (2) Bear responsibility for the administration, investment, | 678 |
|
or investment performance of the program; | 679 |
| (3) Be held liable with regard to investment returns, program | 680 |
|
design, and benefits paid to program participants. | 681 |
| (C) An employer's voluntary contribution under division (J) | 682 |
|
of section 113.60 of the Revised Code shall not in any way | 683 |
|
contradict the provisions of this section or change the employer's | 684 |
|
relationship to the program or an employer's obligations to | 685 |
|
employees. | 686 |
| Sec. 113.73. (A) Each eligible employer that, without good | 687 |
|
cause, fails to allow its eligible employees to participate in the | 688 |
|
Ohio secured choice retirement savings program shall be notified | 689 |
|
by the treasurer of state of the employer's failure to comply with | 690 |
|
sections 113.51 to 113.77 of the Revised Code. After an | 691 |
|
administrative hearing, the treasurer of state shall impose a fine | 692 |
|
of two hundred fifty dollars per eligible employee if | 693 |
|
noncompliance by the employer extends ninety or more days after | 694 |
|
receipt of the notice. If, after an administrative hearing, the | 695 |
|
employer is found to be in noncompliance one hundred or more days | 696 |
|
after receipt of the notice, the treasurer of state shall impose | 697 |
|
an additional fine of five hundred dollars per eligible employee. | 698 |
| (B) All fines collected under this section shall be deposited | 699 |
|
into the administration fund of the Ohio secure choice retirement | 700 |
|
savings trust. | 701 |
| (C) The treasurer of state may charge the Ohio secure choice | 702 |
|
retirement savings investment board a reasonable fee for costs the | 703 |
|
treasurer of state's office incurs in implementing, administering, | 704 |
|
and enforcing the program. | 705 |
| Sec. 113.74. The state shall not be liable for payment of | 706 |
|
the retirement savings benefits earned by participants in the Ohio | 707 |
|
secure choice retirement savings program. Any financial liability | 708 |
|
for the payment of benefits in excess of funds available under the | 709 |
|
program shall be borne by the entities with whom the Ohio secure | 710 |
|
choice retirement savings investment board contracts to provide an | 711 |
|
insurance, annuity, or other funding mechanism to protect the | 712 |
|
value of participants' accounts pursuant to section 113.61 of the | 713 |
|
Revised Code. The state, and any of the funds of the state, shall | 714 |
|
not be obligated for payment of the retirement savings benefits. | 715 |
| Sec. 113.75. (A) Not later than the first day of August of | 716 |
|
each year, the Ohio secure retirement savings investment board | 717 |
|
shall submit an audited financial report, prepared in accordance | 718 |
|
with generally accepted accounting principles, on the operations | 719 |
|
of the Ohio secure choice retirement savings trust to the | 720 |
|
governor, the director of budget and management, the auditor of | 721 |
|
state, and the general assembly. The annual audit shall be | 722 |
|
conducted by an independent certified public accountant and shall | 723 |
|
include, but not be limited to, direct and indirect costs | 724 |
|
attributable to the use of outside consultants, independent | 725 |
|
contractors, and any other persons who are not state employees. | 726 |
| (B) The annual audit shall be supplemented by the following | 727 |
|
information prepared by the board: | 728 |
| (1) Any relevant studies or evaluations prepared in the | 729 |
|
preceding year; | 730 |
| (2) A summary of the benefits provided by the trust including | 731 |
|
the number of participants in the trust; | 732 |
| (3) Any other information that is relevant in order to make a | 733 |
|
full, fair, and effective disclosure of the operations of the | 734 |
|
trust. | 735 |
| Sec. 113.76. The Ohio secure choice retirement savings | 736 |
|
investment board shall adopt rules it deems necessary to implement | 737 |
|
sections 113.51 to 113.77 of the Revised Code consistent with the | 738 |
|
Internal Revenue Code and regulations issued thereunder to ensure | 739 |
|
that the Ohio secure choice retirement savings program meets all | 740 |
|
criteria for federal tax-deferral or tax-exempt benefits, or both. | 741 |
| Sec. 113.77. The Ohio secure choice retirement savings | 742 |
|
program shall be suspended if the payroll deposit retirement | 743 |
|
savings arrangements offered under the program fail to qualify for | 744 |
|
the favorable federal income tax treatment ordinarily accorded to | 745 |
|
IRAs under the Internal Revenue Code or if it is determined that | 746 |
|
the program is an employee benefit plan under the "Employee | 747 |
|
Retirement Income Security Act," 88 Stat. 829, 29 U.S.C. 1001, as | 748 |
|
amended. | 749 |
| Sec. 113.78. Sections 113.51 to 113.77, except for section | 750 |
|
113.53, of the Revised Code shall not be implemented unless all of | 751 |
|
the following occur: | 752 |
| (A) The Ohio secure choice retirement savings investment | 753 |
|
board conducts a market analysis to determine whether the | 754 |
|
necessary conditions for implementation of sections 113.51 to | 755 |
|
113.77 of the Revised Code can be met, including, but not limited | 756 |
|
to, likely participation rates, participants' comfort with various | 757 |
|
investment vehicles and degree of risk, contribution levels, and | 758 |
|
the rate of account closures and rollovers. The board shall | 759 |
|
conduct this analysis only if sufficient funds to initiate and | 760 |
|
complete the required market analysis are made available through a | 761 |
|
nonprofit or private entity or from federal funding. The Ohio | 762 |
|
secure choice retirement savings program fund is hereby created in | 763 |
|
the state treasury. The fund shall consist of all moneys made | 764 |
|
available to conduct the market analysis. The board shall forward | 765 |
|
and offer to present its findings to the chair of the committees | 766 |
|
of the house of representatives and the senate that have | 767 |
|
jurisdiction over commerce and labor matters. | 768 |
| (B) The board determines that, based on the market analysis, | 769 |
|
sections 113.51 to 113.77 of the Revised Code will be | 770 |
|
self-sustaining. | 771 |
| (C) Sufficient funds are made available through a nonprofit | 772 |
|
or other private entity, federal funding, or appropriations to | 773 |
|
allow the board to implement sections 113.51 to 113.77 of the | 774 |
|
Revised Code until the Ohio secure choice retirement savings trust | 775 |
|
has sufficient funds to be self-sustaining. | 776 |
