Editor's Note: This feature in the NTSA Advisor provides a look at what’s going on in the states and the most recent developments in their activity to provide and enhance retirement plan coverage.
Minnesota may join other states that provide retirement plan coverage to private-sector employees whose employers do not, and Connecticut has extended the registration deadline for MyCTSavings.
Considerable Committee Consideration of Minnesota Secure Choice
A measure that would create a state-run retirement plan to provide coverage for private-sector employees in Minnesota whose employers do not is under consideration in the state Legislature.
Multiple committees in both the state Senate and House of Representatives looked at The Minnesota Secure Choice Retirement Program Act in March, and more review is coming.
Sen. Sandra Pappas (DFL-St. Paul) introduced S. 413, the Senate version; Rep. Jamie Becker-Finn (DFL-Roseville) introduced HF 782, the House version.
What the Legislation Would Do. The Minnesota Secure Choice Retirement Program Act calls for establishment of an employee retirement savings program through which employee payroll deduction contributions would be transmitted on an after-tax or pretax basis by covered employers to IRAs established under the program.
- Board of Directors. The legislation calls for the establishment of a Board of Directors to administer the program.
- Types of Accounts. The program would entail a Roth IRA, a traditional IRA, or both a Roth IRA and a traditional IRA for each covered employee whose covered employer transmits employee payroll deduction contributions under the program.
- Employers. Covered employers would be required to enroll its covered employees in the program and withhold payroll deduction contributions from each covered employee’s paycheck, unless the covered employee has elected not to contribute.
Covered employers also would be required to provide information prepared by the Board to all covered employees regarding the program. The information would be provided to each covered employee at least 30 days before the date of the first paycheck from which employee contributions could be deducted for transmittal to the program, if the covered employee does not elect to opt out of the program.
Employees. Covered employees would have the right — annually or more frequently as determined by the Board of Directors — to (1) change the contribution rate, (2) opt out or elect not to contribute, or (3) cease contributions.
Contributions. Employee contributions would be made on an after-tax (Roth) basis, unless the covered employee elects to contribute on a pretax basis. Covered employees would be 100% vested in their accounts at all times.
Distributions. The legislation calls for the Board of Directors to establish alternatives permitting covered employees to take a withdrawal of all or a portion of their accounts while employed and one or more distributions following termination of employment. Distribution alternatives must include lifetime income options.
Investments. The legislation calls for the Board of Directors to make available for investment a diversified array of investment funds selected by the State Board of Investment. Each covered employee would be entitled to direct the investment of the contributions credited to his or her account in the trust and earnings on the contributions into the array of investment funds selected by the State Board of Investment.
Consideration. There was much committee consideration of both versions in March.
In the Senate. March 6, the State and Local Government Committee passed an amended version of S. 413 and referred it to the Labor Committee. That committee did the same on March 13 and referred it to the Judiciary and Public Safety Committee. A week later, it was withdrawn from that committee and referred to the Finance Committee.
In the House. HF 782 was referred to the House State and Local Government Finance and Policy Committee when Rep. Becker-Finn introduced it. The committee adopted an amended version on March 15 and it was referred to the Judiciary Finance and Civil Law Committee, which one week later moved to refer it to the House Ways and Means Committee.
Status. S. 413 awaits action by the Finance Committee. HF 782 awaits action by the House Ways and Means Committee.
MyCTSavings Registration Deadline Extended
Connecticut Comptroller Sean Scanlon has announced that the registration deadline for MyCTSavings has been extended to Aug. 31, 2023.
The Connecticut Retirement Security Program — also known as MyCTSavings — is a state-sponsored program that provides retirement plan coverage for those whose private-sector employers do not offer a retirement plan. It was formally launched in March 2022. Businesses with five or more employees must participate in the program; it is not mandatory for employers with fewer than five employees or that already offer a retirement plan. Participating employers do not have to contribute to it, but they must provide a payroll deduction mechanism by which employees contribute to a Roth IRA.
The program has been phased in gradually in waves.
So Far. Scanlon reports that more than 3,400 businesses have successfully enrolled, and program assets are more than $3.5 million. “We are extending the enrollment deadline to August 31, 2023, so that we can continue to build on this momentum and work with business owners to empower their employees to save for the dignified retirement they deserve," Scanlon said in a press release.