HB 17

This bill enacts the "Tennessee Retirement Savings Plan Act, "" which establishes a Tennessee retirement savings board (""board"") that is administratively attached to the department of treasury in order to develop a defined contribution retirement plan for residents of this state who are employed for compensation in this state (""plan""). TENNESSEE RETIREMENT SAVINGS BOARD This bill creates the board to consist of the following seven members: (i) t he state treasurer or the treasurer's designee; ( ii ) a representative of employers, appointed by the governor ; (iii) a representative with experience in the field of investments, appointed by the governor; (iv) a representative of an association representing employees, appointed by the governor; ( v ) a member of the public who is retire d, appointed by the governor; ( vi ) a member of the senate, appointed by the senate speaker to be a nonvoting advisory member of the board; and (vi) a member of the house of representatives, appointed by the speaker of the house of representatives to be a nonvoting advisory member of the board. This bill requires initial appointments to be made such that the terms of office begin on January 1, 2026. The governor's initial appointment as a representative of employers serve s for a term ending December 31, 2027 ; as a representative of an association representing employees serve s for a term ending Decem ber 31, 2028; and as the other two members serve for a term ending December 31, 2029. Thereafter, the terms of office of each member of the board appointed by the governor is four years, but a member serves at the pleasure of the governor. A member is eligible for reappointment. If there is a vacancy for any cause, then the governor must make an appointment to become immediately effective for the unexpired term. This bill provi des that each legislative member serves at the pleasure of the appointing authority and may serve as long as the member remains in the chamber of the general assembly from which the member was appointed. The state treasurer or the treasurer's designee app ointed to the board serve s as chair of the board. A majority of the voting members of the board constitutes a quorum for the transaction of business. This bill requires members of the board who are not governmental employees or public officials to be pa id a per diem of $75 for attending board meetings. Each member is entitled to reimbursement for travel and other necessary expenses incurred in the performance of official duties in accordance with the state comprehensive travel regulations. DEFINED CONT RIBUTION RETIREMENT PLAN This bill requires the board to develop a plan and to conduct a market and legal analysis of the plan. The plan must do all of the following:  Allow eligible individuals employed for compensation in this state to contribute to an account established under the plan through payroll deduction ;  Require an employer with more than five employees to offer its employees the opportunity to contribute to the plan through payroll deductions unless the employer offers a qualified retirement plan ;  Provide for automatic enrollment of employees and allow employees to opt out of the plan ;  Have a default contribution rate of 5% of wages or salary ;  Offer default escalation of contribution levels that can be increased or decreased within the limits allowed by the Internal Revenue Code ;  Provide for contributions to the plan to be deposited directly with the investment administrator for the plan ;  Whenever possible, use existing employer and public infrastructure to facilitate contributions to the plan, recordkeeping, and outreach ;  Require no employer contributions to employee accounts ;  Require the maintenance of separate records and accounting for each plan account ;  Provide for reports on the status of plan accounts to be provided to plan participants at least annually ;  Allow for account owners to maintain an account regardless of place of employment and to roll over funds into other retirement accounts ;  Pool accounts established under the plan for investment ;  Be professionally managed ;  Provide that the state of Tennessee and employers that participate in the plan have no proprietary interest in the contributions to or earnings on amounts contributed to accounts established under the plan ;  Provide that the investment administrator for the plan is the trustee of all contributions and earnings on amounts contributed to accounts established under the plan ;  Not impose any duties under the Employee Retirement Income Security Act of 1974 on employers ;  Keep administration fees in the plan low ;  Allow the use of private sector partnerships to administer and invest the contributions to the plan under the supervision and guidance of the board ; and  Allow employers to establish an alternative retirement plan for some or all employees . However, this bill prohibits t he plan, the board, each board member, and the state of Tennessee from guarante eing any rate of return or any interest rate on any contribution. The plan, the board, each board member, and the state of Tennessee are not liable for any loss incurred by any pe rson as a result of participating in the plan. RULES This bill requires the board to adopt rules that do all of the following:  Establish the process for voluntary enrollment in the plan, including procedures for automatic enrollment of employees and for employees to opt out of the plan ;  Establish the process for participants to make the default contributions to plan accounts and to adjust the contribution levels ;  Establish the process for employers to withhold employee contributions to plan accounts from employees' wages and send the contributions to the investment administrator for the plan ;  Establish the process for allowing employees to opt out of enrollment in the plan ;  Set minimum, maximum, and default contribution levels in accordance with limits established by the Internal Revenue Code;  Establish the process for withdrawals from plan accounts ;  Establish the process and requirements for an employer to obtain an exemption from offering the plan if the employer offers a qualified retirement plan ;  Mandate the contents and frequency of required disclosures to employees, employers, and other plan participants ; and  Establish civil penalties for the employer's noncompliance with its participation in the plan . DISCLOSURE OF PERSONAL INFORMATION This bill prohibits the state from disclosing personal information about a participant or beneficiary of a participant obtained in connection with an account established under this bill, except under any the following circumstances:  To an individual or entity authorized by the respective participant or beneficiary ;  In compliance with a subpoena or a court order ;  To the comptroller or the comptroller's designee for the purpose of an audit ;  To the internal revenue service or the United States department of treasury ;  To the participant's employer as may be necessary to administer the plan ; and  In an administrative proceeding or court action involving the state, the department of treasury, the state treasurer, or the board relative to an account established under this bill. As used in this bill, ""personal information"" includes, but is not limited to, s ocial security numbers; b ank account numbers; t ransit routing numbers; c redit card numbers; d ebit card numbers; b usiness or residential addresses; t elephone numbers; e mail addresses; a mounts contributed; and e arnings on amounts contributed. This bill clarifies that a ll assets, income, and distributions of the plan are protected against the claims of creditors of the state, plan administrator, and plan participants, a nd are not subject to execution, attachment, garnishment, the operation of bankruptcy, the insolvency laws, or other processes . Additionally, a n assignment of such items is not enforceable in a court. This bill authorizes the board to adopt rules to per mit the plan to honor claims under a qualified domestic relations order. As used in this provision, ""qualified domestic relations order"" has the same meaning as provided in federal law . However, such an order may only relate to the provision of marital p roperty rights relating to the plan for the benefit of a plan participant's former spouse. TENNESSEE RETIREMENT SAVINGS PLAN ADMINISTRATIVE FUND This bill establishes the Tennessee retirement savings plan administrative fund (""fund"") in the state treasury, separate and distinct from the general fund. Interest earned by the fund must be credited to the fund. Moneys in the fund are continuously appropriated to the board. The fund consists of the following:  Moneys appropriated to the fund by the general assembly ;  Moneys transferred to the fund from the federal government, other state agencies, or local governments ;  Moneys from the payment of fees and the payment of other moneys due the board ;  Any gifts or donations made to the state of Tennessee for deposit in the fund ; and  Earnings on moneys in the fund. MARKET ANALYSIS REQUIRED This bill requires, b efore establishing a plan developed under this bill, the board to do all of the following :  Conduct a market analysis to determine: ( i ) t he feasibility of the plan; and ( ii ) w hether and to what extent plans with the characteristics described in state law currently exist in the private market ;  Obtain legal advice regarding the applicability of the Employee Retirement Income Security Act of 1974 and the Internal Revenue Code to the plan;  Investigate whether employers that are not required to participate in the plan can make the plan available to their employees ;  Investigate whether individuals who are self-employed as independent contractors can participate in the plan ; and  Investigate how to allow individuals who are not automatically enrolled in the plan to opt in to the plan and make contributions to an account, either through payroll contributions or another method of contribution. Th is bill requires the board to coordinate with the efforts of other states as those states pursue legal guidance for similar retirement savings programs. ANNUAL REPORT This bill requires the board to report no later than February 1 each year to the gover nor and to the finance, ways and means committees of the house of representatives and the senate detailing the board's activities. LOCAL GOVERNMENTS Except for retirement plans offered by a local government to its independent contractors on the effective date of this act, this bill prohibits a local government from establish ing or offer ing a retirement plan for persons not employed by a governmental en tity. As used in this provision, ""local government"" means a Tennessee local governmental entity, including a municipality, metropolitan government, county, utility district, school district, public building authority, and development district created and existing pursuant to the laws of this state, or an instrumentality of government created by one or more of t he local governmental entities or by an act of the general assembly. INTERAGENCY AGREEMENT This bill requires each state agency that enters into an interagency agreement with the board to provide outreach, technical assistance, or compliance services to collaborate with other state agencies to develop a plan to provide these services to the board. This plan must be provided to the board no later than July 1, 2026. REPORT TO LEGISLATIVE COMMITTEES This bill requires the board to report to certain legi slative committees no later than July 1, 2026. The report must include the results of the market analysis sought by the board ; t he findings from legal advice obtained by the boa rd; a n analysis of potential costs to employers ; a draft of the request for pr oposals to solicit bids from plan administrators ; a timeline for implementation of the plan ; a n overview of any contracts entered into by the board in the performance of its duties ; and r ecommendations to the general assembly regarding ways to increase fin ancial literacy in this state CONTRIBUTIONS This bill generally requires the board to establish the retirement plan so that individuals may begin making contributions to the plan no later than January 1, 2028. However, if the board determines that the plan developed by the board would qualify as an employee benefit plan under the Employee Retirement Income Security Act of 1974, then the board must not establish the plan. Additionally, subject to this bill:  Beginning January 1, 2028, a resident of this state employed for compensation in this state with a private employer employing more than 100 employees is eligible to participate in a defined contribution retirement plan established by the Tennessee retirement savings board under this part .  Beginning January 1, 2029, a resident of this state employed for compensation in this state with a private employer employing between 25 and 100 employees is eligible to participate in a defined contribution retirement plan established by the Tennessee retirement savings board under this bill.  Beginning January 1, 2030, a resident of this state em p loyed for compensation in this state with a private employer that has between five and 24 employees is eligible to participate in a defined contribution retirement plan established by the Tennessee retirement savings board under this bill.  Prior to an employer's participation in the plan, the employer must register with the board to determine whether the employer is required to participate in the plan. SUNSET REVIEW This bill places the board under review pursuant to the Tennessee Governmental Entity Review Law, with the board subject to termination in June 30, 2025 if not extended."