State Retirement Savings Act of 2016

Summary: State Retirement Savings Act of 2016  This bill amends the Employee Retirement Income Security Act of 1974 (ERISA) to authorize and establish requirements for: (1) state-sponsored multiple employer retirement plans, and (2) state-managed payroll deduction savings programs that provide individual retirement plans. 

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``State Retirement Savings Act of 
2016''.

SEC. 2. STATE-SPONSORED MULTIPLE EMPLOYER PLANS.

    Part 2 of title I of the Employee Retirement Income Security Act of 
1974 (29 U.S.C. 10151 et seq.) is amended by adding at the end the 
following:

``SEC. 212. STATE-SPONSORED MULTIPLE EMPLOYER PLANS.

    ``(a) In General.--Any State may establish a plan described in 
section 210(a). Such plan shall not be considered a governmental plan 
solely because it is established and administered by a State, provided 
the plan is in compliance with the requirements of this section.
    ``(b) Requirements.--A State multiple employer plan shall--
            ``(1) be established by a State pursuant to State law;
            ``(2) be open to all employers in the State;
            ``(3) not require participation from any employer, 
        including any employer described in section 401(c)(4) of the 
        Internal Revenue Code of 1986;
            ``(4) be subject to all requirements of this Act that apply 
        to a plan described in section 210(a); and
            ``(5) provide for an opt-out for all employees of a 
        participating employer, if the plan provides for automatic 
        enrollment.
    ``(c) Plan Sponsor, Fiduciary, and Administrator.--The plan 
sponsor, named fiduciary, and plan administrator of a State-sponsored 
plan described in subsection (a) shall be the State.
    ``(d) Enrollment of Individual Employees.--
            ``(1) In general.--A State multiple employer plan may 
        enroll individuals directly in such plan, if such individuals 
        are employed by employers who do not participate in the State 
        plan.
            ``(2) Employer participation.--The State plan shall not 
        require employer participation in the form of contributions, 
        bonuses, or monetary incentives in the case of individual 
        employee participation under paragraph (1).
    ``(e) Tax Treatment.--
            ``(1) Treatment of contributions.--Contributions made to a 
        State multiple employer plan shall be treated in the same 
        manner for purposes of section 401 of the Internal Revenue Code 
        of 1986 as contributions to any other multiple employer plan 
        described in section 210(a).
            ``(2) Treatment of plan.--A State plan described in 
        subsection (a) shall be treated as a plan subject to section 
        413(c) of the Internal Revenue Code of 1986.''.

SEC. 3. CERTAIN STATE SAVINGS PROGRAMS.

    (a) In General.--A State may establish and maintain a State payroll 
deduction savings program (referred to in this section as a 
``program'') that provides individual retirement plans (as defined in 
section 7701(a)(37) of the Internal Revenue Code of 1986). Such plan 
shall not be considered an employee pension benefit plan under section 
3(2) of the Employee Retirement Income Security Act of 1974 (29 U.S.C. 
1002(2)), provided that--
            (1) the program is established by a State pursuant to State 
        law;
            (2) the program is implemented and administered by the 
        State establishing the program, and such State is responsible 
        for investing the employee savings or for selecting investment 
        alternatives for employees to choose;
            (3) the State assumes responsibility for the security of 
        payroll deductions and employee savings;
            (4) the State adopts measures to ensure that employees are 
        notified of their rights under the program, and creates a 
        mechanism for enforcement of such rights;
            (5) participation in the program is voluntary for 
        employees;
            (6) all rights of the employee, former employee, or 
        beneficiary under the program are enforceable only by the 
        employee, former employee, or beneficiary, an authorized 
        representative of such a person, or by the State;
            (7) except for employer contributions allowed under 
        subsection (b), the involvement of the employer is limited to--
                    (A) collecting employee contributions through 
                payroll deductions and remitting them to the program;
                    (B) providing notice to the employees and 
                maintaining records regarding the employer's collection 
                and remittance of payments under the program;
                    (C) providing information to the State necessary to 
                facilitate the operation of the program; and
                    (D) distributing program information to employees 
                from the State and permitting the State or such entity 
                to publicize the program to employees;
            (8) the employer's participation in the program is required 
        by State law;
            (9) the employer has no discretionary authority, control, 
        or responsibility under the program; and
            (10) the employer receives no direct or indirect 
        consideration in the form of cash or otherwise, other than the 
        reimbursement of the actual costs of the program to the 
        employer of the activities described in paragraph (8).
    (b) Employer Contributions to an Employee Account in a State 
Savings Program; Financial Incentives Allowed.--A State savings program 
described in subsection (a)--
            (1) may permit an employer to contribute funds to an 
        employee's account under the payroll deduction savings program, 
        and need not require an employer to make contributions to 
        employee accounts, provide bonuses, or other monetary 
        incentives to employees to participate in the program;
            (2) may permit an employer to provide bonuses or other 
        monetary incentive to employees to participate in the program;
            (3) may be offered to employees who are already eligible 
        for some other workplace savings arrangement;
            (4) may utilize one or more service or investment providers 
        to operate and administer the program, provided that the State 
        retains full responsibility for the operation and 
        administration of the program; and
            (5) shall treat employees as having automatically elected 
        payroll deductions in an amount or percentage of compensation, 
        including any automatic increases in such amount or percentage, 
        specified under State law until the employee specifically 
        elects not to have such deductions made (or specifically elects 
        to have the deductions made in a different amount or percentage 
        of compensation allowed by the program), provided that the 
        employee is given adequate notice of the right to make such 
        elections, and need not provide for the automatic deductions.
    (c) Definitions.--For purposes of this section--
            (1) the term ``State'' has the meaning given such term in 
        section 3 of the Employee Retirement Income Security Act of 
        1974 (29 U.S.C. 1002), and, in the case of a State that has not 
        established a State payroll deduction savings program described 
        in subsection (a), includes any qualified political subdivision 
        of a State; and
            (2) the term ``qualified political subdivision'' means any 
        governmental unit of a State, including a city, county, or 
        similar governmental body, that--
                    (A) has the implicit or explicit authority under 
                State law to require employer participation in a 
                retirement savings account program described in 
                subsection (a); and
                    (B) has a population equal to or greater than the 
                population of the least populated of the 50 States 
                (excluding the District of Columbia and the 
                territories).
    (d) Clarification.--Section 3(2) of the Employee Retirement Income 
Security Act of 1974 (29 U.S.C. 1002(2)) is amended by adding at the 
end the following:
    ``(C) A State payroll deduction savings program established in 
accordance with section 3 of the State Retirement Savings Act of 2016 
is not an `employee pension benefit plan' or `pension plan' for 
purposes of this title.''.