II 

114TH CONGRESS 

2D SESSION S. 3389 

To authorize State-sponsored multiple employer plans and State payroll 

deduction savings programs. 

IN THE SENATE OF THE UNITED STATES 

SEPTEMBER 22, 2016 

Mr. HEINRICH introduced the following bill; which was read twice and referred 

to the Committee on Finance 

A BILL 

To authorize State-sponsored multiple employer plans and 

State payroll deduction savings programs. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘State Retirement Sav5 ings Act of 2016’’. 

6 SEC. 2. STATE-SPONSORED MULTIPLE EMPLOYER PLANS. 

7 Part 2 of title I of the Employee Retirement Income 

8 Security Act of 1974 (29 U.S.C. 10151 et seq.) is amend9 ed by adding at the end the following: 


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1 ‘‘SEC. 212. STATE-SPONSORED MULTIPLE EMPLOYER 

2 PLANS. 

3 ‘‘(a) IN GENERAL.—Any State may establish a plan 

4 described in section 210(a). Such plan shall not be consid5 ered a governmental plan solely because it is established 

6 and administered by a State, provided the plan is in com7 pliance with the requirements of this section. 

8 ‘‘(b) REQUIREMENTS.—A State multiple employer 

9 plan shall— 

10 ‘‘(1) be established by a State pursuant to 

11 State law; 

12 ‘‘(2) be open to all employers in the State; 

13 ‘‘(3) not require participation from any em14 ployer, including any employer described in section 

15 401(c)(4) of the Internal Revenue Code of 1986; 

16 ‘‘(4) be subject to all requirements of this Act 

17 that apply to a plan described in section 210(a); and 

18 ‘‘(5) provide for an opt-out for all employees of 

19 a participating employer, if the plan provides for 

20 automatic enrollment. 

21 ‘‘(c) PLAN SPONSOR, FIDUCIARY, AND ADMINIS22 TRATOR.—The plan sponsor, named fiduciary, and plan 

23 administrator of a State-sponsored plan described in sub24 section (a) shall be the State. 

25 ‘‘(d) ENROLLMENT OF INDIVIDUAL EMPLOYEES.— 


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1 ‘‘(1) IN GENERAL.—A State multiple employer 

2 plan may enroll individuals directly in such plan, if 

3 such individuals are employed by employers who do 

4 not participate in the State plan. 

5 ‘‘(2) EMPLOYER PARTICIPATION.—The State 

6 plan shall not require employer participation in the 

7 form of contributions, bonuses, or monetary incen8 tives in the case of individual employee participation 

9 under paragraph (1). 

10 ‘‘(e) TAX TREATMENT.— 

11 ‘‘(1) TREATMENT OF CONTRIBUTIONS.—Con12 tributions made to a State multiple employer plan 

13 shall be treated in the same manner for purposes of 

14 section 401 of the Internal Revenue Code of 1986 

15 as contributions to any other multiple employer plan 

16 described in section 210(a). 

17 ‘‘(2) TREATMENT OF PLAN.—A State plan de18 scribed in subsection (a) shall be treated as a plan 

19 subject to section 413(c) of the Internal Revenue 

20 Code of 1986.’’. 

21 SEC. 3. CERTAIN STATE SAVINGS PROGRAMS. 

22 (a) IN GENERAL.—A State may establish and main23 tain a State payroll deduction savings program (referred 

24 to in this section as a ‘‘program’’) that provides individual 

25 retirement plans (as defined in section 7701(a)(37) of the 


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1 Internal Revenue Code of 1986). Such plan shall not be 

2 considered an employee pension benefit plan under section 

3 3(2) of the Employee Retirement Income Security Act of 

4 1974 (29 U.S.C. 1002(2)), provided that— 

5 (1) the program is established by a State pur6 suant to State law; 

7 (2) the program is implemented and adminis8 tered by the State establishing the program, and 

9 such State is responsible for investing the employee 

10 savings or for selecting investment alternatives for 

11 employees to choose; 

12 (3) the State assumes responsibility for the se13 curity of payroll deductions and employee savings; 

14 (4) the State adopts measures to ensure that 

15 employees are notified of their rights under the pro16 gram, and creates a mechanism for enforcement of 

17 such rights; 

18 (5) participation in the program is voluntary 

19 for employees; 

20 (6) all rights of the employee, former employee, 

21 or beneficiary under the program are enforceable 

22 only by the employee, former employee, or bene23 ficiary, an authorized representative of such a per24 son, or by the State; 


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1 (7) except for employer contributions allowed 

2 under subsection (b), the involvement of the em3 ployer is limited to— 

4 (A) collecting employee contributions 

5 through payroll deductions and remitting them 

6 to the program; 

7 (B) providing notice to the employees and 

8 maintaining records regarding the employer’s 

9 collection and remittance of payments under the 

10 program; 

11 (C) providing information to the State nec12 essary to facilitate the operation of the pro13 gram; and 

14 (D) distributing program information to 

15 employees from the State and permitting the 

16 State or such entity to publicize the program to 

17 employees; 

18 (8) the employer’s participation in the program 

19 is required by State law; 

20 (9) the employer has no discretionary authority, 

21 control, or responsibility under the program; and 

22 (10) the employer receives no direct or indirect 

23 consideration in the form of cash or otherwise, other 

24 than the reimbursement of the actual costs of the 


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1 program to the employer of the activities described 

2 in paragraph (8). 

3 (b) EMPLOYER CONTRIBUTIONS TO AN EMPLOYEE

4 ACCOUNT IN A STATE SAVINGS PROGRAM; FINANCIAL IN5 CENTIVES ALLOWED.—A State savings program described 

6 in subsection (a)— 

7 (1) may permit an employer to contribute funds 

8 to an employee’s account under the payroll deduc9 tion savings program, and need not require an em10 ployer to make contributions to employee accounts, 

11 provide bonuses, or other monetary incentives to em12 ployees to participate in the program; 

13 (2) may permit an employer to provide bonuses 

14 or other monetary incentive to employees to partici15 pate in the program; 

16 (3) may be offered to employees who are al17 ready eligible for some other workplace savings ar18 rangement; 

19 (4) may utilize one or more service or invest20 ment providers to operate and administer the pro21 gram, provided that the State retains full responsi22 bility for the operation and administration of the 

23 program; and 

24 (5) shall treat employees as having automati25 cally elected payroll deductions in an amount or perVerDate Sep 11 2014 03:23 Sep 24, 2016 Jkt 059200 PO 00000 Frm 00006 Fmt 6652 Sfmt 6201 E:\BILLS\S3389.IS S3389

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1 centage of compensation, including any automatic 

2 increases in such amount or percentage, specified 

3 under State law until the employee specifically elects 

4 not to have such deductions made (or specifically 

5 elects to have the deductions made in a different 

6 amount or percentage of compensation allowed by 

7 the program), provided that the employee is given 

8 adequate notice of the right to make such elections, 

9 and need not provide for the automatic deductions. 

10 (c) DEFINITIONS.—For purposes of this section— 

11 (1) the term ‘‘State’’ has the meaning given 

12 such term in section 3 of the Employee Retirement 

13 Income Security Act of 1974 (29 U.S.C. 1002), and, 

14 in the case of a State that has not established a 

15 State payroll deduction savings program described in 

16 subsection (a), includes any qualified political sub17 division of a State; and 

18 (2) the term ‘‘qualified political subdivision’’ 

19 means any governmental unit of a State, including 

20 a city, county, or similar governmental body, that— 

21 (A) has the implicit or explicit authority 

22 under State law to require employer participa23 tion in a retirement savings account program 

24 described in subsection (a); and 


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1 (B) has a population equal to or greater 

2 than the population of the least populated of 

3 the 50 States (excluding the District of Colum4 bia and the territories). 

5 (d) CLARIFICATION.—Section 3(2) of the Employee 

6 Retirement Income Security Act of 1974 (29 U.S.C. 

7 1002(2)) is amended by adding at the end the following: 

8 ‘‘(C) A State payroll deduction savings program es9 tablished in accordance with section 3 of the State Retire10 ment Savings Act of 2016 is not an ‘employee pension 

11 benefit plan’ or ‘pension plan’ for purposes of this title.’’. 

Æ 


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