Title: Strengthening Financial Security Through Short-Term Savings Accounts Act of 2018
Policy area: Labor and Employment

Summary:
Strengthening Financial Security Through Short-Term Savings Accounts Act of 2018
This bill allows employers to enroll employees in short-term savings accounts that are funded using automatic contributions deducted from participating employees' wages.
For each pay period, the employer must transfer to the account an amount equal to the percentage of the employee's compensation or a fixed amount, as determined by the employer.
Employees may elect to adjust, stop, or pause their contributions. The balance in an account may not exceed $10,000 (adjusted annually for inflation) and must be made readily available to the employee at any time.

[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 3218 Introduced in Senate (IS)]

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115th CONGRESS
  2d Session
                                S. 3218

To allow employers to offer short-term savings accounts with automatic 
          contribution arrangements for financial emergencies.


_______________________________________________________________________


                   IN THE SENATE OF THE UNITED STATES

                             July 17, 2018

   Ms. Heitkamp (for herself, Mr. Cotton, Mr. Booker, and Mr. Young) 
introduced the following bill; which was read twice and referred to the 
          Committee on Health, Education, Labor, and Pensions

_______________________________________________________________________

                                 A BILL


 
To allow employers to offer short-term savings accounts with automatic 
          contribution arrangements for financial emergencies.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Strengthening Financial Security 
Through Short-Term Savings Accounts Act of 2018''.

SEC. 2. PURPOSE.

    The purpose of this Act is to improve financial security, 
facilitate convenient and affordable access to all types of employer 
sponsored short-term savings accounts, reduce leakage, and complement 
overall retirement savings.

SEC. 3. STAND-ALONE SHORT-TERM SAVINGS ACCOUNTS.

    (a) In General.--An employer may make available to employees a 
stand-alone, short-term savings account, using an automatic 
contribution arrangement (as defined in section 514(e)(2) of the 
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1144(e)(2))) 
in accordance with this Act. An employer that offers employees a short-
term savings account shall deduct amounts from each participating 
employee's wages in accordance with subsection (e) and transfer such 
amounts to a savings account that meets the requirements of subsection 
(b).
    (b) Account Requirements.--
            (1) In general.--A short-term savings account offered in 
        accordance with subsection (a) shall--
                    (A) have no minimum balance requirements, 
                reasonable fees as determined by a joint rulemaking by 
                the Secretary of Labor and the Secretary of the 
                Treasury, in consultation with other financial 
                regulators, and a maximum account balance of not to 
                exceed $10,000, adjusted annually for inflation and by 
                the Secretary of the Treasury;
                    (B) have a balance that is made readily available, 
                in whole or in part, at any time to an individual who 
                owns the account, subject to any reasonable, limited 
                restrictions imposed on withdrawals pursuant to the 
                terms of the arrangement; and
                    (C) make available to the individual who owns the 
                account, not later than 5 business days after the 
                individual terminates employment, the entire account 
                balance.
        An employer may structure and adapt such short-term savings 
        account to assist employees with short-term financial 
        emergencies, so long as such savings accounts meet the minimum 
        standards set forth in this Act.
            (2) Coordination.--An employer may coordinate with a bank, 
        credit union, or payroll card provider that is licensed by the 
        Federal Government or a State government offering a short-term 
        savings account under subsection (a), including--
                    (A) an FDIC insured pooled account that the 
                employer opens in the name of the employer for which 
                the employer maintains responsibility, subject to 
                reasonable fees as defined in section 1022.380 of title 
                31, Code of Federal Regulations, and New Opinion No. 8 
                of the General Counsel of the Federal Deposit Insurance 
                Corporation (73 Fed. Reg. 67155 (November 13, 2008)), a 
                variation of a savings account for a short-term savings 
                account offered under subsection (a); and
                    (B) an individual account opened in the name of the 
                employee for which the employee maintains 
                responsibility.
            (3) Regulations.--The Secretary of the Treasury, in 
        consultation with the Secretary of Labor, shall promulgate 
        regulations carrying out this subsection. Such regulations 
        shall address the responsibility of employers to establish and 
        maintain reasonable claims procedures, any associated penalties 
        for failure to comply with this Act, the timing and notice of 
        benefit determination, how the funds must be invested and 
        minimum interest requirements, and the manner and content of 
        benefit determination, rights of participants in these 
        accounts, among other things as they determine are necessary.
            (4) Applicability.--Notwithstanding any other provision of 
        law, an employer may designate an account for direct deposit 
        for a short-term savings account offered under subsection (a).
    (c) Account Sponsor Requirements.--Employers--
            (1) shall have a fiduciary responsibility to ensure that--
                    (A) any account offered in accordance with 
                subsection (a) meets the requirements of subsection 
                (b);
                    (B) relevant information about participating 
                employees is submitted safely and securely to the 
                insured depository institution or insured credit union;
                    (C) amounts are properly deducted from employees' 
                wages and transferred to the financial institution on 
                behalf of the employees in accordance with subsection 
                (f);
                    (D) employees have clear instructions and an easy 
                means to make changes to contributions or stop them 
                entirely at any time; and
                    (E) employees have clear guidance on how they may 
                access their money and how quickly they will receive 
                their money upon request; and
            (2) have no other fiduciary responsibility beyond the 
        responsibilities described in paragraph (1).
    (d) Applicability of Banking Laws.--
            (1) In general.--Except as provided in paragraph (2), 
        Federal banking laws (including regulations) shall apply to 
        short-term savings accounts as if the short-term savings 
        accounts were savings accounts.
            (2) Know your customer laws.--Notwithstanding any other 
        provision of law, a bank, credit union, or payroll card 
        provider offering a short-term savings account under subsection 
        (a) shall be treated as if it were an ERISA plan, for purposes 
        of rules relating to Anti-Money Laundering, Customer 
        Identification Program (CIP), Suspicious Activity Report (SAR) 
        requirements, or any other rules required to establish the 
        identity of the account holder before an account for a short-
        term savings account is opened in accordance with this Act. The 
        Secretary may prescribe regulations which would establish 
        minimum standards that such an arrangement would be required to 
        satisfy in order for this subsection to apply with respect to 
        such an account.
    (e) Preemption of State Anti-Garnishment Laws.--Notwithstanding any 
other provision of law, this section shall supersede any law of a State 
which would directly or indirectly prohibit or restrict the use an 
automatic contribution arrangement for a short-term savings account, as 
if it were an ERISA plan. The Secretary may prescribe regulations which 
would establish minimum standards that such an arrangement would be 
required to satisfy in order for this subsection to apply with respect 
to such an account.
    (f) Transfers to Accounts.--The account sponsor shall transfer each 
pay period--
            (1) to the short-term savings account an amount equal to 
        the percentage of the employee's compensation, or a fixed 
        amount, as the account sponsor determines; and
            (2) employees shall have the ability to adjust, stop, or 
        pause, their contributions as they see fit.
    (g) Disclosure Requirements.--An account sponsor shall disclose in 
writing, or electronically if the employee so elects, to the 
participating employee within 5 business days before the commencement 
of the contributions to the account--
            (1) a short-term savings account description, including the 
        contours, all terms and conditions, and fees associated with 
        the short-term savings account;
            (2) describe the tax treatment of the short-term savings 
        account and the tax treatment of any tax favored account that 
        is offered;
            (3) any rules with respect to, deposits or contributions 
        into the account, maintenance of the account, investments, 
        balances, escalations not to exceed 4 percent and withdrawals, 
        replenishment of the accounts, balance caps and other features 
        of the account; and
            (4) the access and availability to account information and 
        related account information to participating employees.
    (h) Effective Date.--The provisions of this Act shall be effective 
upon the date of enactment of this Act.

SEC. 4. SHORT-TERM SAVINGS ACCOUNT WITHIN A RETIREMENT PLAN.

    (a) In General.--Not later than one year after the date of 
enactment of this Act, the Secretary of the Treasury or the Secretary's 
delegate shall issue regulations or other guidance that interprets and 
applies the rules of the Internal Revenue Code of 1986 applicable to 
tax-qualified plans and arrangements described in sections 219(g)(5), 
408 (including 408(q) and 408A), and 457(b) of such Code in a manner 
that facilitates the offering and operation, including automatic 
enrollment and automatic escalation, of short-term savings arrangements 
as part of or in conjunction or coordination with, any such tax-
qualified plan or arrangement.
    (b) Requirements.--Any short-term savings account that is part of a 
tax-qualified plans and arrangements described in sections 219(g)(5), 
408 (including 408(q) and 408A), and 457(b) of the Internal Revenue 
Code of 1986 shall comply with applicable plan requirements, including 
provisions for the retention of assets in a qualified trust, timely 
payment of assets, and distribution of assets upon plan or participant 
termination. Any savings account that is not part of a tax-qualified 
plan, bank or credit union, shall be subject to appropriate regulations 
by the Department of Treasury.

SEC. 5. PILOT PROGRAM.

    The Secretary of the Treasury may establish a pilot program that 
incentivizes employers to set up short-term savings accounts under this 
Act. Any employer that participates in the pilot program shall be 
eligible to receive not more than $400 per employee account.

SEC. 6. STUDY OF EFFECTIVENESS OF SHORT-TERM SAVINGS ACCOUNT OPTIONS.

    Not later than 1 year after the date of enactment of this Act, the 
Comptroller General shall study, and report to the Committee on 
Finance, the Committee on Banking, Housing, and Urban Affairs, and the 
Committee on Health, Education, Labor, and Pensions of the Senate and 
the Committee on Ways and Means of the House of Representatives, the 
effectiveness of various methods for developing the savings accounts 
described in this Act, including after-tax employee contributions to a 
plan described in section 401(k) of the Internal Revenue Code of 1986, 
deemed treatment of such plans as a Roth plan for purposes of such 
Code, and the use of depository accounts, including payroll cards.
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