An Act To Promote Individual Private Savings Accounts through a Public-private Partnership
Maine Legislature, Session 127, LD 1318
Committee: Labor, Commerce, Research and Economic Development
Sponsors: BECK

Legislative Document 
No. 1318 
H.P. 896 
House of Representatives, April 14, 2015 
An Act To Promote Individual Private Savings Accounts through a 
Public-private Partnership 
Reference to the Committee on Labor, Commerce, Research and Economic Development 
suggested and ordered printed. 
ROBERT B. HUNT 
Clerk 
Presented by Representative BECK of Waterville. 
Be it enacted by the People of the State of Maine as follows: 
Sec. 1.  5 MRSA c. 7-A is enacted to read: 
CHAPTER 7-A 
MAINE SMALL BUSINESS RETIREMENT MARKETPLACE 
§171.  Short title 
This Act may be known and cited as "the Maine Small Business Retirement 
Marketplace Act." 
§172.  Definitions 
As used in this chapter, unless the context otherwise indicates, the following terms 
have the following meanings. 
1.  Employee.  "Employee" means any individual who is 18 years of age or older 
who is employed by an employer and who has wages that are allocable to the State during 
a calendar year. 
2.  Employer.  "Employer" means a person or entity engaged in a business, industry, 
profession, trade or other enterprise in the State, whether for profit or not for profit, that: 
A.  Has at no time during the previous calendar year employed fewer than 10 
employees in the State; 
B.  Has been in business at least 2 years; and 
C.  Has not offered a qualified retirement plan, including, but not limited to, a plan 
qualified under Section 401(a), Section 401(k), Section 403(a), Section 403(b), 
Section 408(k), Section 408(p) or Section 457(b) of the Internal Revenue Code of 
1986 in the preceding 2 years. 
3.  Enrollee.  "Enrollee" means any employee who is enrolled in the program. 
4.  Fund.  "Fund" means the Maine Small Business Marketplace Fund. 
5.  Internal Revenue Code.  "Internal Revenue Code" means the Internal Revenue 
Code of 1986, or any successor law, in effect for the calendar year. 
6.  Individual retirement account.  "Individual retirement account" means a Roth 
individual retirement account under Section 408A of the Internal Revenue Code. 
7.  Marketplace.  "Marketplace" means the Maine Small Business Retirement 
Marketplace. 
8.  Participating employer.  "Participating employer" means an employer or small 
employer that provides a payroll deposit retirement savings arrangement as provided for 
by this chapter for its employees who are enrollees in the program. 
9.  Payroll deposit retirement savings arrangement.  "Payroll deposit retirement 
savings arrangement" means an arrangement by which a participating employer allows 
enrollees to remit payroll deduction contributions to the program. 
10.  Small employer.  "Small employer" means a person or entity engaged in a 
business, industry, profession, trade or other enterprise in the State, whether for profit or 
not for profit, that: 
A.  Employed fewer than 10 employees at any one time in the State throughout the 
previous calendar year; or 
B.  Has been in business less than 2 years. 
11.  Wages.  "Wages" means any compensation within the meaning of Section 
219(f)(1) of the Internal Revenue Code that is received by an enrollee from a 
participating employer during the calendar year. 
§173.  Maine Small Business Retirement Marketplace established 
The Maine Small Business Retirement Marketplace is established as a retirement 
savings program in the form of an automatic enrollment payroll deduction individual 
retirement account for the purpose of promoting greater retirement savings for private-
sector employees in a convenient, low-cost and portable manner. 
1.  Payroll deposit retirement arrangement.  Each employer shall establish a 
payroll deposit retirement savings arrangement to allow each employee to participate in 
the marketplace. A small employer may, but is not required to, provide a payroll 
deduction retirement savings arrangement for each employee who elects to participate in 
the marketplace. 
2.  Automatic enrollment; opt out.  A participating employer shall automatically 
enroll in the marketplace each employee who has not opted out of participation in the 
program and shall provide a payroll deduction retirement savings arrangement for the 
employee and deposit, on behalf of the employee, these funds into the marketplace. 
3.  Enrollee contributions.  An enrollee may select a contribution level to contribute 
into the fund. This contribution level may be expressed as a percentage of wages or as a 
dollar amount up to the deductible amount for the enrollee's taxable year under Section 
219(b)(1)(A) of the Internal Revenue Code. An enrollee may change the contribution 
level at any time, subject to rules adopted by the treasurer. If an enrollee fails to select a 
contribution level, the enrollee shall contribute 3% of the enrollee's wages to the 
marketplace as long as those contributions do not cause the enrollee's total contributions 
to an individual retirement account for the year to exceed the deductible amount for the 
enrollee's taxable year under Section 219(b)(1)(A) of the Internal Revenue Code. 
4.  Selection of investment.  An enrollee may select an investment option from the 
permitted investment options available under section 175. An enrollee may change this 
investment option at any time, subject to rules adopted by the treasurer. In the event that 
an enrollee fails to select an investment option, that enrollee is placed in the investment 
option selected by the treasurer as the default. 
5.  Open enrollment.  Following initial implementation of the marketplace pursuant 
to this section, at least once every year a participating employer shall designate an open 
enrollment period during which employees who previously opted out of the marketplace 
may enroll in the marketplace.  An employee who opts out of the marketplace who 
subsequently wants to participate through the participating employer's payroll deposit 
retirement savings arrangement may enroll only during the participating employer's 
designated open enrollment period or, if permitted by the participating employer, at an 
earlier time. 
6.  Employer-sponsored plans.  An employer retains the option at any time to set up 
any type of employer-sponsored retirement plan or to offer an automatic enrollment 
payroll deduction individual retirement account, instead of having a payroll deposit 
retirement savings arrangement to allow employee participation in the marketplace. 
7.  Termination.  An employee may terminate the employee's participation in the 
marketplace at any time in a manner prescribed by the treasurer. 
§174.  Operation 
1.  Duties of the treasurer.  In addition to any other duties and responsibilities set 
forth in this chapter, the treasurer shall: 
A.  Cause the marketplace to be designed, established and operated in a manner that: 
(1)  Maintains best practices for retirement savings vehicles; 
(2)  Maximizes participation, savings and sound investment practices; 
(3)  Maximizes simplicity, including ease of administration for participating 
employers and enrollees; 
(4)  Provides an efficient product to enrollees by pooling investment funds; 
(5)  Ensures the portability of benefits; and 
(6)  Provides for the deaccumulation of enrollee assets in a manner that 
maximizes financial security in retirement; 
B.  Appoint a trustee to the fund in compliance with Section 408 of the Internal 
Revenue Code; 
C.  Explore and establish investment options in accordance with section 175 that 
offer employees returns on contributions and the conversion of individual retirement 
savings account balances to secure retirement income without incurring debt or 
liabilities to the State; 
D.  Establish the process by which interest, investment earnings and investment 
losses are allocated to individual program accounts on a pro rata basis and are 
computed at the interest rate on the balance of an individual's account; 
E.  Make and enter into contracts necessary for the administration of the marketplace 
and fund, including, but not limited to, retaining and contracting with investment 
managers, private financial institutions, other financial and service providers, 
consultants, actuaries, counsel, auditors, 3rd-party administrators and other 
professionals as necessary; 
F.  Conduct a review of the performance of any investment vendors every 4 years, 
including, but not limited to, a review of returns, fees and customer service. A copy 
of reviews conducted under this paragraph must be posted to the marketplace's 
publicly accessible website; 
G.  Determine the number and duties of staff members needed to administer the 
marketplace and assemble such a staff, including, as needed, employing staff and 
appointing a marketplace administrator; 
H.  Cause funds in the fund to be held and invested as pooled investments described 
in section 175 with a view to achieving cost savings through efficiencies and 
economies of scale; 
I.  Evaluate and establish the process by which an enrollee is able to contribute a 
portion of the enrollee's wages to the marketplace for automatic deposit of those 
contributions and the process by which the participating employer provides a payroll 
deposit retirement savings arrangement to forward those contributions and related 
information to the marketplace, including, but not limited to, contracting with 
financial service companies and 3rd-party administrators with the capability to 
receive and process employee information and contributions for payroll deposit 
retirement savings arrangements or similar arrangements; 
J.  Design and establish the process for enrollment under section 173, including the 
process by which an employee can opt not to participate in the marketplace, select a 
contribution level, select an investment option, and terminate participation in the 
marketplace; 
K.  Evaluate and establish the process by which an employee may voluntarily enroll 
in and make contributions to the marketplace; 
L.  Accept any grants, appropriations or other funds from the State, any unit of 
federal, state or local government, or any other person, firm, partnership or 
corporation solely for deposit into the fund, whether for investment or administrative 
purposes; 
M.  Evaluate the need for, and procure as needed, insurance against any loss in 
connection with the property, assets or activities of the marketplace; 
N.  Make provisions for the payment of administrative costs and expenses for the 
creation, management and operation of the marketplace. Subject to appropriations, 
the State may pay administrative costs associated with the creation and management 
of the marketplace until sufficient assets are available in the fund for that purpose. 
Thereafter, all administrative costs of the fund, including repayment of any start-up 
funds provided by the State, are paid only out of funds on deposit in the fund; 
O.  Allocate administrative fees to individual retirement accounts in the marketplace 
on a pro rata basis; 
P.  Set minimum and maximum contribution levels in accordance with limits 
established for individual retirement accounts by the Internal Revenue Code; 
Q.  Facilitate education and outreach to employers and employees; 
R.  Facilitate compliance by the marketplace with all applicable requirements for the 
program under the Internal Revenue Code, including tax qualification requirements 
or any other applicable law and accounting requirements; and 
S.  Exercise any and all other powers reasonably necessary for the effectuation of the 
purposes, objectives and provisions of this chapter pertaining to the marketplace. 
2.  Risk management.  The treasurer shall annually prepare and adopt a written 
statement of investment policy that includes a risk management and oversight program. 
This investment policy must prohibit the treasurer, marketplace and fund from borrowing 
for investment purposes. The risk management and oversight program must be designed 
to ensure that an effective risk management system is in place to monitor the risk levels 
of the program and fund portfolio, to ensure that the risks taken are prudent and properly 
managed, to provide an integrated process for overall risk management and to assess 
investment returns as well as risk to determine if the risks taken are adequately 
compensated compared to applicable performance benchmarks and standards. The 
treasurer shall consider the statement of investment policy and any changes in the 
investment policy at a public hearing. 
§175.  Investment; requirements 
1.  Investment firms.  The treasurer shall engage, after an open bid process, an 
investment manager or managers to invest the fund and any other assets of the 
marketplace. Funds in the fund may be invested or reinvested by the Treasurer of State or 
private investment managers as selected by the treasurer. In selecting the investment 
manager or managers the treasurer shall take into consideration and give weight to the 
investment manager's fees and charges in order to reduce the marketplace's administrative 
expenses. 
2.  Compliance.  The investment manager or managers shall comply with all 
applicable federal and state laws, rules and regulations, as well as rules, policies and 
guidelines adopted by the treasurer with respect to the marketplace and the investment of 
the fund, including, but not limited to, the investment policy adopted under section 174, 
subsection 2. 
3.  Reports.  The investment manager or managers shall provide such reports as the 
treasurer considers necessary for the treasurer to oversee each investment manager's 
performance and the performance of the fund. 
4.  Replacement of default option.  If the board elects to establish a secure return 
fund, the board shall then determine whether such option shall replace the target date or 
life-cycle fund as the default investment option for enrollees who do not elect an 
investment option. In making such determination, the board shall consider the cost, risk 
profile, benefit level, and ease of enrollment in the secure return fund. The board may at 
any time thereafter revisit this question and, based upon an analysis of these criteria, 
establish either the secure return fund or the life-cycle fund as the default for enrollees 
who do not elect an investment option. 
§176.  Benefits 
Interest, investment earnings and investment losses are allocated to individual 
accounts as established by the treasurer. An enrollee's retirement savings benefit under 
the marketplace is an amount equal to the balance in the enrollee's marketplace account 
on the date the retirement savings benefit becomes payable. The State has no liability for 
the payment of any benefit to any participant in the marketplace. 
§177.  Employer and employee information packets and disclosure forms 
1.  Employer information.  The marketplace shall design and disseminate to all 
employers an employer information packet and an employee information packet, which 
includes background information on the marketplace and appropriate disclosures for 
employees as required by this section. 
2.  Employee information.  The employee information packet must include a 
disclosure form. The disclosure form must explain, at a minimum, all of the following: 
A.  The benefits and risks associated with making contributions to the marketplace; 
B.  The mechanics of how to make contributions to the marketplace; 
C.  How to opt out of the marketplace; 
D.  How to participate in the marketplace with a level of employee contributions 
other than 3%; 
E.  The process for withdrawal of retirement savings; 
F.  How to obtain additional information about the marketplace; 
G.  That employees seeking financial advice should contact financial advisors, that 
participating employers are not in a position to provide financial advice, and that 
participating employers are not liable for decisions employees make pursuant to this 
chapter; 
H.  That the marketplace is not an employer-sponsored retirement plan; and 
I.  That the marketplace fund is not guaranteed by the State. 
3.  Employee decision required.  The employee information packet must also 
include a form for an employee to note a decision to opt out of participation in the 
marketplace or elect to participate with a level of employee contributions other than 3%. 
4.  Distribution of information.  Participating employers shall supply the employee 
information packet to employees upon launch of the marketplace. Participating employers 
shall supply the employee information packet to new employees at the time of hiring, and 
new employees may opt out of participation in the marketplace or elect to participate with 
a level of employee contributions other than 3% at that time. 
§178.  Payments 
Employee contributions deducted by the participating employer through payroll 
deduction must be paid by the participating employer to the fund using one or more 
payroll deposit retirement savings arrangements established by the treasurer, either: 
1.  Monthly contributions.  On or before the last day of the month following the 
month in which the compensation otherwise would have been payable to the employee in 
cash; or 
2.  Other contributions.  Before a later deadline prescribed by the treasurer for 
making such payments, but not later than the due date for the deposit of tax required to be 
deducted and withheld relating to collection of income tax at source on wages or for the 
deposit of tax required to be paid under the unemployment insurance system for the 
payroll period to which such payments relate. 
§179.  Maine Small Business Marketplace Fund 
1.  Trust fund.  The Maine Small Business Marketplace Fund is established as a trust 
outside of the State Treasury. The fund must include the individual retirement accounts of 
enrollees, which must be accounted for as individual accounts. Funds in the fund consist 
of funds received from enrollees and participating employers pursuant to automatic 
payroll deductions and contributions to savings made under this chapter.  The fund must 
be operated in a manner determined by the treasurer, as long as the fund is operated so 
that the accounts of enrollees established under the marketplace meet the requirements for 
individual retirement accounts under the Internal Revenue Code. 
2.  Funds not property of State.  The amounts deposited in the fund do not 
constitute property of the State, and the fund may not be construed to be a department, 
institution or agency of the State. Amounts on deposit in the fund may not be 
commingled with state funds and the State has no claim to or against, or interest in, such 
funds. 
§180.  Maine Small Business Marketplace Enterprise Fund 
The Maine Small Business Marketplace Enterprise Fund is established as an 
enterprise fund.  The treasurer shall use funds deposited in the enterprise fund to pay for 
administrative expenses incurred in the performance of its duties under this chapter. The 
enterprise fund may receive grants or other funds designated for administrative expenses 
from the State or a unit of federal or local government or any other person, firm, 
partnership or corporation. Interest earnings that are attributable to funds in the enterprise 
fund must be deposited into the enterprise fund. The enterprise fund may not lapse, but 
must be carried forward to carry out the purposes of this chapter. 
§181.  Duty and liability of the State 
1.  No liability. The State has no duty or liability to any party for the payment of 
retirement savings benefits accrued by an enrollee under the marketplace. Financial 
liability for the payment of retirement savings benefits in excess of funds available under 
the marketplace must be borne solely by the entities with whom the board contracts to 
provide insurance to protect the value of the marketplace. 
2.  Losses or deficiencies.  A state board, commission or agency or any officer, 
employee or member of a state board, commission or agency is not liable for any loss or 
deficiency resulting from particular investments selected under this chapter. 
§182.  Duty and liability of participating employers 
1.  Employee participation.  A participating employer does not have any liability for 
an employee's decision to participate in or opt out of the marketplace or for the 
investment decisions of the treasurer or of any enrollee. 
2.  Employer not a fiduciary.  A participating employer may not be a fiduciary, or 
considered to be a fiduciary, of the marketplace. A participating employer does not bear 
responsibility for the administration, investment or investment performance of the 
marketplace. A participating employer may not be liable with regard to investment 
returns, marketplace design and benefits paid to marketplace participants. 
§183.  Audit and reports 
1.  Audited financial statement.  The treasurer shall annually submit an audited 
financial statement, prepared in accordance with generally accepted accounting 
principles, on the operations of the marketplace during each calendar year by July 1st of 
the following year to the Governor, the State Controller and the Legislature. 
2.  Annual report.  The treasurer shall also submit a report that must include, but is 
not limited to, a summary of the benefits provided by the marketplace, including the 
number of enrollees in the marketplace, the percentage and amounts of investment 
options and rates of return, and other information that is relevant to make a full, fair and 
effective disclosure of the operations of the marketplace and the fund. The annual report 
must be made by an independent certified public accountant and must include, but is not 
limited to, direct and indirect costs attributable to the use of outside consultants, 
independent contractors and any other persons who are not state employees for the 
administration of the marketplace. 
3.  Reports to employers.  In addition to other statements or reports required by law, 
the treasurer shall provide periodic reports at least annually to participating employers, 
reporting the names of each enrollee employed by the participating employer and the 
amounts of contributions made by the participating employer on behalf of each enrollee 
during the reporting period, as well as to enrollees, reporting contributions and 
investment income allocated to, withdrawals from and balances in their program accounts 
for the reporting period. Such reports may include any other information regarding the 
marketplace as the board may determine necessary. 
§184.  Penalty 
An employer who fails without reasonable cause to enroll employees in the 
marketplace in accordance with the requirements of this chapter is subject to a penalty 
equal to $250 for each employee for each calendar year or portion of a calendar year 
during which the employee was not enrolled in the marketplace or had not opted out of 
participation in the marketplace. 
§185.  Rules 
The treasurer shall adopt rules to implement this chapter. Rules adopted pursuant to 
this section are routine technical rules as defined in chapter 375, subchapter 2-A. 
Sec. 2.  Ruling on applicability of federal Employee Retirement Income 
Security Act.  The treasurer shall request in writing an opinion or ruling from the 
appropriate entity with jurisdiction over the federal Employee Retirement Income 
Security Act of 1974, Public Law 93-405, regarding the applicability of the federal 
Employee Retirement Income Security Act to this Act. The treasurer may not implement 
this Act if the individual retirement account arrangements to be offered in accordance 
with this Act fail to qualify for the favorable federal income tax treatment ordinarily 
accorded to individual retirement accounts under the Internal Revenue Code or if it is 
determined that the Maine Small Business Marketplace constitutes an employee benefit 
plan and state or employer liability is established under the federal Employee Retirement 
Income Security Act. 
SUMMARY 
This bill establishes the Maine Small Business Marketplace. The bill requires 
employers of more than 10 employees that have not offered their employees a qualified 
retirement plan in the preceding 2 years to offer a payroll deposit retirement savings 
arrangement to their employees to allow contributions to an individual retirement 
account. The bill also allows small employers with fewer than 10 employees to 
voluntarily participate in the marketplace. The bill requires the Treasurer of State to 
administer and oversee the marketplace.