Sen. Iris Y. Martinez

Filed: 3/2/2012

 

 


 

 


 
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1
AMENDMENT TO SENATE BILL 1844

2    AMENDMENT NO. ______. Amend Senate Bill 1844 by replacing
3everything after the enacting clause with the following:
 
4    "Section 1. Short title. This Act may be cited as the
5Illinois Automatic IRA Program Act.
 
6    Section 5. Definitions. As used in this Act, unless the
7context requires a different meaning:
8    "Compensation" means remuneration paid to a participant
9for services rendered to his or her employer.
10    "Employee" means any individual who performs or performed
11any service on behalf of a business operating in the State of
12Illinois.
13    "Employer" means any business operating in the State of
14Illinois for whom an individual performs or performed any
15service as an employee.
16    "Enrollee" means any employee who is enrolled in the

 

 

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1Program.
2    "Fund" means the Illinois Automatic IRA Program Fund.
3    "IRA" means an individual retirement account under Section
4408 of the Internal Revenue Code.
5    "Participating employer" means any qualified small
6employer with employees that are enrolled in the Program.
7    "Program" means the Illinois Automatic IRA Program.
8    "Qualified small employer" means an employer located in the
9State of Illinois that (i) employed at least 10, but fewer than
10100, employees during the previous calendar year, (ii) has been
11in business for a period of at least 2 years after the
12enactment of this Act, (iii) did not offer a qualified
13retirement plan, including, but not limited to, a plan
14qualified under Section 401(a), Section 401(k), Section
15403(a), Section 403(b), Section 408(k), Section 408(p), or
16Section 457(b) of the Internal Revenue Code for the 2 years
17prior to the effective date of this Act.
 
18    Section 10. Establishment of Illinois Automatic IRA
19Program. There is hereby established a retirement savings
20program known as the Illinois Automatic IRA Program to be
21administered by the State Treasurer with the intent of
22promoting greater retirement savings for private sector
23employees in a convenient, low-cost, and portable manner.
 
24    Section 15. Illinois Automatic IRA Program Fund.

 

 

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1    (a) There is established the Illinois Automatic IRA Program
2Fund to finance the program created by this Act. The assets of
3the Fund shall be administered by the State Treasurer's office
4as trust funds and shall be used exclusively for the purposes
5of administering the Program, including the design and
6qualification of the Program, supporting the administrative
7cost of establishing the Program and providing information
8about the Program.
9    (b) The Fund shall include the individual accounts of
10enrollees, which shall be accounted for as individual accounts.
11    (c) Moneys in the Fund shall consist of moneys received
12from enrollees and participating employers pursuant to
13automatic payroll deductions and contributions to savings made
14under this Act, grants from the United States government and
15its agencies and instrumentalities, and any other available
16sources of funds, public or private. Interest and income earned
17from the investment of such funds shall remain in the Fund and
18be credited to it.
 
19    Section 20. Operation of Program.
20    (a) The Program shall be administered by the State
21Treasurer, or his or her designee, and prior to accepting any
22enrollees or funds the State Treasurer shall design a plan of
23operation for the Program, which plan of operation shall be
24approved by the Internal Revenue Service to offer the Program
25to enrollees on a tax-qualified basis. The Program shall

 

 

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1include an option for enrollees to roll pre-tax contributions
2into an individual retirement account or other eligible
3retirement plan after ceasing participation in the Program.
4    (b) In designing the plan of operation for the Program, the
5State Treasurer shall consult with employers, workers, private
6sector retirement plan administrators and providers, and any
7other persons that the State Treasurer determines relevant to
8the development of an effective and efficient method of
9operating the Program.
10    (c) The plan of operation for the Program shall include, at
11a minimum, the following elements:
12        (1) a payroll deduction IRA arrangement for employees
13    of qualified small employers wherein a qualified small
14    employer shall deduct a contribution amount from each
15    enrolled employee's salary and deposit it into the Fund;
16        (2) the ability for each enrolled employee to
17    periodically elect to contribute up to a set percentage of
18    his or her compensation or a dollar amount to the Fund;
19    provided, however, if an election is not made, the
20    qualified small employer shall deduct a default
21    contribution amount of 2% of an enrolled employee's salary
22    on behalf of the employee;
23        (3) the ability for each enrolled employee to direct
24    the investment of such enrollee's contribution and be
25    entitled to make investment choices within available
26    categories of investments provided through the Program;

 

 

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1    provided, however, that if an enrollee does not select an
2    investment option then the Program administrator shall
3    select a default investment option on behalf of the
4    employee;
5        (4) notwithstanding any other provision of this Act,
6    the ability of each enrolled employee to, at any time and
7    from time to time, opt-out of the Program, change the
8    percentage of his or her contribution amount or investment
9    choice, or any combination thereof;
10        (5) the ability for the State Treasurer to enter into
11    an administrative service arrangement that will allow
12    participating employers to achieve economies of scale for
13    pension or retirement savings arrangements relating to
14    accounting, investment, payroll processing employee
15    communication, or investor education;
16        (6) the ability for the State Treasurer to contract,
17    after an open bid process, with a third-party administrator
18    for the management of the Fund and any other assets of the
19    Program and whose fees shall be reasonable and shall be
20    paid from the Fund and the Program's assets;
21        (7) a requirement that each retirement plan or account
22    shall pay a proportionate share of the expenses incurred to
23    implement, maintain, and administer the Program; and
24        (8) a provision that the State Treasurer, his or her
25    designee, any other employees or agents of the Program, or
26    any investment manager shall not have any liability with

 

 

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1    respect to investment returns under any retirement plan.
 
2    Section 25. Duties and authority of State Treasurer. The
3State Treasurer shall have the authority and responsibility to
4carry out the following duties:
5        (1) administer the Fund and the Program, including the
6    authority to invest moneys in the Fund in any instruments,
7    obligations, securities, or property deemed appropriate by
8    the State Treasurer;
9        (2) apply for, accept, and expend gifts, grants, or
10    other donations from public or private sources to enable it
11    to carry out the objectives of the Program;
12        (3) enter into contractual agreements, including
13    contracts for legal, actuarial, financial and consulting
14    services;
15        (4) develop strategies to inform the public of the
16    availability and desirability of the Program, including
17    education about the need to accumulate financial resources
18    for retirement, available options for financing
19    retirement, and basic information about investing
20    strategies; and
21        (5) engage in such other activities are necessary to
22    implement and administer the Program.
 
23    Section 30. Duties of qualified small employers. Qualified
24small employers shall automatically enroll their employees in

 

 

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1the Program and provide payroll deductions for such employees.
 
2    Section 35. Regulations. The State Treasurer shall adopt
3such regulations and procedures as may be necessary to
4implement the Program. As part of the regulation development
5process, the State Treasurer shall consult with employers,
6workers, private sector retirement plan administrators and
7providers, and any other individuals or entities that it
8determines relevant to the development of an effective and
9efficient method for operating the Program. Regulations shall
10be adopted, including, at a minimum, requirements of
11enrollment, contribution and investment requirements, as
12necessary to implement and administer the Program.
 
13    Section 40. Liability. Neither the State of Illinois nor
14any State board, commission, or agency, or any officer,
15employee, or member of the same shall be liable for any loss or
16deficiency resulting from investment selected by an enrollee.
17An employer shall not be liable for any loss or deficiency
18resulting from making default payroll deductions or default
19investment decisions on behalf of an employee.
 
20    Section 45. Audits and reports. The accounts and records of
21the State Treasurer showing the receipt and disbursement of
22funds, from whatever source derived, in connection with the
23Program be available for audit on as frequent a basis as

 

 

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1prescribed by regulations enacted under this Act. The State
2Treasurer shall issue an annual report on the status of the
3Program prior to December 1 of each year.
 
4    Section 99. Effective date. This Act takes effect upon
5becoming law.".