WSR 16-02-050 PROPOSED RULES DEPARTMENT OF COMMERCE [Filed December 31, 2015, 11:43 a.m.]
Original Notice.
Preproposal statement of inquiry was filed as WSR 15-19-148.
Title of Rule and Other Identifying Information: Small business retirement marketplace.
Description of Subject: The Washington small business retirement marketplace ("marketplace") is a retirement savings program created to connect eligible employers and their employees with approved plans to increase retirement savings. RCW 43.330.750 requires the director of the department of commerce to adopt rules necessary to allow the marketplace to operate. The purpose of this rule making is to define terms, establish eligibility guidelines, and make other provisions for the effective operation of the marketplace.
Hearing Location(s): Department of Commerce, 1011 Plum Street S.E., Room 110, Olympia, WA 98504, on Wednesday, March 16, 2016, at 10:00 a.m. PDT (Olympia, Washington time).
Date of Intended Adoption: March 25, 2016.
Submit Written Comments to: Carolyn C. McKinnon, 1011 Plum Street S.E., P.O. Box 42525, Olympia, WA 98504-2525, e-mail Carolyn.mckinnon@commerce.wa.gov, fax (360) 259-7999, by March 17, 2016, at 5:00 p.m. PDT.
Assistance for Persons with Disabilities: Contact Marti Maxwell by TTY (statewide, toll-free) 711 or voice (360) 725-2753.
Purpose of the Proposal and Its Anticipated Effects, Including Any Changes in Existing Rules: The purpose of this rule making is to define terms, establish eligibility guidelines, and make other provisions for the effective operation of the marketplace. RCW 43.330.750 requires the director of the department of commerce to adopt rules necessary to allow the marketplace to operate. This chapter is newly established in statute per ESSB 5826, chapter 296, Laws of 2015, and thus, this proposal does not make changes to existing rules. The anticipated effects of the rule will be the effective operation of the marketplace.
Reasons Supporting Proposal: The proposal is necessary to implement recently adopted statute.
Statutory Authority for Adoption: RCW 43.330.750.
Statute Being Implemented: RCW 43.330.730 - [43.330].750, ESSB 5826, chapter 296, Laws of 2015.
Rule is not necessitated by federal law, federal or state court decision.
Name of Proponent: Washington state department of commerce, governmental.
Name of Agency Personnel Responsible for Drafting: Jaime Rossman, 1101 Plum Street S.E., Olympia, WA, (360) 725-2717; Implementation and Enforcement: Carolyn McKinnon, 1101 Plum Street S.E., Olympia, WA, (360) 725-3121.
No small business economic impact statement has been prepared under chapter 19.85 RCW. Participation in the Washington small business retirement marketplace is entirely voluntary for small businesses (employers), employees, and private sector financial services firms (industry), and costs participants would incur to comply with these rules, if any, would be de minimis.
A cost-benefit analysis is not required under RCW 34.05.328. A cost-benefit analysis is not required, per RCW 34.05.328 (5)(a) and (b)(iii) and (v).
December 31, 2015
Jaime Rossman
Policy Advisor
Chapter 365-65 WAC
SMALL BUSINESS RETIREMENT MARKETPLACE NEW SECTION
WAC 365-65-010 Authority.
These rules are adopted under the authority of RCW 43.330.750.
NEW SECTION
WAC 365-65-020 Purpose.
The purpose of this chapter is to define terms, establish eligibility guidelines, and make other provisions for the effective operation of the Washington Small Business Retirement Marketplace.
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WAC 365-65-030 Definitions.
The following words and terms have the following meanings for the purposes of this chapter unless otherwise indicated:
(1) "Approved plan" means:
(a) the myRA retirement program, or
(b) a verified plan offered by a verified financial services firm that has been approved for listing in the marketplace by the department pursuant to this chapter.
(2) "Balanced fund" means a fund that has an investment mandate to balance its portfolio holdings. A balanced fund generally includes a mix of stocks and bonds in varying proportions according to the fund's investment outlook.
(3) "Department" means the Washington State Department of Commerce.
(4) "Director" means the director of the Washington State Department of Commerce, or his or her designee.
(5) "Eligible Employer" means a self-employed individual, sole proprietor, or an employer with fewer than one hundred qualified employees at the time that its first employee enrolls in an approved plan through the marketplace.
(6) "Enrollee" means any employee, self-employed individual, or sole proprietor, who is voluntarily enrolled in an approved plan offered on the marketplace.
(7) "Marketplace" means the Washington small business retirement marketplace.
(8) "Marketplace operator" or "operator" means a private sector entity with which the director has contracted to operate the marketplace pursuant to chapter 43.330 RCW.
(9) "myRA retirement program" or "myRA" means the myRA retirement program administered by the United States department of the treasury.
(10) "Participating employer" means:
(a) a self-employed individual or sole proprietor who voluntarily enrolls in an approved plan, or
(b) an eligible employer or sole proprietor, that offers one or more approved plans to its employees for voluntary enrollment.
(11) "Qualified employee" or "employee" means a worker who is eligible to participate in a retirement plan.
(12) "Retirement plan" or "plan" means a savings vehicle or life insurance plan that is designed for retirement purposes and that receives favorable federal tax treatment pursuant to the Internal Revenue Code.
(13) "Target date fund" means a hybrid investment fund that automatically adjusts the asset mix according to a selected time frame that is appropriate for a particular investor, based on the investor's age.
(14) "Verified plan" means retirement plan that has been verified as meeting the requirements of Chapter 43.330 RCW by the Department of Financial Institutions and/or the Office of the Insurance Commissioner for inclusion in the marketplace.
(15) "Verified financial services firm" means a person or entity that has been verified as currently meeting the requirements of chapter 43.330 RCW by the Department of Financial Institutions and/or the Office of the Insurance Commissioner to offer verified plans in the marketplace.
(16) "Voluntary," in regard to an employee's enrollment or participation in an approved plan, means enrollment or participation wherein the amount of any contribution of the employee's wages to the plan is:
(a) affirmatively chosen by the employee, or
(b) established by default by the employer in accordance with applicable federal laws and rules, provided that the employee receives any required notice of the default contribution amount and may affirmatively choose to contribute a different amount or to entirely opt out of contributing.
(17) "Washington small business retirement marketplace" means the retirement savings program created to connect eligible employers and their employees with approved plans to increase retirement savings.
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WAC 365-65-040 Eligibility.
(1) Verified financial services firms, eligible employers, and qualified employees are eligible to participate in the marketplace.
(2) Participation in the marketplace, and enrollment in an approved plan, is voluntary.
(3) Enrollment in an approved plan is not an entitlement.
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WAC 365-65-050 Approval of verified financial services firms.
(1) A financial services firm seeking approval to be a verified financial services firm and offer plans in the marketplace must submit a complete application in a form prescribed by the department.
(2) The marketplace shall include at least two verified financial services firms that offer one or more approved plans.
(3) A verified financial services firm must offer a minimum of two investment product options in the marketplace: a target date fund or other similar fund, and a balanced fund.
(4) A verified financial services firm must provide information about the historical performance of any investment products offered in the marketplace.
(5) A verified financial services firm must comply with all applicable federal laws and rules to offer retirement plans.
(6) The protocol used by the department and/or the marketplace operator for reviewing, verifying and approving the qualifications of financial services firms for participation in the marketplace shall be based on objective criteria, and shall not provide unfair advantage to any entity.
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WAC 365-65-060 Approval of verified plans.
(1) The department will approve a diverse array of verified plan options to be offered in the marketplace, including:
(a) Life insurance plans;
(b) A SIMPLE-IRA type of plan that provides for employer contributions to participant accounts;
(c) A payroll deduction individual retirement account type of plan or workplace based individual retirement account open to all workers to which the employer does not contribute; and
(d) myRA.
(2) A plan that is proposed to be offered in the marketplace must be submitted to the department for review and approval, including all documentation, in a form prescribed by the department.
(3) A plan that is proposed to be offered in the marketplace must comply with applicable laws and rules, included but not limited to federal tax laws and rules.
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WAC 365-65-070 Portability and rollovers.
Nothing in this chapter shall be construed to limit rollovers, or the portability of an employee's retirement savings into or out of approved plans. An approved plan must include the option for an enrollee to roll pretax contributions into a different individual retirement account or another eligible retirement plan in accordance with federal tax laws providing for tax free rollovers after ceasing participation in the approved plan.
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WAC 365-65-080 Limits on fees.
A verified financial services firm that offers approved plans in the marketplace may not charge participating employers an administrative fee, and may not charge enrollees more than one hundred basis points in total annual fees.
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WAC 365-65-090 Removal of plans.
An approved plan shall be removed from the marketplace if the plan, or the financial services firm offering the plan, no longer meets the requirements of this chapter, chapter 43.330 RCW, or any other applicable law or rule.
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WAC 365-65-095 Conflict with other laws or rules.
If any part of these rules are found to conflict with federal or state laws or rules, including those that are a prescribed condition to the allocation of federal funds to the state, the conflicting part of these rules is inoperative solely to the extent of the conflict, and this finding does not affect the operation of the remainder of these rules.
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