H.B. 496
GENERAL ASSEMBLY OF NORTH CAROLINA
Mar 28, 2023
SESSION 2023 HOUSE PRINCIPAL CLERK
H D
HOUSE BILL DRH30197-MCa-99
Short Title: North Carolina Work and Save. (Public)
Sponsors: Representative Lowery.
Referred to:
1 A BILL TO BE ENTITLED
2 AN ACT TO CREATE THE SMALL BUSINESS RETIREMENT SAVINGS PROGRAM AND
3 TO APPROPRIATE FUNDS.
4 Whereas, the General Assembly finds that too many North Carolina citizens have no
5 or inadequate savings for retirement, and an estimated 1.7 million North Carolina working
6 families, including employees, independent contractors, and the self-employed, have no access
7 to an employer-sponsored retirement plan or program or any other easy way to save at work; and
8 Whereas, it is the policy of the State to assist the North Carolina private-sector
9 workforce, including in particular moderate- and lower-income working households, to
10 voluntarily save for retirement, including by facilitating saving in individual retirement accounts
11 (IRAs) as well as by encouraging employers to adopt retirement savings and other retirement
12 plans for employees in the State; and
13 Whereas, more adequate, portable, low-cost, and consumer-protective retirement
14 saving by North Carolina households will enhance their retirement security and ultimately reduce
15 the pressure on State public assistance programs for retirees and other elderly citizens and the
16 potential burden on North Carolina taxpayers to finance such programs; and
17 Whereas, the General Assembly intends to establish a North Carolina Work and Save
18 Program that will use the services of competent and qualified private-sector entities selected by
19 the North Carolina Small Business Retirement Savings Program Board to administer the Program
20 and manage the funds on behalf of the Program participants; and
21 Whereas, the North Carolina 529 College Savings Program has demonstrated the
22 feasibility of a public-private partnership that outsources investment and administration to assist
23 private citizens of the State to save on a voluntary and cost-efficient basis; Now, therefore,
24 The General Assembly of North Carolina enacts:
25 SECTION 1. Article 10 of Chapter 143B of the General Statutes is amended by
26 adding a new Part to read:
27 "Part 2L. North Carolina Small Business Retirement Savings Program.
28 "§ 143B-437.105. Title.
29 This Part shall be known as the " North Carolina Small Business Retirement Savings
30 Program" or "North Carolina Work and Save."
31 "§ 143B-437.106. Definitions.
32 The following definitions apply in this Part:
33 (1) Administrative Fund. – The North Carolina Small Business Retirement
34 Savings Administrative Fund established in G.S. 143B-437.115.
35 (2) Board. – The North Carolina Small Business Retirement Savings Program
36 Board.
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1 (3) Covered employee. – An individual who is employed by a covered employer,
2 who has wages or other compensation that is allocable to the State, and who
3 is at least 18 years of age. A covered employee does not include any of the
4 following:
5 a. Any employee covered under the federal Railway Labor Act (45
6 U.S.C. § 151).
7 b. Any employee on whose behalf an employer makes contributions to a
8 Taft-Hartley multiemployer pension trust fund.
9 c. Any individual who is an employee of the federal government, the
10 State or any other state, any county or municipal corporation, or any
11 of the State's, any other state's, or the federal government's units or
12 instrumentalities.
13 (4) Covered employer. – A person or entity engaged in a business, industry,
14 profession, trade, or other enterprise in the State, whether for profit or not for
15 profit, excluding the federal government, the State, any county, any
16 municipality, or any political subdivision of the State, and provided that
17 covered employer does not include an employer that maintains a specified
18 tax-favored retirement plan for its employees or has done so effective in form
19 and operation at any time within the current or two preceding calendar years.
20 If an employer does not maintain a specified tax-favored retirement plan for a
21 portion of a calendar year ending on or after the effective date of this Article
22 and adopts such a plan effective for the remainder of that calendar year, the
23 employer is exempt from covered employer status for that remainder of the
24 year.
25 (4a) Department. – The North Carolina Department of Commerce.
26 (5) ERISA. – The Employee Retirement Income Security Act of 1974, as
27 amended (29 U.S.C. § 1001 et seq.).
28 (6) Internal Revenue Code. – The Internal Revenue Code of 1986, as amended
29 (Title 26 of the United States Code).
30 (7) IRA. – A traditional or Roth individual retirement account or individual
31 retirement annuity.
32 (8) Participant. – An individual who is contributing to an IRA under the Program
33 or has an IRA account balance under the Program.
34 (9) Participating employer. – A covered employer that provides for covered
35 employees a payroll deduction IRA provided for by this Article.
36 (10) Payroll deduction IRA arrangement or payroll deduction IRA. – An
37 arrangement by which an employer allows employees to contribute to an IRA
38 by means of payroll deduction.
39 (11) Program or North Carolina Work and Save Program. – The Small Business
40 Retirement Savings Program established by this Article.
41 (12) Roth IRA. – A Roth individual retirement account or individual retirement
42 annuity under section 408A of the Internal Revenue Code.
43 (13) Specified tax-favored retirement plan. – A retirement plan that is tax-qualified
44 under or is described in and satisfies the requirements of subsection 401(a),
45 401(k), 403(a), 403(b), 408(k) (Simplified Employee Pension), or 408(p)
46 (SIMPLE-IRA) of the Internal Revenue Code.
47 (14) Total fees and expenses. – All fees, costs, and expenses, including, but not
48 limited to, administrative expenses, investment expenses, investment advice
49 expenses, accounting costs, actuarial costs, legal costs, marketing expenses,
50 education expenses, trading costs, insurance annuitization costs, and other
51 miscellaneous costs.
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1 (15) Traditional IRA. – A traditional individual retirement account or traditional
2 individual retirement annuity under subsection 408(a) or (b) of the Internal
3 Revenue Code.
4 (16) Trust. – The trust in which the assets of the Program are held. Where
5 applicable, except as may be otherwise specified, references throughout this
6 Article to the Program generally are intended to refer also to the Trust,
7 including the assets, facilities, costs and expenses, receipts, expenditures,
8 activities, operations, administration, or management.
9 "§ 143B-437.107. Establishment of Board.
10 (a) The North Carolina Small Business Retirement Savings Board is established for
11 administrative purposes in the Department of Commerce, but the Board shall exercise its powers
12 and duties independently of the Department. The Department shall provide administrative
13 support for the Board in carrying out its duties pursuant to this Article.
14 (b) The Board shall consist of 12 members.
15 (1) Ten voting members shall be appointed as follows:
16 a. The State Treasurer shall appoint a member who has a favorable
17 reputation for skill, knowledge, and experience in retirement
18 investment products or retirement plan designs.
19 b. Five members appointed by the Governor as follows:
20 1. One member who has a favorable reputation for skill,
21 knowledge, and experience in retirement investment products
22 or retirement plan designs.
23 2. One member who has a favorable reputation for skill,
24 knowledge, and experience relating to small business or
25 covered employers.
26 3. One member from the Office of State Budget and Management
27 or other designee knowledgeable about fiscal impacts.
28 4. One member who is an employee of the Department of
29 Commerce.
30 5. One member of the public.
31 c. Two members appointed by the General Assembly upon the
32 recommendation of the Speaker of the House of Representatives as
33 follows:
34 1. One member who is a retired individual or an individual who
35 represents persons retired to be a representative of the interests
36 of retirees.
37 2. One member who has a favorable reputation for skill,
38 knowledge, and experience in the interests of employers in
39 retirement saving.
40 d. Two members appointed by the General Assembly upon the
41 recommendation of the President Pro Tempore of the Senate as
42 follows:
43 1. One member who is a representative of an association
44 representing employees or who has a favorable reputation for
45 skill, knowledge, and experience in the interests of employees
46 in retirement saving.
47 2. One member who has a favorable reputation for skill,
48 knowledge, and experience in retirement investment products
49 or retirement plan designs.
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1 (2) In addition to the 10 voting members, the President Pro Tempore of the Senate
2 and the Speaker of the House of Representatives shall each appoint one
3 nonvoting advisory member.
4 (c) All initial appointments shall be made no later than October 1, 2023. Of the initial
5 five appointments made by the Governor, two shall be appointed for four-year terms, two shall
6 be appointed for two-year terms, and one shall be appointed for a one-year term, with all terms
7 to begin on October 1, 2023. Of the initial two appointments made by the General Assembly
8 upon the recommendation of the President Pro Tempore of the Senate, one shall be appointed for
9 a four-year term and one shall be appointed for a two-year term, with both terms to begin on
10 October 1, 2023. Of the initial two appointments made by the General Assembly upon the
11 recommendation of the Speaker of the House of Representatives, one shall be appointed for a
12 four-year term and one shall be appointed for a two-year term, with both terms to begin on
13 October 1, 2023. The initial appointment by the State Treasurer shall be for a term of three years
14 to begin on October 1, 2023. All successors shall be appointed for four-year terms. All members
15 of the Board shall serve at the pleasure of the appointing authority.
16 (d) Members of the Board shall serve without compensation and shall receive per diem,
17 subsistence, and travel allowances as provided in G.S. 138-5 and G.S. 138-6 as applicable.
18 (e) The Governor shall convene the first meeting of the Board no later than October 15,
19 2023. A majority of the voting members of the Board constitutes a quorum. The first order of
20 business before the Board shall be to elect a chair from among the Board's membership. A
21 vacancy in the membership of the Board shall not impair the right of a quorum to exercise the
22 powers and duties of the Board.
23 "§ 143B-437.108. Powers and duties of the Board.
24 (a) The Board shall have the following powers and duties, subject to its authority and
25 fiduciary duty:
26 (1) Design, develop, implement, maintain, govern, and promulgate rules with
27 respect to a payroll deduction retirement savings program for covered
28 employers and, to that end, may conduct market, legal, and feasibility
29 analyses.
30 (2) Elect a chair and other officers it deems necessary.
31 (3) Meet as necessary to perform its duties.
32 (4) Appoint an executive director, who shall be the chief administrative officer of
33 the Board.
34 (5) Retain trustees, record keepers, investment managers, investment advisors,
35 and other administrative, professional, expert advisors and service providers,
36 none of whom shall be members of the Board and all of whom shall serve at
37 the pleasure of the Board, and determine their duties and compensation. The
38 Board may authorize the executive director and other officials to oversee
39 requests for proposals or other public competitions and enter into contracts on
40 behalf of the Board and conduct any business necessary for the efficient
41 operation of the Board.
42 (6) Cause the Program, Trust, and arrangements and accounts established under
43 the Program to be designed, established, and operated:
44 a. In accordance with best practices for retirement saving vehicles.
45 b. To encourage participation, saving, sound investment practices, and
46 appropriate selection of investment options, including any default
47 investments.
48 c. To maximize simplicity and ease of administration for covered
49 employers.
50 d. To arrange for collective, common, and pooled investment of assets of
51 the Program and Trust, including investments in conjunction with
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1 other funds with which these assets are permitted by law to be
2 collectively invested, with a view to achieving economies of scale and
3 other efficiencies designed to minimize costs for the Program and its
4 participants, to promote portability of benefits.
5 e. To avoid preemption of the Program by federal law (Employee
6 Retirement Income Security Act of 1974, 29 U.S.C. § 1001 et seq.).
7 (7) Develop and implement an investment policy that defines the Program's
8 investment objectives, consistent with the objectives of the Program, and that
9 provides for policies and procedures consistent with those investment
10 objectives. The Board shall designate appropriate default investments that
11 include a mix of asset classes, such as target date and balanced funds. The
12 Board shall seek to minimize participant fees and expenses of investment and
13 administration. The Board shall strive to design and implement investment
14 options available to holders of accounts established as part of the Program and
15 other Program features that are intended to achieve maximum possible income
16 replacement balanced with an appropriate level of risk in an IRA-based
17 environment consist