This bill enacts the "Tennessee Retirement Savings Plan Act," which establishes a Tennessee retirement savings board ("board"), to be administratively attached to the department of treasury with department staff providing administrative support, to develop a defined contribution retirement plan for residents of this state who are employed for compensation in this state. BOARD This bill establishes a board consisting of the following seven members: (i) the state treasurer or the treasurer's designee, (ii) a representative of employers appointed by the governor, (iii) a representative with experience in the field of investments appointed by the governor, (iv) a representative of an association representing employees appointed by the governor, (v) a member of the public who is retired, (vi) a member of the senate, appointed by the speaker of the senate to be a nonvoting advisory member of the board, and (vii) a member of the house of representatives, appointed by the speaker of the house of representatives to be a nonvoting advisory member of the board. The state treasurer or the treasurer's designee serves as chair of the board. A majority of the voting members of the board constitutes a quorum for the transaction of business. Terms of Office This bill requires the governor and the speakers of the senate and the house of representatives to first make appointments to the board for terms of office beginning on January 1, 2027. Of the members first appointed to the board by the governor, (i) the representative of employers serves for a term ending December 31, 2028, (ii) the representative of an association representing employees serves for a term ending December 31, 2029, and (iii) the two other members serve for a term ending December 31, 2030. Following initial appointments, this bill provides that the term of office of each member of the board appointed by the governor is four years, but a member serves at the pleasure of the governor. A member is eligible for reappointment. If there is a vacancy for any cause, then the governor must make an appointment to become immediately effective for the unexpired term. Further, each legislative member serves at the pleasure of the appointing authority and may serve as long as the member remains in the chamber of the general assembly from which the member was appointed. Compensation This bill requires the members of the board who are not governmental employees or public officials to be paid a per diem of $75 for attending board meetings. Each member is entitled to reimbursement for travel and other necessary expenses incurred in the performance of official duties in accordance with the state comprehensive travel regulations as promulgated by the commissioner of finance and administration and approved by the attorney general. DEFINED CONTRIBUTION RETIREMENT PLAN This bill requires the board to develop a defined contribution retirement plan ("plan") for residents of this state who are employed for compensation in this state. The board must conduct a market and legal analysis of the plan. This bill provides that the board has all of the following powers:  To establish, implement, and maintain the plan. To promulgate rules as are necessary. To direct the investment of the funds contributed to accounts in the plan consistent with the investment restrictions established by the board. To collect application, account, or administrative fees to defray the plan's costs. To make or enter into contracts or agreements. To evaluate the need for, and procure as needed, pooled private insurance. To develop and implement an outreach plan to gain input and disseminate information regarding the plan and retirement savings in general. To delegate to the state treasurer the day-to-day administration, operations, and responsibilities of the plan. Plan Requirements This bill requires the plan to do all of the following:  Allow eligible individuals employed for compensation in this state to contribute to an account established under the plan through payroll deduction. Require an employer with more than five employees to offer its employees the opportunity to contribute to the plan through payroll deductions unless the employer offers a qualified retirement plan. Provide for automatic enrollment of employees and allow employees to opt out. Have a default contribution rate of 5% of wages or salary. Offer default escalation of contribution levels that can be increased or decreased within the limits allowed by the Internal Revenue Code. Provide for contributions to the plan to be deposited directly with the investment administrator for the plan. Whenever possible, use existing employer and public infrastructure to facilitate contributions to the plan, recordkeeping, and outreach. Require no employer contributions to employee accounts. Require the maintenance of separate records and accounting for each account. Provide for reports on the status of plan accounts to be provided to plan participants at least annually. Allow for account owners to maintain an account regardless of place of employment and to roll over funds into other retirement accounts. Pool accounts established under the plan for investment. Be professionally managed. Provide that the state of Tennessee and employers that participate in the plan have no proprietary interest in the contributions to or earnings on amounts contributed to accounts established under the plan. Provide that the investment administrator for the plan is the trustee of all contributions and earnings on amounts contributed to accounts established under the plan. Not impose any duties under the Employee Retirement Income Security Act of 1974 on employers. Keep administration fees in the plan low. Allow the use of private sector partnerships to administer and invest the contributions to the plan under the supervision and guidance of the board. Allow employers to establish an alternative retirement plan for some or all employees. This bill prohibits the plan, the board, each board member, and the state of Tennessee from guaranteeing any rate of return or any interest rate on any contribution. The plan, the board, each board member, and the state of Tennessee are not liable for any loss incurred by any person as a result of participating in the plan. Board Rules for the Plan This bill requires the board to adopt rules that:  Establish the process for voluntary enrollment in the plan. Establish the process for participants to make the default contributions to plan accounts and to adjust the contribution levels. Establish the process for employers to withhold employee contributions to plan accounts from employees' wages and send the contributions to the investment administrator for the plan. Establish the process for allowing employees to opt out of enrollment in the plan. Set minimum, maximum, and default contribution levels in accordance with limits established by the Internal Revenue Code. Establish the process for withdrawals from plan accounts. Establish the process and requirements for an employer to obtain an exemption from offering the plan if the employer offers a qualified retirement plan. Mandate the contents and frequency of required disclosures to employees, employers, and other plan participants. Establish civil penalties for the employer's noncompliance with this bill. Privacy This bill prohibits the state from disclosing personal information about a participant or beneficiary of a participant obtained in connection with an account, except under any of the following circumstances:  To an individual or entity authorized by the respective participant or beneficiary; In compliance with a subpoena or a court order. To the comptroller of the treasury or the comptroller's designee for an audit. To the internal revenue service or the United States department of the treasury. To the participant's employer as may be necessary to administer the plan. In an administrative proceeding or court action involving the state, the department of treasury, the state treasurer, or the board relative to an account. As used in this bill, "personal information" includes, but is not limited to, social security numbers, bank account numbers, transit routing numbers, credit card numbers, debit card numbers, business or residential addresses, telephone numbers, email addresses, amounts contributed, and earnings on amounts contributed. Claims This bill provides that all assets, income, and distributions of the plan are protected against the claims of creditors of the state, plan administrator, and plan participants, and are not subject to execution, attachment, garnishment, the operation of bankruptcy, the insolvency laws, or other processes. Further, an assignment of such is not enforceable in a court. This bill authorizes the board to adopt rules to permit the plan to honor claims under a qualified domestic relations order. However, such an order may only relate to the provision of marital property rights relating to the plan for the benefit of a plan participant's former spouse. Actions Required Prior to Establishing Plans Before establishing a plan, this bill requires the board to do all of the following:  Conduct a market analysis to determine the feasibility of the plan and whether and to what extent plans with the characteristics currently exist in the private market. Obtain legal advice regarding the applicability of federal law to the plan. Investigate whether employers that are not required to participate in the plan can make the plan available to their employees. Investigate whether individuals who are self-employed as independent contractors can participate in the plan. Investigate how to allow individuals who are not automatically enrolled in the plan to opt in to the plan and make contributions to an account, either through payroll contributions or another method of contribution. This bill requires the board to coordinate with the efforts of other states as those states pursue legal guidance for similar retirement savings programs. Effective Dates for Plans Generally, this bill requires the board to establish the retirement plan developed under this bill so that individuals may begin making contributions to the plan no later than January 1, 2029. However, if the board determines that the plan would qualify as an employee benefit plan under the Employee Retirement Income Security Act of 1974, then the board must not establish the plan. Beginning January 1, 2029, a resident of this state employed for compensation in this state with a private employer employing more than 100 employees is eligible to participate in a defined contribution retirement plan established by the board. Beginning January 1, 2030, a resident of this state employed for compensation in this state with a private employer employing between 25 and 100 employees is eligible to participate in a defined contribution retirement plan established by the board. Beginning January 1, 2031, a resident of this state employed for compensation in this state with a private employer that has between five and 24 employees is eligible to participate in a defined contribution retirement plan established by the board. Prior to an employer's participation in the plan, this bill requires the employer to register with the board to determine whether the employer is required to participate. ADMINISTRATIVE FUND This bill establishes the Tennessee retirement savings plan administrative fund in the state treasury, separate and distinct from the general fund. The fund consists of moneys appropriated to the fund by the general assembly; moneys transferred to the fund from the federal government, other state agencies, or local governments; moneys from the payment of fees and the payment of other moneys due the board; any gifts or donations made to the state of Tennessee for deposit in the fund; and earnings on moneys in the fund. The board may use the moneys in the fund to pay the administrative costs and expenses of the board and the plan and for any other purpose described in this bill. REPORTS Annual Report This bill requires the board to report no later than February 1 each year to the governor and to the finance, ways and means committees of the senate and the committee of the house of representatives having jurisdiction over retirement issues detailing the board's activities. One-time Report This bill requires the board to report to the finance, ways and means committee of the senate and the committee of the house of representatives having jurisdiction over retirement issues no later than July 1, 2027. The report must include all of the following:  The results of the market analysis sought by the board under this bill. The findings from legal advice obtained by the board under this bill. An analysis of potential costs to employers. A draft of the request for proposals to solicit bids from plan administrators. A timeline for implementation of the plan developed under this bill. An overview of any contracts entered into by the board. Recommendations to the general assembly regarding ways to increase financial literacy in this state. RESTRICTION ON LOCAL GOVERNMENTS Except for retirement plans offered by a local government to its independent contractors on the effective date of this bill, this bill prohibits a local government from establishing or offering a retirement plan for persons not employed by a governmental entity. As used in this bill, a "local government" means a Tennessee local governmental entity, including, but not limited to, a municipality, metropolitan government, county, utility district, school district, public building authority, and development district created and existing pursuant to the laws of this state, or an instrumentality of government created by one or more of the local governmental entities described above or by an act of the general assembly. INTERAGENCY AGREEMENTS This bill requires each state agency that enters into an interagency agreement with the board to provide outreach, technical assistance, or compliance services to collaborate with other state agencies to develop a plan to provide these services to the board. Such plan must be provided to the board no later than July 1, 2027.

Statutes affected:
Introduced: 4-29-249(a), 4-29-249