Z-0630.1
HOUSE BILL 2244
State of Washington 68th Legislature 2024 Regular Session
By Representatives Reeves, Walen, Senn, Ramel, Chapman, Chopp,
Ormsby, Reed, Fosse, Leavitt, Davis, and Riccelli; by request of
State Treasurer
Read first time 01/09/24. Referred to Committee on Consumer
Protection & Business.
1 AN ACT Relating to improving retirement security for
2 Washingtonians by establishing Washington saves, an automatic
3 enrollment individual retirement savings account program, and
4 updating the Washington retirement marketplace statute; amending RCW
5 43.330.732 and 43.330.735; reenacting and amending RCW 43.79A.040 and
6 43.79A.040; adding a new chapter to Title 19 RCW; creating a new
7 section; decodifying RCW 43.330.730; prescribing penalties; providing
8 effective dates; and providing an expiration date.
9 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
10 PART I
11 WASHINGTON SAVES
12 NEW SECTION. Sec. 1. ESTABLISHMENT. (1) Washington saves is
13 established to serve as a vehicle through which covered employees
14 may, on a voluntary basis, provide for additional retirement security
15 through a state-facilitated retirement savings program in a
16 convenient, cost-effective, and portable manner.
17 (2) Washington saves is intended as a public-private partnership
18 that will encourage, not replace or compete with, employer-sponsored
19 retirement plans.
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 1 NEW SECTION. Sec. 2. DEFINITIONS. (1) "Administrative account"
2 means the Washington saves administrative treasury trust account
3 created in section 12 of this act.
4 (2) "Complainant" means anyone who files a complaint alleging an
5 employer administrative violation of section 3 of this act who
6 learned of the alleged violation by way of their employment with a
7 covered employer.
8 (3) "Consumer price index" means the consumer price index for all
9 urban consumers, all items, for the Seattle area as calculated by the
10 United States bureau of labor statistics or its successor agency.
11 (4) "Covered employee" means an individual who is 18 years of age
12 or older, who is employed by a covered employer.
13 (5) "Covered employer" means any employer that:
14 (a) Has been in business in this state for at least two years as
15 of the immediately preceding calendar year;
16 (b) Maintains a physical presence;
17 (c) Does not offer a qualified retirement plan to their covered
18 employees; and
19 (d) Employs, and at any point during the immediately preceding
20 calendar year employed, five or more individuals.
21 (6) "Department" means the department of labor and industries.
22 (7) "Employer" means a person or entity engaged in a business,
23 profession, trade, or other enterprise in the state, whether for
24 profit or not for profit. "Employer" does not include federal or
25 state entities, agencies, or instrumentalities, or any political
26 subdivision thereof.
27 (8) "Employer administrative duties" include all requirements of
28 covered employers under section 3 of this act that do not involve
29 amounts due to the employee.
30 (9) "Employment" has the same meaning as in RCW 50.04.100.
31 (10) "Governing board" means the board created in section 4 of
32 this act.
33 (11) "Individual account" means an IRA established by or for an
34 individual participant and owned by the individual participant
35 pursuant to this chapter.
36 (12) "Individual participant" means any individual who is
37 contributing to, or has a balance credited in, an IRA through the
38 program.
39 (13) "Internal revenue code" means the federal internal revenue
40 code of 1986, as amended, or any successor law.
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 1 (14) "IRA" means a traditional or Roth individual retirement
2 account or individual retirement annuity described in section 408(a),
3 408(b), or 408A of the internal revenue code.
4 (15) "Office" means the office of the state treasurer.
5 (16) "Payroll deduction IRA agreement" means an arrangement by
6 which a participating employer makes payroll deductions authorized by
7 this chapter and remits amounts deducted as contributions to IRAs on
8 behalf of individual participants.
9 (17) "Program" means the Washington saves program established
10 under this chapter.
11 (18) "Qualified retirement plan" means a retirement plan in
12 compliance with applicable federal law for employees including those
13 described in section 401(a), 401(k), 403(a), 403(b), 408(k), or
14 408(p) of the internal revenue code.
15 (19) "Wages" means any commission, compensation, salary, or other
16 remuneration, as defined by section 219(f)(1) of the internal revenue
17 code, received by a covered employee from a covered employer.
18 NEW SECTION. Sec. 3. GENERAL PROVISIONS. (1) The program:
19 (a) Allows covered employees to contribute to an IRA through
20 automatic payroll deductions;
21 (b) Requires covered employers to fulfill the requirements
22 provided in subsection (3) of this section;
23 (c) Facilitates automatic enrollment for covered employees and
24 allows for covered employees to opt out of the plan;
25 (d) Has a default contribution rate, set by the governing board
26 by rule. The default contribution rate may not be less than three
27 percent or more than seven percent of wages; and
28 (e) Has a default escalation rate, set by the governing board by
29 rule. The default escalation rate may not exceed one percent per
30 year. The maximum contribution rate based on the default escalation
31 rate may not exceed 10 percent of wages.
32 (2)(a) Covered employees, who do not opt out of the program, are
33 automatically enrolled in the program at the default rate or at an
34 amount expressly specified by the employee in connection with the
35 payroll deduction IRA agreement. Individual participants may modify
36 their contribution rates or amounts or terminate their participation
37 in the program at any time, subject to procedure defined by rule by
38 the governing board. All contribution amounts are subject to the
39 dollar limits on contributions provided by federal law.
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 1 (b) Contributions must be invested in the default investment
2 option unless the individual participant affirmatively elects to
3 invest some or all balances in one or more approved investment
4 options offered by the program. An individual participant must have
5 the opportunity to change investments for either future contributions
6 or existing balances, or both, subject to requirements defined by
7 rule by the governing board.
8 (c) Individual accounts are portable. A former individual
9 participant who is either unemployed, or is employed by a noncovered
10 employer, must be permitted to contribute to their individual
11 account.
12 (d) An individual participant's and former individual
13 participant's ability to withdraw, roll over, or transfer account
14 balances is subject to, and liable for, all fees, penalties, and
15 taxes under applicable law.
16 (e) An individual participant's or former individual
17 participant's ability to receive distributions of contributions and
18 earnings is subject to applicable law.
19 (3)(a) Each covered employer must facilitate the opportunity for
20 covered employees to participate in the program by fulfilling the
21 following administrative duties, as defined by rule by the governing
22 board:
23 (i) Register with the program and provide the program
24 administrator relevant information about covered employees;
25 (ii) Assist the program by offering all covered employees the
26 choice to either participate by voluntarily contributing to an IRA or
27 opt out;
28 (iii) Timely remit participant contributions; and
29 (iv) Provide the following information to covered employees:
30 (A) Information regarding the program;
31 (B) The following disclosures:
32 (I) A description of the benefits and risks associated with
33 making contributions under the program;
34 (II) Instructions about how to obtain additional information
35 about the program;
36 (III) A description of the tax consequences of an IRA, which may
37 consist of or include the disclosure statement required to be
38 distributed by the trustee under the internal revenue code and
39 treasury regulations thereunder;
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 1 (IV) A statement that covered employees seeking financial advice
2 should contact their own financial advisers, that covered employers
3 are not in a position to provide financial advice, and that covered
4 employers are not liable for decisions covered employees make under
5 this chapter;
6 (V) A statement that the program is not an employer-sponsored
7 retirement plan;
8 (VI) A statement that the covered employee's IRA established
9 under the program is not guaranteed by the state; and
10 (VII) A statement that neither a covered employer nor the state
11 will monitor or has an obligation to monitor the covered employee's
12 eligibility under the internal revenue code to make contributions to
13 an IRA or to monitor whether the covered employee's contributions to
14 the IRA established for the covered employee exceed the maximum
15 permissible IRA contribution; that it is the covered employee's
16 responsibility to monitor such matters; and that the state, the
17 program, and the covered employer have no liability with respect to
18 any failure of the covered employee to be eligible to make IRA
19 contributions or any contribution in excess of the maximum IRA
20 contribution;
21 (C) Information, forms, and instructions to be furnished to
22 covered employees at such times as the governing board determines
23 that provide the covered employee with the procedures for:
24 (I) Making contributions to the covered employee's IRA
25 established under the program, including a description of the
26 automatic enrollment rate, the automatic escalation rate and
27 frequency, and the right to elect to make no contribution or to
28 change the contribution rate under the program;
29 (II) Making an investment election with respect to the covered
30 employee's IRA established under the program, including a description
31 of the default investment fund; and
32 (III) Making transfers, rollovers, withdrawals, and other
33 distributions from the covered employee's IRA.
34 (b) The employers' role in the program is solely ministerial. In
35 accordance with federal law, employers are prohibited from
36 contributing funds to the IRAs through the program.
37 (c) Employers are not fiduciaries with respect to, or are liable
38 for, the program, related information, educational materials, or
39 forms or disclosures approved by the governing board, or the
40 selection or performance of vendors selected by the governing board.
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 1 An employer is not responsible for or obligated to monitor a covered
2 employee's or individual participant's decision to participate in or
3 opt out of the program, for contribution decisions, investment
4 decisions, or failure to comply with the statutory eligibility
5 conditions or limits on IRA contributions. An employer does not
6 guarantee any investment, rate of return, or interest on assets in
7 any individual participant account or the administrative account or
8 is liable for any market losses, failure to realize gains, or any
9 other adverse consequences, including the loss of favorable tax
10 treatment or public assistance benefits, incurred by any person as a
11 result of participating in the program. Nothing in this section
12 relieves an employer from liability for criminal, fraudulent,
13 tortious, or otherwise actionable conduct including liability related
14 to the failure to remit employee contributions.
15 (4)(a) The governing board must determine the type or types of
16 IRA accounts available under the program.
17 (b) An individual participant's contributions and earnings may be
18 combined for investment and custodial purposes only. Separate records
19 and accounting are required for individual accounts. Reports on the
20 status of individual accounts must be provided to each individual
21 participant at least annually. Individual participants must have
22 online access to their accounts.
23 (c) Any moneys placed in these accounts may not be counted as
24 assets for the purposes of state or local means-tested program
25 eligibility or levels of state means-tested program eligibility.
26 NEW SECTION. Sec. 4. GOVERNING BOARD—RESPONSIBILITIES. (1) The
27 governing board shall design and administer the program for the
28 exclusive benefit of individual participants and beneficiaries with
29 the care and skill of a knowledgeable, prudent individual.
30 (2) The governing board is comprised of seven members as follows:
31 (a) The state treasurer;
32 (b) The director of the department or the director's designee;
33 and
34 (c) The following members, appointed by the governor:
35 (i) Three members with demonstrated financial, legal, or other
36 relevant program experience;
37 (ii) One member representing the financial industry; and
38 (iii) One member representing a retirement advocacy organization.
39 (3) The state treasurer shall chair the governing board.
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 1 (4) Members who are appointed by the governor serve three-year
2 terms and may be appointed for a second three-year term at the
3 discretion of the governor. Members who are appointed by the governor
4 may serve up to two terms over the course of their lifetime. The
5 governor may stagger the terms of the appointed members.
6 (5) The governing board may appoint work groups to support the
7 design and administration of the program. Work groups do not serve a
8 voting function on the governing board and may include individuals
9 who are not members of the governing board. Any work group
10 established by the governing board is a class one group under RCW
11 43.03.220. Work group members receive compensation accordingly.
12 (6) Other state agencies must provide appropriate and reasonable
13 assistance to the program as needed, including gathering data and
14 information, in order for the governing board to carry out the
15 purposes of this chapter. The governing board may reimburse the other
16 state agencies from the administrative account for reasonable
17 expenses incurred in providing appropriate and reasonable assistance.
18 (7)(a) The governing board shall meet at least four times
19 annually and periodically as specified by the chair or a majority of
20 the governing board.
21 (b) The governing board may conduct meetings remotely by
22 teleconference or videoconference, including to obtain a quorum and
23 to take votes on any measure.
24 (c) Each governing board member has one vote. The powers of the
25 governing board must be exercised by a majority of all members
26 present at the meeting of the governing board, whether in person or
27 remotely. Four members constitute the necessary quorum to convene a
28 meeting of the governing board and to act on any measure before the
29 governing board.
30 (8) The governing board shall establish, design, develop,
31 implement, maintain, and oversee the program in accordance with this
32 chapter and best practices for retirement saving vehicles.
33 (9) Regarding investments, the governing board:
34 (a) Has the sole responsibility for contracting with outside
35 firms to provide investment management for the program funds and
36 manage the performance of investment managers under those contracts;
37 (b) Must adopt an investment policy statement and ensure that the
38 investment options offered, including default investment options, are
39 consistent with the objectives of the program. The menu of investment
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 1 options may encompass a range of risk and return opportunities and
2 must take the following into account:
3 (i) The nature and objectives of the program;
4 (ii) The diverse needs of individual participants;
5 (iii) The desirability of limiting investment choices under the
6 program to a reasonable number; and
7 (iv) The extensive investment choices available to participants
8 outside of the program.
9 (10) Regarding the design of the program, the governing board
10 must:
11 (a) Ensure the program is designed and operated in a manner that
12 will not cause it to be subject to or preempted by the federal
13 employment retirement income security act of 1974, as amended;
14 (b) Design and operate the program to:
15 (i) Minimize costs to individual participants, covered employers,
16 and the state;
17 (ii) Minimize the risk that covered employees will exceed
18 applicable annual contribution limits;
19 (iii) Facilitate and encourage employee participation in the
20