WSR 16-13-016 PERMANENT RULES DEPARTMENT OF FINANCIAL INSTITUTIONS [Filed June 3, 2016, 10:40 a.m., effective July 4, 2016] Effective Date of Rule: Thirty-one days after filing.
Purpose: The rules will implement the provisions of the Washington small business retirement marketplace that pertain to the department of financial institutions. Pursuant to RCW 43.330.735(6), the department of financial institutions must verify that retirement plans to be offered on the Washington small business retirement marketplace meet the requirements set forth in RCW 43.330.732(7) and 43.330.735. The proposed rules address who can apply to the department of financial institutions to obtain this verification. In addition, the proposed rules specify the application filing requirements.
Adopted under notice filed as WSR 16-02-038 on December 30, 2015.
Changes Other than Editing from Proposed to Adopted Version: The department of financial institutions made minor revisions to WAC 208-710-010 in response to comments received. The proposed rule stated that the department of commerce would approve retirement plans for the marketplace "provided that either the Washington department of financial institutions or the Washington office of the insurance commission [commissioner] has verified that the retirement plan and the financial services firm offering it meet the requirements set forth in RCW 43.330.732(7) and 43.330.735." The office of the insurance commissioner (OIC) requested that the reference to OIC be removed from the rule. Therefore, we revised WAC 208-710-010 to strike the words "either" and "or the Washington office of the insurance commissioner."
Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 7, Amended 0, Repealed 0.
Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.
Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 0, Repealed 0.
Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 0, Repealed 0.
Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 0, Repealed 0.
Date Adopted: June 3, 2016.
Scott Jarvis
Director
Chapter 208-710 WAC
WASHINGTON SMALL BUSINESS RETIREMENT MARKETPLACE NEW SECTION
WAC 208-710-010 Application of rules.
The rules in this chapter implement the provisions of the Washington small business retirement marketplace, RCW 43.330.730 through 43.330.750, and 43.320.180, as they relate to the department of financial institutions.
The legislature created the Washington small business retirement marketplace in order to address the retirement savings access gap in Washington. The purpose of the Washington small business retirement marketplace is to educate small employers on retirement plan availability and promote qualified, low-cost, low-burden retirement savings vehicles and myRa accounts without mandating participation by either employers or employees.
The Washington department of commerce is responsible for the operation of the Washington small business retirement marketplace. The department of commerce will approve retirement plans for inclusion on the Washington small business retirement marketplace provided that the Washington department of financial institutions has verified that the retirement plan and the financial services firm offering it meet the requirements set forth in RCW 43.330.732(7) and 43.330.735.
Financial services firms seeking verification for their retirement plans from the department of financial institutions for the purpose of inclusion on the Washington small business retirement marketplace shall follow the application procedures set forth in this chapter.
NEW SECTION
WAC 208-710-020 Eligibility to apply for verification with the department of financial institutions.
Financial services firms that are regulated by the department of financial institutions or by a federal agency with authority over banking, securities, or broker-dealer firms, and that meet all federal laws and regulations to offer retirement plans, are eligible to apply to the department of financial institutions for verification that their retirement plans meet the requirements set forth in RCW 43.330.732(7) and 43.330.735 for inclusion on the Washington small business retirement marketplace.
NEW SECTION
WAC 208-710-030 Verification process.
(1) Financial services firms that are eligible under WAC 208-710-020 to apply for verification from the department of financial institutions may do so by submitting an application for verification as described in WAC 208-710-040, 208-710-060, and 208-710-070.
(2) The department of financial institutions will review and process initial, renewal, and amendment applications for verification. The department of financial institutions will issue a verification letter for retirement plans that meet the requirements set forth in RCW 43.330.732(7) and 43.330.735. The verification letter will be effective for one year for initial and renewal applications. For amendment applications, the verification letter will be effective for the remainder of the current one-year verification period.
(3) A financial services firm may withdraw its application for verification at any time by submitting a written request to withdraw to the department of financial institutions.
NEW SECTION
WAC 208-710-040 Initial application requirements.
Financial service firms that seek verification of retirement plans from the department of financial institutions for inclusion on the Washington small business retirement marketplace must submit a separate application for each retirement plan for which verification is sought. The following initial application materials shall be submitted to the department of financial institutions:
(1) A completed application for verification form marked "initial application";
(2) A copy of the retirement plan agreement;
(3) A copy of the materials routinely used to market the retirement plan to eligible employers;
(4) Any additional documents necessary to identify the funds and other investment products to be offered under the plan, specify the plan's fees and roll-over options, and disclose historical investment performance for the investment products in the plan; and
(5) The prospectus for each balanced fund and target date fund or other similar fund offered under the retirement plan.
NEW SECTION
WAC 208-710-050 Application review criteria.
The department of financial institutions will review applications for verification to ensure that retirement plans meet the following criteria established by RCW 43.330.732(7) and 43.330.735:
(1) The financial services firm offering the retirement plan must be licensed or hold a certificate of authority and be in good standing with the department of financial institutions, or be regulated by a federal agency with authority over banking, securities, or broker-dealer firms, and meet all federal laws and regulations to offer retirement plans;
(2) The retirement plan must offer a minimum of two product options:
(a) A target date or other similar fund, with asset allocations and maturities designed to coincide with the expected date of retirement; and
(b) A balanced fund.
(3) The retirement plan must include the option for enrollees to roll pretax contributions into a different individual retirement account or another eligible retirement plan after the enrollees cease participation in the retirement plan offered on the Washington small business retirement marketplace;
(4) The financial services firm offering the retirement plan may not charge the participating employer an administrative fee and may not charge enrollees more than one hundred basis points in total annual fees;
(5) The financial services firm offering the retirement plan must provide information about the product's historical investment performance; and
(6) Participation in a retirement plan offered on the Washington small business retirement marketplace shall be voluntary for both eligible employers and qualified employees.
NEW SECTION
WAC 208-710-060 Annual renewal application procedure.
(1) To apply to renew the verification of a retirement plan for inclusion on the Washington small business retirement marketplace for a subsequent one-year period, the financial services firm offering the plan shall submit the following to the department of financial institutions at least thirty days prior to the expiration of the current verification letter:
(a) A completed application for verification form marked "renewal";
(b) The most recently updated versions of the retirement plan, marketing materials, prospectuses, and other plan documents required by WAC 208-710-040 (2) through (5); and
(c) A report indicating the number of eligible employers in Washington who established retirement plans under the financial service provider's approved plan in the last year. The report shall include the total number of new retirement accounts opened in Washington by qualified employees as a result of the adoption of the approved plan by eligible employers in Washington.
(2) If the retirement plan meets the requirements set forth in RCW 43.330.732(7), 43.330.735, and WAC 208-710-050 for inclusion on the Washington small business retirement marketplace, the department of financial institutions will issue a renewal of the verification letter for the retirement plan. An application for verification will not be considered renewed until the department of financial institutions issues a new verification letter.
(3) If the retirement plan no longer meets the requirements for inclusion on the Washington small business retirement marketplace, or the application is otherwise deficient, the department of financial institutions will issue a deficiency letter rather than renew the verification letter.
NEW SECTION
WAC 208-710-070 Amendment review procedure.
(1) During the time period in which a retirement plan's verification letter is effective, the financial services firm offering the plan must amend its application for verification if material amendments to the retirement plan or its underlying investment options are proposed.
(2) To amend an application for verification, the financial services firm shall submit the following to the department of financial institutions at least thirty days prior to the proposed amendment of the plan:
(a) A completed application for verification marked "amendment"; and
(b) The most recent versions of the retirement plan, marketing materials, prospectuses, and other plan documents required by WAC 208-710-040 (2) through (5).
(3) If the amended retirement plan meets the requirements set forth in RCW 43.330.732(7), 43.330.735, and WAC 208-710-050 for inclusion on the Washington small business retirement marketplace, the department of financial institutions will issue a verification letter for the amended retirement plan.
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