BILL REQ. #:  H-0927.1 



_____________________________________________ 

HOUSE BILL 1570
_____________________________________________
State of Washington59th Legislature2005 Regular Session

By Representatives McIntire, Simpson, Jarrett, Fromhold and Dunshee

Read first time 01/28/2005.   Referred to Committee on Appropriations.



     AN ACT Relating to creating the Washington voluntary accounts program; amending RCW 43.33A.070 and 43.84.092; adding a new chapter to Title 41 RCW; and providing an effective date.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:

NEW SECTION.  Sec. 1   The legislature finds that many workers do not have access to an employment-based retirement plan. Workers who are unable to build up pensions and savings risk living on low incomes in their old age and are more likely to become dependent on state services. The Washington voluntary accounts program will provide a simple and inexpensive way for workers to save for retirement and employers to offer an employee benefit.

NEW SECTION.  Sec. 2   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.
     (1) "Program" means the Washington voluntary accounts program created under section 3 of this act.
     (2) "Director" means the director of the department of retirement systems.
     (3) "Participating employee" means any workers in this state that choose to participate in the program.
     (4) "Participating employer" means any private employer, with a place of business in this state, and with employees that have chosen to participate in the program.

NEW SECTION.  Sec. 3   The Washington voluntary accounts program is created. The director may adopt rules as necessary to implement this chapter. Sections 4 and 5 of this act may not be implemented until any approvals from federal agencies that may be necessary, including the favorable tax treatment of the plan, have been granted, and appropriate funds for start-up costs of the program have been identified.

NEW SECTION.  Sec. 4   (1) Private employers shall, in cooperation with the department, provide employees with the opportunity to participate in the Washington voluntary accounts program, including payroll deductions for those employees who elect to contribute to individual retirement accounts. Each participating employer is authorized to contract with a participating employee to defer or otherwise contribute a portion of that employee's compensation, in accordance with the internal revenue code or other applicable federal laws.
     (2) Participating employees may self-direct the investment of their account balances through selection among investment options to the extent provided in subsection (3) of this section.
     (3) The director may provide the individual retirement account plans as the department determines to be advisable. The state investment board, with respect to the program, shall invest the contributions of participating employees, in accordance with federal law, and to the extent permissible under federal law, in accordance with RCW 43.84.150, 43.33A.140, and 41.50.780, and pursuant to investment policy established by the state investment board for the program. The state investment board shall provide investment options for participants to choose from, and may establish an investment plan for participants who choose not to self-direct their investments.

NEW SECTION.  Sec. 5   The director may also provide plans, including 401(k) plans and savings incentive match plan for employees individual retirement account plans, that employers may elect to adopt for the benefit of their employees, and that comply with applicable federal laws. However, this act does not require employers to provide plans for their employees. Those employers that elect to adopt plans are responsible for complying with any applicable federal laws and regulations.

NEW SECTION.  Sec. 6   (1) The Washington voluntary accounts program principal account is created in the state treasury and shall be administered in compliance with applicable federal law and as set forth in this section. The department shall make arrangements with financial institutions to serve as trustees or custodians of Washington voluntary accounts as may be required or advisable to comply with applicable federal law and to provide for the efficient implementation and administration of the program.
     (2) The contributions elected by participating employees in accordance with sections 4 and 5 of this act shall be paid into the Washington voluntary accounts program principal account and shall be sufficient to cover costs of administration and staffing in addition to such other amounts as may be determined by the director. The account shall be used to carry out the purposes of this chapter.
     (3) All moneys in the Washington voluntary accounts program principal account and the Washington voluntary accounts program administrative account, all property and rights purchased therewith, and all income attributable thereto, shall be held in trust by the state investment board, as set forth under RCW 43.33A.030, for the exclusive benefit of the Washington voluntary accounts program participants and their beneficiaries, and, notwithstanding any other provision of this or related acts, shall be held separate from other types of funds to the extent required by federal law. Neither the participating employee, nor the participant's beneficiary or beneficiaries, nor any other designee, has any right to commute, sell, assign, transfer, or otherwise convey the right to receive any payments under the program. These payments and rights are nonassignable and nontransferable. Account balances are not subject to attachment, garnishment, or execution and are not transferable by operation of law in event of bankruptcy or insolvency, except to the extent otherwise required by law.
     (4) The state investment board has the full power to invest moneys in the Washington voluntary accounts program principal account and the Washington voluntary accounts program administrative account in accordance with RCW 43.84.150, 43.33A.140, and 41.50.770, and cumulative investment directions received under this chapter. All investment and operating costs of the state investment board associated with the investment of the program assets shall be paid under RCW 43.33A.160 and 43.84.160. With the exception of these expenses, one hundred percent of all earnings from these investments shall accrue directly to the Washington voluntary accounts program principal account.
     (5)(a) No state board, commission, or agency, or any officer, employee, or member is liable for any loss or deficiency resulting from participant investments selected under this chapter.
     (b) The state investment board, or any officer, employee, or member is not liable for any loss or deficiency resulting from reasonable efforts to implement investment directions under this chapter.
     (6) The Washington voluntary accounts program administrative account is created in the state treasury. All expenses of the department pertaining to the Washington voluntary accounts program including staffing and administrative expenses shall be paid out of the Washington voluntary accounts program administrative account. Any excess balances credited to this account over administrative expenses disbursed from this account shall be transferred to the Washington voluntary accounts program principal account at such time and in such amounts as may be determined by the director with the approval of the director of financial management. Any deficiency in the Washington voluntary accounts program administrative account caused by an excess of administrative expenses disbursed from this account shall be transferred to this account from the Washington voluntary accounts program principal account.
     (7)(a)(i) The director shall keep or cause to be kept full and adequate accounts and records of the assets of each individual participant, obligations, transactions, and affairs of the program. The department shall account for and report on the investment of program assets or may enter into an agreement with the state investment board for accounting and reporting.
     (ii) The director's duties related to individual participant accounts include conducting the activities of trade instruction, settlement activities, and direction of cash movement and related wire transfers with the custodian bank and outside investment firms.
     (iii) The director has sole responsibility for contracting with any recordkeepers for individual participant accounts and shall manage the performance of recordkeepers under those contracts.
     (b)(i) The director's duties under (a)(ii) of this subsection do not limit the authority of the state investment board to conduct its responsibilities for asset management and balancing of program funds.
     (ii) The state investment board has sole responsibility for contracting with outside investment firms to provide investment management for program funds and shall manage the performance of investment managers under those contracts.
     (c) The state treasurer shall designate and define the terms of engagement for the custodial banks.

Sec. 7   RCW 43.33A.070 and 1981 c 3 s 7 are each amended to read as follows:
     No member of the state investment board is liable for the negligence, default, or failure of any other person or other member of the board to perform the duties of the member's office and no member of the board shall be considered or held to be an insurer of the funds or assets of any of the trust and retirement funds, including funds or assets of the voluntary accounts program, nor is any nonvoting member liable for actions performed with the exercise of reasonable diligence within the scope of the member's authorized activities as a member of the board.

Sec. 8   RCW 43.84.092 and 2004 c 242 s 60 are each amended to read as follows:
     (1) All earnings of investments of surplus balances in the state treasury shall be deposited to the treasury income account, which account is hereby established in the state treasury.
     (2) The treasury income account shall be utilized to pay or receive funds associated with federal programs as required by the federal cash management improvement act of 1990. The treasury income account is subject in all respects to chapter 43.88 RCW, but no appropriation is required for refunds or allocations of interest earnings required by the cash management improvement act. Refunds of interest to the federal treasury required under the cash management improvement act fall under RCW 43.88.180 and shall not require appropriation. The office of financial management shall determine the amounts due to or from the federal government pursuant to the cash management improvement act. The office of financial management may direct transfers of funds between accounts as deemed necessary to implement the provisions of the cash management improvement act, and this subsection. Refunds or allocations shall occur prior to the distributions of earnings set forth in subsection (4) of this section.
     (3) Except for the provisions of RCW 43.84.160, the treasury income account may be utilized for the payment of purchased banking services on behalf of treasury funds including, but not limited to, depository, safekeeping, and disbursement functions for the state treasury and affected state agencies. The treasury income account is subject in all respects to chapter 43.88 RCW, but no appropriation is required for payments to financial institutions. Payments shall occur prior to distribution of earnings set forth in subsection (4) of this section.
     (4) Monthly, the state treasurer shall distribute the earnings credited to the treasury income account. The state treasurer shall credit the general fund with all the earnings credited to the treasury income account except:
     (a) The following accounts and funds shall receive their proportionate share of earnings based upon each account's and fund's average daily balance for the period: The capitol building construction account, the Cedar River channel construction and operation account, the Central Washington University capital projects account, the charitable, educational, penal and reformatory institutions account, the common school construction fund, the county criminal justice assistance account, the county sales and use tax equalization account, the data processing building construction account, the deferred compensation administrative account, the deferred compensation principal account, the department of retirement systems expense account, the drinking water assistance account, the drinking water assistance administrative account, the drinking water assistance repayment account, the Eastern Washington University capital projects account, the education construction fund, the election account, the emergency reserve fund, The Evergreen State College capital projects account, the federal forest revolving account, the health services account, the public health services account, the health system capacity account, the personal health services account, the state higher education construction account, the higher education construction account, the highway infrastructure account, the industrial insurance premium refund account, the judges' retirement account, the judicial retirement administrative account, the judicial retirement principal account, the local leasehold excise tax account, the local real estate excise tax account, the local sales and use tax account, the medical aid account, the mobile home park relocation fund, the multimodal transportation account, the municipal criminal justice assistance account, the municipal sales and use tax equalization account, the natural resources deposit account, the oyster reserve land account, the perpetual surveillance and maintenance account, the public employees' retirement system plan 1 account, the public employees' retirement system combined plan 2 and plan 3 account, the public facilities construction loan revolving account beginning July 1, 2004, the public health supplemental account, the public works assistance account, the Puyallup tribal settlement account, the regional transportation investment district account, the resource management cost account, the site closure account, the special wildlife account, the state employees' insurance account, the state employees' insurance reserve account, the state investment board expense account, the state investment board commingled trust fund accounts, the supplemental pension account, the Tacoma Narrows toll bridge account, the teachers' retirement system plan 1 account, the teachers' retirement system combined plan 2 and plan 3 account, the tobacco prevention and control account, the tobacco settlement account, the transportation infrastructure account, the tuition recovery trust fund, the University of Washington bond retirement fund, the University of Washington building account, the volunteer fire fighters' and reserve officers' relief and pension principal fund, the volunteer fire fighters' and reserve officers' administrative fund, the Washington fruit express account, the Washington judicial retirement system account, the Washington law enforcement officers' and fire fighters' system plan 1 retirement account, the Washington law enforcement officers' and fire fighters' system plan 2 retirement account, the Washington public safety employees' plan 2 retirement account, the Washington school employees' retirement system combined plan 2 and 3 account, the Washington state health insurance pool account, the Washington state patrol retirement account, the Washington State University building account, the Washington State University bond retirement fund, the Washington voluntary accounts program administrative account, the Washington voluntary accounts program principal account, the water pollution control revolving fund, and the Western Washington University capital projects account. Earnings derived from investing balances of the agricultural permanent fund, the normal school permanent fund, the permanent common school fund, the scientific permanent fund, and the state university permanent fund shall be allocated to their respective beneficiary accounts. All earnings to be distributed under this subsection (4)(a) shall first be reduced by the allocation to the state treasurer's service fund pursuant to RCW 43.08.190.
     (b) The following accounts and funds shall receive eighty percent of their proportionate share of earnings based upon each account's or fund's average daily balance for the period: The aeronautics account, the aircraft search and rescue account, the county arterial preservation account, the department of licensing services account, the essential rail assistance account, the ferry bond retirement fund, the grade crossing protective fund, the high capacity transportation account, the highway bond retirement fund, the highway safety account, the motor vehicle fund, the motorcycle safety education account, the pilotage account, the public transportation systems account, the Puget Sound capital construction account, the Puget Sound ferry operations account, the recreational vehicle account, the rural arterial trust account, the safety and education account, the special category C account, the state patrol highway account, the transportation 2003 account (nickel account), the transportation equipment fund, the transportation fund, the transportation improvement account, the transportation improvement board bond retirement account, and the urban arterial trust account.
     (5) In conformance with Article II, section 37 of the state Constitution, no treasury accounts or funds shall be allocated earnings without the specific affirmative directive of this section.

NEW SECTION.  Sec. 9   Sections 1 through 6 of this act constitute a new chapter in Title 41 RCW.

NEW SECTION.  Sec. 10   This act takes effect July 1, 2006.

--- END ---