Washington State House of Representatives Office of Program Research | BILL ANALYSIS |
Appropriations Committee |
SB 6328
This analysis was prepared by non-partisan legislative staff for the use of legislative members in their deliberations. This analysis is not a part of the legislation nor does it constitute a statement of legislative intent. |
Brief Description: Concerning deferred compensation plans.
Sponsors: Senators Roach and Kline.
Brief Summary of Bill |
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Hearing Date: 2/24/14
Staff: David Pringle (786-7310).
Background:
The Washington State Deferred Compensation Program (DCP) is a supplemental tax-deferred savings program under section 457 of the federal Internal Revenue Code (IRC) offered to state employees and to the employees of local governments that elect to participate in the program. It is administered by the Department of Retirement Systems, which contracts with a vendor for record keeping and other administrative services. More than 1,000 employers and 53,000 employees participate in the DCP. Local governments are also authorized to offer deferred compensation programs to their employees through vendors rather than through the DCP.
The Washington State Investment Board (WSIB) is responsible for establishing investment policy; developing participant investment options; and managing investment funds of the self-directed retirement and savings programs, including the selection and monitoring of investment options offered to the DCP participants. In making these decisions it acts as a plan fiduciary. State law permits the DCP and local government deferred compensation programs to deposit or invest funds in a credit union, savings and loan association, bank, mutual savings bank, shares of an investment company, or fixed and/or variable annuity contracts from any insurance company or investment company licensed to conduct business in the state. Currently, WSIB has 19 investment options for the DCP participants: savings pool, bond fund, socially responsible balanced fund, four equity index funds, and 12 retirement date strategy fund options.
Some employer retirement savings plans offered under IRC section 401(k) and some government deferred compensation programs under IRC section 457 also offer a brokerage account option that gives plan participants access to a range of investment alternatives available on the market, in addition to standard options. The investment options can include individual securities.
Summary of Bill:
Investment in individual securities is added to the list of investment options authorized for the DCP and for local government deferred compensation programs.
Appropriation: None.
Fiscal Note: Available.
Effective Date: The bill takes effect 90 days after adjournment of the session in which the bill is passed.