WSR 16-12-029
PERMANENT RULES
DEPARTMENT OF COMMERCE
[Filed May 23, 2016, 2:15 p.m., effective June 23, 2016]
Effective Date of Rule: Thirty-one days after filing.
Other Findings Required by Other Provisions of Law as Precondition to Adoption or Effectiveness of Rule: As required by RCW 43.330.750 and 43.330.735(3), commerce consulted with the departments of retirement systems and financial services, the Washington state investment board, organizations representing eligible employers, qualified employees, private and nonprofit sector retirement plan administrators and providers, organizations representing private sector financial services firms, and other individuals or entities relevant to the development of an effective and efficient method for operating the Small Business Retirement Marketplace ("marketplace"). These rules were proposed prior to January 1, 2016, and will not be adopted until after the end of the regular 2016 legislative session.
Purpose: The marketplace is a retirement savings program created per ESSB 5826, chapter 296, Laws of 2015, to connect eligible employers and their employees with approved plans to increase retirement savings. RCW 43.330.750 requires the director of the department of commerce to adopt rules necessary to allow the marketplace to operate. The purpose of these rules, new chapter 365-65 WAC, is to define terms, establish eligibility guidelines, and make other provisions for the effective operation of the marketplace.
Statutory Authority for Adoption: RCW 43.330.750 and 43.330.040 (2)(g).
Adopted under notice filed as WSR 16-02-050 on December 31, 2015.
Changes Other than Editing from Proposed to Adopted Version: This section summarizes differences between the proposed rules and the final adopted rules, pursuant to RCW 34.05.340(3). The differences between the proposed and adopted rule are all technical in nature, reflecting fine-tuning of financial services industry-specific terminology, and edits to improve clarity and internal consistency of rule language.
Section
CR-102
Final
Explanation
WAC 365-65-030(2)
"Balanced fund" means a fund that has an investment mandate to balance its portfolio holdings. A balanced fund generally includes a mix of stocks and bonds in varying proportions according to the fund's investment outlook.
"Balanced fund" means a mutual fund that has an investment mandate to balance its portfolio holdings. A balanced fund generally includes a mix of stocks and bonds in varying proportions according to the fund's investment outlook.
Revised to match statutory definition, RCW 433.330.732(2) [43.330.732(2)].
WAC 365-65-030(11)
"Qualified employee" or "employee" means a worker who is eligible to participate in a retirement plan.
"Qualified employee" or "employee" means a worker who is eligible to participate in a retirement plan, consistent with RCW 43.330.732(8).
Revised to reference statutory definition.
WAC 365-65-030(12)
"Retirement plan" or "plan" means a savings vehicle or life insurance plan that is designed for retirement purposes and that receives favorable federal tax treatment pursuant to the Internal Revenue Code.
"Retirement plan" or "plan" means an arrangement that is designed for retirement purposes and that receives favorable federal tax treatment pursuant to the Internal Revenue Code.
Revised to clarify definition based on public comments.
WAC 365-65-030 (14) and (15)
"Verified plan" means retirement plan that has been verified as meeting the requirements of chapter 43.330 RCW by the department of financial institutions and/or the office of the insurance commissioner for inclusion in the marketplace.
"Verified plan" means a retirement plan that has been verified as meeting the requirements of RCW 43.330.735 for inclusion in the marketplace by, as applicable:
(a) The department of financial institutions pursuant to its verification process under chapter 208-710 WAC, and/or
(b) The office of the insurance commissioner pursuant to its approval process under Section K and other relevant provisions of the Washington state system for electronic rate filing (SERFF) life and disability form filing instructions, including but not limited to any certifications required by the office of insurance commissioner.
Revised to clarify and add more specific reference to statute and DFI and OIC verification processes.
This definition was renumbered as WAC 365-65-030(15) in the final rule.
WAC 365-65-030 (14) and (15)
"Verified financial services firm" means a person or entity that has been verified as currently meeting the requirements of chapter 43.330 RCW by the department of financial institutions and/or the office of the insurance commissioner to offer verified plans in the marketplace.
"Verified financial services firm" means a person or entity that has been verified as currently meeting the requirements of RCW 43.330.732(7) by, as applicable:
(a) The department of financial institutions pursuant to its verification process under chapter 208-710 WAC, and/or
(b) The office of the insurance commissioner pursuant to its plan approval process under Section K and other relevant provisions of the Washington state system for electronic rate filing (SERFF) life and disability form filing instructions, including but not limited to any certifications required by the office of insurance commissioner.
Revised to clarify and add more specific reference to statute and DFI and OIC verification processes.
This definition was renumbered as WAC 365-65-030(14) in the final rule.
WAC 365-65-050
(1) A financial services firm seeking approval to be a verified financial services firm and offer plans in the marketplace must submit a complete application in a form prescribed by the department.
(2) The marketplace shall include at least two verified financial services firms that offer one or more approved plans.
(3) A verified financial services firm must offer a minimum of two investment product options in the marketplace: A target date fund or other similar fund, and a balanced fund.
(4) A verified financial services firm must provide information about the historical performance of any investment products offered in the marketplace.
(5) A verified financial services firm must comply with all applicable federal laws and rules to offer retirement plans.
(6) The protocol used by the department and/or the marketplace operator for reviewing, verifying and approving the qualifications of financial services firms for participation in the marketplace shall be based on objective criteria, and shall not provide unfair advantage to any entity.
(1) A verified financial services firm seeking approval for a verified plan to be offered on the marketplace must submit a complete application in a form prescribed by the department.
(2) A verified financial services firm must offer a minimum of two investment product options in the marketplace: A target date fund or other similar fund, and a balanced fund.
(3) A verified financial services firm must provide information about the historical performance of any investment products offered in the marketplace, consistent with applicable federal laws.
(4) A verified financial services firm must comply with all applicable federal laws to offer retirement plans.
(5) The protocol used by the department and/or the marketplace operator for reviewing and approving the qualifications of financial services firms for participation in the marketplace shall be based on objective criteria, and shall not provide unfair advantage to any entity.
Removed subsection (2) pertaining to the number of firms operating on the marketplace, as this section pertains to the approval process for individual firms.
Other portions revised for clarity based on public comments.
WAC 365-65-060
(1) The department will approve a diverse array of verified plan options to be offered in the marketplace, including:
(a) Life insurance plans;
(b) A SIMPLE-IRA type of plan that provides for employer contributions to participant accounts;
(c) A payroll deduction individual retirement account type of plan or workplace based individual retirement account open to all workers to which the employer does not contribute; and
(d) myRA.
(2) A plan that is proposed to be offered in the marketplace must be submitted to the department for review and approval, including all documentation, in a form prescribed by the department.
(3) A plan that is proposed to be offered in the marketplace must comply with applicable laws and rules, included but not limited to federal tax laws and rules.
(1) The department will approve a diverse array of verified plan options to be offered in the marketplace, including:
(a) Life insurance plans that are designed for retirement purposes;
(b) A SIMPLE-IRA type of plan that provides for employer contributions to participant accounts; and
(c) A payroll deduction individual retirement account or individual retirement annuity, or a workplace based individual retirement account open to all workers to which the employer does not contribute.
(2) The department will approve the myRA retirement program to be offered in the marketplace.
(3) A verified plan that is proposed to be offered in the marketplace must be submitted to the department for review and approval, including all documentation, in a form prescribed by the department.
(4) A verified plan that is proposed to be offered in the marketplace must comply with applicable laws and rules, included but not limited to federal tax laws.
Revised subsection (1)(a) to reflect statutory language concerning life insurance plans, RCW 43.330.735(5).
Other portions revised for clarity and completeness based on public comments.
WAC 365-65-070
Nothing in this chapter shall be construed to limit rollovers, or the portability of an employee's retirement savings into or out of approved plans. An approved plan must include the option for an enrollee to roll pretax contributions into a different individual retirement account or another eligible retirement plan in accordance with federal tax laws providing for tax free rollovers after ceasing participation in the approved plan.
Nothing in this chapter shall be construed to limit rollovers, or the portability of an employee's retirement savings into or out of approved plans. An approved plan must include the option for an enrollee to rollover or transfer amounts into a different retirement arrangement in accordance with federal tax laws providing for tax free rollovers or transfers after ceasing active participation in the approved plan.
Revised for clarity and completeness based on public comments.
WAC 365-65-095
If any part of these rules are found to conflict with federal or state laws or rules, including those that are a prescribed condition to the allocation of federal funds to the state, the conflicting part of these rules is inoperative solely to the extent of the conflict, and this finding does not affect the operation of the remainder of these rules.
If any part of these rules are found to conflict with federal or state laws, including but not limited to those that are a prescribed condition to the allocation of federal funds to the state, the conflicting part of these rules is inoperative solely to the extent of the conflict, and this finding does not affect the operation of the remainder of these rules.
Revised for clarity and completeness based on public comments.
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 10, 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 10, 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: May 23, 2016.
Brian Bonlender
Director
Chapter  365-65  WAC
SMALL BUSINESS RETIREMENT MARKETPLACE
NEW SECTION
WAC 365-65-010 Authority.
These rules are adopted under the authority of RCW 43.330.750.
NEW SECTION
WAC 365-65-020 Purpose.
The purpose of this chapter is to define terms, establish eligibility guidelines, and make other provisions for the effective operation of the Washington Small Business Retirement Marketplace.
NEW SECTION
WAC 365-65-030 Definitions.
The following words and terms have the following meanings for the purposes of this chapter unless otherwise indicated:
(1) "Approved plan" means:
(a) the myRA retirement program, or
(b) a verified plan offered by a verified financial services firm that has been approved for listing in the marketplace by the department pursuant to this chapter.
(2) "Balanced fund" means a mutual fund that has an investment mandate to balance its portfolio holdings. A balanced fund generally includes a mix of stocks and bonds in varying proportions according to the fund's investment outlook.
(3) "Department" means the Washington State Department of Commerce.
(4) "Director" means the director of the Washington State Department of Commerce, or his or her designee.
(5) "Eligible Employer" means a self-employed individual, sole proprietor, or an employer with fewer than one hundred qualified employees at the time that its first employee enrolls in an approved plan through the marketplace.
(6) "Enrollee" means any employee, self-employed individual, or sole proprietor, who is voluntarily enrolled in an approved plan offered on the marketplace.
(7) "Marketplace" means the Washington small business retirement marketplace.
(8) "Marketplace operator" or "operator" means a private sector entity with which the director has contracted to operate the marketplace pursuant to chapter 43.330 RCW.
(9) "myRA retirement program" or "myRA" means the myRA retirement program administered by the United States department of the treasury.
(10) "Participating employer" means:
(a) a self-employed individual or sole proprietor who voluntarily enrolls in an approved plan, or
(b) an eligible employer or sole proprietor, that offers one or more approved plans to its employees for voluntary enrollment.
(11) "Qualified employee" or "employee" means a worker who is eligible to participate in a retirement plan, consistent with RCW 43.330.732(8).
(12) "Retirement plan" or "plan" means an arrangement that is designed for retirement purposes and that receives favorable federal tax treatment pursuant to the Internal Revenue Code.
(13) "Target date fund" means a hybrid investment fund that automatically adjusts the asset mix according to a selected time frame that is appropriate for a particular investor, based on the investor's age.
(14) "Verified financial services firm" means a person or entity that has been verified as currently meeting the requirements of RCW 43.330.732(7) by, as applicable:
(a) the Department of Financial Institutions pursuant to its verification process under Chapter 208-710 WAC, and/or
(b) the Office of the Insurance Commissioner pursuant to its plan approval process under Section K and other relevant provisions of the Washington State System for Electronic Rate Filing (SERFF) Life and Disability Form Filing Instructions, including but not limited to any certifications required by the Office of Insurance Commissioner.
(15) "Verified plan" means a retirement plan that has been verified as meeting the requirements of RCW 43.330.735 for inclusion in the marketplace by, as applicable:
(a) the Department of Financial Institutions pursuant to its verification process under Chapter 208-710 WAC, and/or
(b) the Office of the Insurance Commissioner pursuant to its approval process under Section K and other relevant provisions of the Washington State System for Electronic Rate Filing (SERFF) Life and Disability Form Filing Instructions, including but not limited to any certifications required by the Office of Insurance Commissioner.
(16) "Voluntary," in regard to an employee's enrollment or participation in an approved plan, means enrollment or participation wherein the amount of any contribution of the employee's wages to the plan is:
(a) affirmatively chosen by the employee, or
(b) established by default by the employer in accordance with applicable federal laws, provided that the employee receives any required notice of the default contribution amount and may affirmatively choose to contribute a different amount or to entirely opt out of contributing.
(17) "Washington small business retirement marketplace" means the retirement savings program created to connect eligible employers and their employees with approved plans to increase retirement savings.
NEW SECTION
WAC 365-65-040 Eligibility.
(1) Verified financial services firms, eligible employers, and qualified employees are eligible to participate in the marketplace.
(2) Participation in the marketplace, and enrollment in an approved plan, is voluntary. 
(3) Enrollment in an approved plan is not an entitlement.
NEW SECTION
WAC 365-65-050 Approval of verified financial services firms.
(1) A verified financial services firm seeking approval for a verified plan to be offered on the marketplace must submit a complete application in a form prescribed by the department. 
(2) A verified financial services firm must offer a minimum of two investment product options in the marketplace: a target date fund or other similar fund, and a balanced fund.
(3) A verified financial services firm must provide information about the historical performance of any investment products offered in the marketplace, consistent with applicable federal laws.
(4) A verified financial services firm must comply with all applicable federal laws to offer retirement plans.
(5) The protocol used by the department and/or the marketplace operator for reviewing and approving the qualifications of financial services firms for participation in the marketplace shall be based on objective criteria, and shall not provide unfair advantage to any entity.
NEW SECTION
WAC 365-65-060 Approval of verified plans.
(1) The department will approve a diverse array of verified plan options to be offered in the marketplace, including:
(a) Life insurance plans that are designed for retirement purposes;
(b) A SIMPLE-IRA type of plan that provides for employer contributions to participant accounts; and
(c) A payroll deduction individual retirement account or individual retirement annuity, or a workplace based individual retirement account open to all workers to which the employer does not contribute.
(2) The department will approve the myRA retirement program to be offered in the marketplace.
(3) A verified plan that is proposed to be offered in the marketplace must be submitted to the department for review and approval, including all documentation, in a form prescribed by the department.
(4) A verified plan that is proposed to be offered in the marketplace must comply with applicable laws and rules, included but not limited to federal tax laws.
NEW SECTION
WAC 365-65-070 Portability and rollovers.
Nothing in this chapter shall be construed to limit rollovers, or the portability of an employee's retirement savings into or out of approved plans. An approved plan must include the option for an enrollee to rollover or transfer amounts into a different retirement arrangement in accordance with federal tax laws providing for tax free rollovers or transfers after ceasing active participation in the approved plan.
NEW SECTION
WAC 365-65-080 Limits on fees.
A verified financial services firm that offers approved plans in the marketplace may not charge participating employers an administrative fee, and may not charge enrollees more than one hundred basis points in total annual fees.
NEW SECTION
WAC 365-65-090 Removal of plans.
An approved plan shall be removed from the marketplace if the plan, or the financial services firm offering the plan, no longer meets the requirements of this chapter, chapter 43.330 RCW, or any other applicable law or rule.
NEW SECTION
WAC 365-65-095 Conflict with other laws.
If any part of these rules are found to conflict with federal or state laws, including but not limited to those that are a prescribed condition to the allocation of federal funds to the state, the conflicting part of these rules is inoperative solely to the extent of the conflict, and this finding does not affect the operation of the remainder of these rules.