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Bill > SF185

IA SF185

A bill for an act establishing a retirement savings plan trust, and including implementation provisions.

summary

Introduced
02/03/2025
In Committee
02/03/2025
Crossed Over
Passed
Dead

Introduced Session

91st General Assembly

Bill Summary

This bill creates the Iowa retirement savings plan trust under the office of treasurer of state for the purpose of helping Iowans save for retirement. The bill provides that the trust be operated so that, for federal tax purposes, it meets the requirements of a retirement plan as provided by the Internal Revenue Code and functions according to other federal law. The state treasurer is the trustee of the trust and has numerous powers, as specified in the bill, for the purpose of carrying out the purpose of the trust. Powers granted the treasurer of state to effectuate the purpose of the trust include entering into agreements with trust participants and employers, investing moneys in the trust, and entering into any agreements or contracts necessary to carry out the purposes of the trust. The bill provides that individuals who are employed for compensation in this state and whose wages are subject to withholding by the state are automatically enrolled in the trust by the treasurer of state with a default contribution rate of 5 percent, which can be adjusted at the participant’s request. A participant may opt out of the trust at any time. Employers may allow employees to have their contributions deducted from their paychecks. Employer contributions to the trust are not required, and if an employer chooses to make contributions, the employer has no proprietary right to the moneys in the trust. The bill requires the treasurer of state to provide participants with reports on the trust fund at least once per year. The bill also requires that all participant account information be maintained as confidential, except as necessary to administer the trust or as agreed to in writing by the person who provides the information or is the subject of the information. The bill prohibits local governments from establishing or offering retirement plans for anyone other than public employees. The bill provides that the state, the treasurer of state, and the trust shall not guarantee any rate of return on any contributions to the trust and are not liable for any loss incurred by any person as a result of participating in the trust. The bill requires the treasurer to submit an annual audited financial report on the operations of the trust. The bill provides that when the requirements of the bill are enacted, the treasurer shall not allow individuals to make contributions to the trust earlier than July 1, 2026.

AI Summary

This bill establishes the Iowa Retirement Savings Plan Trust, a state-sponsored retirement savings program designed to help workers who lack access to employer-sponsored retirement plans save for their future. The bill automatically enrolls individuals working in Iowa at a 5% contribution rate, with the option to adjust or opt out, and allows contributions through payroll deductions (though employers with fewer than five employees or those already offering qualified retirement plans are not required to participate). The treasurer of state will serve as the trust's trustee, with broad powers to manage the program, including establishing investment strategies, accepting grants and gifts, procuring insurance, and creating administrative rules. Participants can maintain their accounts regardless of employment changes and can roll over funds to other retirement accounts. The trust will operate in compliance with federal tax laws, specifically the SECURE 2.0 Act, and will provide annual reports to participants while maintaining strict confidentiality of account information. Notably, the state does not guarantee investment returns and participants bear the investment risk. The program is set to begin accepting contributions no earlier than July 1, 2026, and is designed to address the significant retirement savings gap in Iowa, where a 2019 study found that 39% of residents rely solely on Social Security and 37% have less than $5,000 saved for retirement.

Committee Categories

Government Affairs

Sponsors (12)

Last Action

Subcommittee: Rozenboom, Blake, and Schultz. S.J. 203. (on 02/05/2025)

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