HF4921

Purpose

• Establish and expand a state retirement savings program (the Minnesota Secure Choice program) to help private-sector workers save for retirement. The bill adds new definitions, enrollment rules, contribution schedules, reporting requirements, governance provisions, and protections around data and enforcement.

Key Definitions and Terms

• Covered employee: a worker who is eligible to participate in the program, with specific exclusions (e.g., certain young workers, some federal employees, temporary/seasonal workers lasting 180 days or less, and others described in the bill).
• Covered employer: an employer that must enroll its eligible employees in the program.
• Enrollment window: the period when a covered employer must provide information to employees and enroll those who don’t opt out.
• Waiting period: a 30-day period before a newly eligible employee must begin participating.
• Contributions: employee payroll deductions into IRAs (Roth and/or traditional) or direct payments if not employed by a covered employer.
• Default contribution rate and escalation schedule: the initial automatic contribution rate for new participants and how it increases over time unless the employee elects otherwise.
• Roth IRA and Traditional IRA: the program can open these accounts for employees and set up relevant payroll deduction contributions.
• Annual report: a yearly summary of financial performance, program expenses, outcomes, and other metrics.

Main Provisions and What the Bill Seeks to Accomplish

• Program establishment and accounts
  • The board must operate a retirement savings program with contributions via payroll deduction or direct payment to IRAs (Roth and/or traditional).
  • Employees can contribute after-tax (Roth) unless they choose pretax contributions; the board sets procedures to open Roth and traditional IRAs for participants.
• Enrollment, waiting period, and contributions
  • Employers must enroll eligible employees during the enrollment window and begin payroll deductions no later than 30 days after the employee’s first day of work, unless the employee elects not to contribute.
  • A default escalation schedule sets increasing contribution rates over time (5% in year 1, 6% in year 2, 7% in year 3, 8% in year 4 and thereafter). Employees may adjust contributions or opt out annually; the board can change rates with advance notice (at least six months).
  • A 30-day waiting period applies before enrollment or contributions start for new hires; there are rules around when rates apply after a waiting period.
• Employer certification and coverage determination
  • Non-covered employers can certify through the program portal that they are not covered, with review, appeal, and potential enrollment if misclassification occurs.
• Default and opt-out
  • If no employee elects otherwise, contributions default to the set escalation schedule; employees have annual opportunities to change rates or opt out.
• Account management and fees
  • Each participating employee has an individual account; investment earnings accrue and fees/ losses are handled within the account.
  • The board must keep administrative costs reasonable and publish related financial information in annual reports.
• Notices, information, and consumer protections
  • The board must provide clear notices to employees about benefits, risks, enrollment, distributions, tax consequences, and disclaimers about liability and investment decisions.
  • Annual notices remind employees about IRA contribution limits and the need to adjust contributions to stay within those limits.
• Penalties for noncompliance
  • The bill creates penalties for covered employers that fail to enroll or to provide required information, with escalating amounts by anniversary years (e.g., $100 per employee by year 2, up to $4,000; higher amounts in later years).
  • If a covered employer fails to comply with multiple requirements, penalties can be doubled.
• Governance and administration
  • The program’s policymaking board is defined and expanded to seven members, including the executive directors of relevant state retirement and investment agencies, plus experienced professionals and representatives from private/public sectors.
  • The board has duties such as establishing enrollment processes, budgeting, acquiring services, selecting contribution criteria and distribution options, choosing a default investment fund, and maintaining low administrative costs.
  • The board can enter intergovernmental agreements with other state agencies to provide outreach and compliance support, while protecting data privacy.
• Data privacy
  • Employee and account data are confidential; data may only be disclosed under specific legal or consent circumstances.
• Reporting and transparency
  • The board must publish annual financial and outcomes reports and deliver them to legislative chairs and relevant bodies, including details on costs, participation, and program impact on social safety nets.
• Miscellaneous
  • The bill repeals a prior provision (187.07 subdivision 3) and adds several new sections to Minnesota Statutes (2024/2025 supplements).
  • Provisions authorize the program to seek gifts, grants, and donations (with conflict-of-interest safeguards) and to contract with third-party service providers as needed.

Significant Changes to Existing Law

• Introduces a comprehensive, mandatory enrollment framework for private employers to participate in a secure retirement program with a defined escalation of employee contribution rates.
• Establishes a formal default contribution rate schedule (5% to 8% over four years) and annual opt-out/change rights for employees.
• Expands governance to a seven-member board with specified expertise and terms, including ongoing authority to hire third-party service providers.
• Creates detailed reporting requirements, including annual financial and plan-outcome reports.
• Adds penalties for noncompliance by employers, with escalating penalties by anniversary dates.
• Clarifies and broadens data privacy protections for employee and account data.
• Enables intergovernmental cooperation with other state agencies for outreach, compliance, and administration.
• Repeals a prior subdivision (187.07 subdivision 3), replacing it with updated provisions and procedures.

Administration and Oversight

• The program is overseen by a seven-member board that sets policies, rates, and distribution options.
• The board must ensure enrollment processes, communications, and disclosures are clear and accessible.
• The program coordinates with other state agencies for outreach, compliance, and data privacy, while protecting private data.

Implementation Timeline (Highlights)

• Enrollment windows, waiting periods, and default contribution rates are defined with phased implementation and ongoing adjustments subject to board-approved schedules and notices.
• Six months’ advance notice is required for changes to employee contribution rates.
• Required notices and annual reports must be produced and distributed according to the defined timelines.

Relevant Terms - Minnesota Secure Choice - board of directors (program) - covered employer - covered employee - enrollment window - waiting period - enrollment and payroll deduction - contributions ( Roth IRA, Traditional IRA, after-tax/pre-tax) - default contribution rate - escalation schedule - opt out - annual report - penalties and enforcement - intergovernmental agreements - confidentiality / private data - trust / accounts (individual accounts) - administrative fees - notices (enrollment notices, annual IRA limit notices) - fiduciary duties - compliance and outreach - investment fund (default investment fund) - gifts, grants, donations to program - repealed subdivision (187.07, subd. 3)

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