SB 1076

WisEARNS retirement savings program

This bill creates a program called “WisEARNS” to provide a defined

contribution retirement savings plan for employees of private employers in this state

that do not offer an employer-sponsored retirement plan or that do not offer such a

plan to all employees. A defined contribution retirement savings plan is one that

pays retirement benefits based on an individual's account balance, rather than a

prescribed formula.

The bill creates a WisEARNS Board that is attached to the Office of the State

Treasurer. Under the bill, the board consists of the following nine members: the state

treasurer or his or her designee; the secretary of financial institutions or his or her

designee; two members appointed by the governor; two members appointed,

respectively, by the speaker of the assembly and president of the senate; one member

appointed by the state treasurer; one member appointed by the State of Wisconsin

Investment Board; and one member appointed by the other members. The bill

requires certain members to possess specified attributes or experience, and all

members serve four-year terms.

Under the bill, the state treasurer recommends a candidate for executive

director of the plan to the board, with the board approving the executive director. The

executive director serves outside the classified service and appoints staff outside the

classified service. The executive director serves at the pleasure of the board.

Under the bill, the board is required to establish the savings plan under which

employees may contribute to retirement savings accounts through payroll

deductions. Before establishing the plan, the board must conduct a legal analysis of

the applicability of the Internal Revenue Code and the Employee Retirement Income

Security Act of 1974 to the proposed plan, and must issue a request for information

from prospective vendors of a variety of defined-contribution retirement accounts

authorized under the Internal Revenue Code.

Under the bill, the default account type is a Roth IRA. The bill requires the

board to design the plan and contract with third-party investment administrators

to operate the plan. Among other requirements, the plan must do at least all of the

following: 1) require automatic participation by private employers in this state; 2)

require automatic enrollment for employees, but allow employees to opt out before

any payroll deduction is made; 3) prohibit employer contributions to employee

retirement accounts; and 4) allow an employee to roll over the amounts in an account

to a different IRS-qualified retirement account.

Also under the bill, unless the employee directs otherwise, during the

employee's first year of enrollment in the plan, the employer must make a payroll

deduction each pay period at a rate of 5 percent of the employee's gross wages, with

this rate increasing by 1 percent per year until the rate is the maximum rate allowed

under the Internal Revenue Code. Under the plan, the eligible employee must have