Legislation is before the Virginia House of Delegates that would establish the My Virginia Plan Program, a state-based retirement plan. The bills were prefiled by Del. Luke Torian (D-Dumfries), who introduced them before the new session of the state’s General Assembly began on Jan. 9.
H.B. 2431 would create a state-based program similar to OregonSaves, the program run by the Oregon Treasury Department that provides retirement benefits for private-sector employees whose employers do not offer a retirement plan. The program, which would be run by the My Virginia Plan Board, would require all private-sector employers, as well as sole proprietors and the self-employed, to offer the program if they do not otherwise have a substitute retirement plan. But the legislation would not impose an explicit financial or tax penalty for noncompliance.
More specifically, H.R. 2431 would:
- allow enrollees to contribute to an account established under the program through payroll deduction;
- require an eligible employer to offer eligible employees the opportunity to contribute to the program through payroll deductions unless the eligible employer offers a substitute retirement plan;
- not require automatic enrollment of eligible employees or enrollees;
- have a default contribution rate, as determined by the Board and promulgated by regulation;
- offer default escalation of contribution levels that may be increased or decreased within the limits allowed under the Internal Revenue Code;
- provide for contributions to the program to be deposited directly with the investment administrator for the program;
- whenever possible, use existing employer and public infrastructure to facilitate contributions to the program, recordkeeping, and outreach;
- not require a participating employer to contribute to the account of an enrollee;
- require the maintenance of separate records and accounting for each account in the program;
- provide for reports on the status of program accounts to be provided to enrollees at least annually;
- allow for an enrollee to maintain an account regardless of his place of employment and to roll over funds into other retirement accounts;
- pool accounts established under the program for investment;
- be professionally managed;
- provide that the Commonwealth of Virginia and participating employers have no proprietary interest in the contributions to, or earnings on, amounts contributed to accounts established under the program;
- provide that the investment administrator for the program is the trustee of all contributions and earnings on amounts contributed to accounts established under the program;
- not impose any duties under ERISA on participating employers;
- keep administration fees in the plan low;
- allow the use of private sector partnerships to administer and invest the contributions to the program under the supervision and guidance of the board; and
- allow eligible employers and participating employers to establish a substitute retirement plan for some or all of their employees.
Like H.B. 2431, H.B. 2432 would provide retirement benefits for private-sector employees whose employers do not offer a retirement plan. Unlike the plan H.B. 2431 would establish, however, participation would be voluntary for eligible employers. It also would be voluntary for eligible employees.
Also unlike H.B. 2431, the bill would create a plan that was structured in a way similar to the program Washington state began to make available in March 2018. That program is a virtual marketplace in which financial services firms will offer low-cost retirement savings plans to businesses with fewer than 100 employees, including sole proprietors and the self-employed.
H.B. 2432 also would create a My Virginia Plan Board to run the program. It provides that the board would contract with a private entity to assist in carrying out its duties, which would be to:
- ensure that the program provides a range of investment options to meet the needs of investors with various levels of risk tolerance and various ages;
- approve a diverse array of retirement plan options that are available to employers on a voluntary basis; and
- ensure that there are at least two financial services firms offering approved plans.
The bill provides that the retirement plan options that would be available would include:
- life insurance plans that are designed for retirement purposes;
- plans that provide for employer contributions to enrollee accounts; and
- IRAs funded by payroll deductions in which the employer does not contribute to the enrollee's account.