Analysis Complete for Senate Bill 5740

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SB 5740, titled AN ACT Relating to creating the secure choice retirement savings program, 10 year analysis is complete.

The Office of Financial Management has identified this bill as requiring a ten-year projection of increased cost to the taxpayers or affected fee payers.

Ten-year projection:

This legislation creates the secure choice retirement saving program. This program is automatic for all employees 21 years old or older. However, employees may opt out of the program without penalty.

This fiscal note only addresses those sections of the bill that impact the Department of Revenue (Department).

This legislation requires the collection of a penalty from covered employers for non-compliance through existing audit functions.  

Section 3 defines a covered employer as an employer that has either been in business for at least 2 years and has no current retirement plan (per the IRS code) or an employer who elects to be a covered employer. The employer must also be engaged in business in the state and employ one or more individuals in the state.

Section 3 also defines a covered employee as any individual who is 21 or older and who is employed by a covered employer.

Section 6 provides guidelines, by which, the Department will enforce penalties on covered employers.

Section 9 adds collecting penalties from covered employers to our existing audit functions.  As of June 30, 2021 a covered employer who does not allow employees to participate in the program must pay a penalty of $250, if they are given notice.  The $250 penalty is due between day 1 and day 180 after the notice has been given. If they are still non-compliant after an additional 180 days, they would be subject to an additional penalty of $500.

The bill takes effect 90 days after final adjournment of the session in which it is enacted.

Revenue associated with enforcement of the $250 and $500 penalties is expected to be minimal.