January 24, 2007, Introduced by Senator THOMAS and referred to the Committee on Appropriations.
A bill to provide a retirement system to increase access to
retirement plans for small business employees; and to provide
certain duties of certain state agencies.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. This act shall be known and may be cited as the "MI
retirement program act".
Sec. 2. As used in this act:
(a) "Account" means an account in a plan established under
this act.
(b) "Account owner" means the participant, former participant,
or designated beneficiary who owns the account in a plan
established under this act.
(c) "Compensation" means remuneration paid to a participant
for services rendered to his or her employer, as stated in the plan
document.
(d) "Department" means the department of management and
budget.
(e) "Designated beneficiary" means an individual nominated by
a participant or a former participant under section 9 to receive a
distribution of the participant's account balance in the event of
death in the manner prescribed in section 10.
(f) "Employer" means an employer that pays a participant
compensation, including a self-employed individual. The eligibility
requirements of an employer to participate in the plan are stated
in the plan document. Employer participation in the retirement plan
established under this act is voluntary.
(g) "Former participant" means an individual who was a
participant and who terminates the employment upon which his or her
participation is based for any reason.
(h) "Participant" means an individual who is a participant in
the plan.
(i) "Plan" means the retirement plan or plans established by
the department of management and budget director pursuant to the
internal revenue code that is available to eligible participants
under this act.
(j) "Plan document" means the document that contains the
provisions and procedures of the plan in conformity with this act
and the internal revenue code.
(k) "Treasurer" means the treasurer of this state.
Sec. 3. (1) It is the intent of the legislature that the MI
retirement plan will be transferred to a private or nonprofit
entity no later than 5 years after the effective date of this act.
(2) The department director shall administer any plan under
this act and is the sole fiduciary of any plan under this act. The
department director may appoint an advisory board to assist the
department director.
(3) The department director shall determine the provisions and
procedures of the plan in conformity with this act and the internal
revenue code.
(4) The department director has the exclusive authority and
responsibility to employ or contract with personnel and for
services that the department director determines necessary for the
proper administration of and investment of plan assets, including,
but not limited to, managerial, professional, legal, clerical,
technical, administrative personnel or services, and personnel or
services to assist with the transition of responsibility to a
private or nonprofit entity.
Sec. 4. A participant, former participant, or designated
beneficiary who believes the plan document has been violated can
appeal, as stated in the plan document.
Sec. 5. Each participant, former participant, and designated
beneficiary shall direct the investment of the individual's
accumulated employer and employee contributions and earnings to 1
or more investment choices within available categories of
investments provided by the department director, in consultation
with the treasurer.
Sec. 6. The administrative expenses of any plan shall be paid
by the participants, former participants, and designated
beneficiaries who have not closed their accounts in the manner
stated in the plan document.
Sec. 7. (1) This section is subject to section 8.
(2) A participant's employer may contribute to the
participant's account an amount equal to a percent of the
participant's compensation or a dollar amount, as stated in the
plan document.
(3) A participant may periodically elect to contribute up to a
set percentage of his or her compensation or a dollar amount to his
or her account, as stated in the plan document. The participant's
employer may make an additional contribution to the participant's
account, as stated in the plan document.
Sec. 8. A participant is immediately 100% vested in his or her
contributions made to the account. Except as otherwise provided in
this section, a participant shall vest in the employer
contributions made on his or her behalf to the account according to
the schedule stated in the plan document.
Sec. 9. Pursuant to the plan document and conformity with this
act and the internal revenue code, a participant or former
participant may nominate 1 or more individuals as a designated
beneficiary by filing a notice of nomination as stated in the plan
document.
Sec. 10. (1) A participant is eligible to receive distribution
of his or her account balance upon becoming a former participant as
stated in the plan document.
(2) Upon the death of a participant or former participant, the
account balance of that deceased participant is considered to
belong to the designated beneficiary, if any, of that deceased
participant. If a valid nomination of a designated beneficiary is
not on file, the plan, in a lump sum distribution, shall distribute
the account balance to the legal representative, if any, of the
deceased participant or, if there is no legal representative, to
the deceased participant's estate as stated in the plan document.
If neither the beneficiary nor the estate can be located and
reasonable attempts to locate the beneficiary or the estate have
been made, the account balance shall be escheated to the department
of treasury, as stated in the plan document.
(3) A former participant or designated beneficiary may elect 1
or a combination of several of the methods of distribution of the
account balance as stated in the plan document and to the extent
allowed by federal law.
Sec. 11. (1) This act does not create and shall not be
construed to create any obligation upon this state or any agency or
instrumentality of this state to make any guarantee for the benefit
of an account owner or designated beneficiary.
(2) All documents used in connection with a contribution to an
account shall clearly indicate that the account is not insured by
this state and that the money deposited into and investment return
earned on an account are not guaranteed by this state.
Sec. 12. It is the intent of the legislature that the
department may recover administrative costs that are appropriated
for start-up administration of this plan by charging an
administrative fee to participants in the same manner as described
in section 6. It is the intent of the legislature that the
department reimburse the general fund for the cost of the start-up
administrative costs from the proceeds of the administrative fee
charged to participants.
Sec. 13. This section is enacted pursuant to section 401(a) of
the internal revenue code, 26 USC 401, that imposes certain
administrative requirements and benefit limitations for qualified
plans. This state intends that any plan administered under this act
be a qualified pension plan created in trust under section 401 of
the internal revenue code, 26 USC 401, and that the trust be an
exempt organization under section 501 of the internal revenue code,
26 USC 501. The department director shall administer any plans
created under this act to fulfill this intent.
Sec. 14. All plans administered under this act shall contain a
provision that the employer, the participant, and all designated
beneficiaries agree and understand that this state is acting as a
plan administrator and no liability shall accrue from this state to
any employer, participant, or designated beneficiary because of any
action taken in the administration of any plan administered under
this act.
Sec. 15. If the department determines that the plan should be
terminated, the department shall terminate the plan and pay the
account balances as stated in the plan document.
Sec. 16. This act shall be construed liberally to effectuate
the legislative intent, the purposes of the act, and as complete
and independent authority for the performance of each and every act
and thing authorized in the act, and all powers granted in the act
shall be broadly interpreted to effectuate such intent and purposes
and not as to limitation of powers.