The Kentucky House of Representatives currently has legislation before it that, if enacted, would make the Bluegrass State the second to have a state IRA program in place. Rep. Martha Jane King (D-Lewisburg) on Feb. 3 introduced HB 261, a measure that would establish the Kentucky Retirement Account Program, an automatic enrollment, payroll deduction Roth IRA program, for employees of private employers with five or more employees.
The measure would:
- allow employees to opt out if they would rather not participate;
- require employees to participate to deposit at least 3% of their wages per pay period into their Roth accounts;
- allow private employers with five or more employees to obtain an exemption from the program if they can establish that participation would create an irrebutable hardship for them;
- require that the program be administered by a third party administrator;
- require that the program contain a default investment fund but permit a range of investment options; and
- state that neither the state, nor employers, are liable for investment losses.
The bill would create a governing board for the program composed of the elected state Treasurer (currently Democrat Todd Hollenbach), the Secretary of the Labor Cabinet, the Secretary of the Finance Cabinet, two at-large members with expertise in retirement savings and one at-large member from the public. This board would come under the Treasurer's office for administrative purposes.
The board’s functions would include promulgating administrative regulations regarding the program, as well as developing and disseminating program information to all employers, including informational packets explaining the plan to employees.
The bill provides that the program would begin 24 months after enactment. However, there are two brakes on implementation:
- the board can delay implementation due to lack of funding; and
- the board can seek an opinion regarding whether ERISA is applicable and what impact it could have.
