SENATE BILL 392

54th legislature - STATE OF NEW MEXICO - first session, 2019

INTRODUCED BY

Bill Tallman and Tomás E. Salazar

 

 

 

 

 

AN ACT

RELATING TO PRIVATE-SECTOR RETIREMENT; ENACTING THE NEW MEXICO SAVES ACT; AUTHORIZING A NONPROFIT CORPORATION AND A BOARD; PROVIDING POWERS AND DUTIES; ALLOWING FOR A RETIREMENT SAVINGS WEB-BASED MARKETPLACE; ALLOWING FOR A VOLUNTARY SAVINGS PROGRAM FOR PRIVATE-SECTOR EMPLOYEES AND THE SELF-EMPLOYED; PROVIDING CONDITIONS; LIMITING LIABILITY OF EMPLOYERS AND THE STATE; PROVIDING FOR CONFIDENTIALITY OF PARTICIPANTS AND ACCOUNT INFORMATION; REQUIRING AUDITS AND ANNUAL REPORTS; REQUIRING PARTICIPATION BY COVERED EMPLOYERS UNDER CERTAIN CONDITIONS; PROVIDING A PRIVATE RIGHT OF ACTION.

 

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF NEW MEXICO:

     SECTION 1. [NEW MATERIAL] SHORT TITLE.--This act may be cited as the "New Mexico Saves Act".

     SECTION 2. [NEW MATERIAL] LEGISLATIVE FINDINGS AND PURPOSE.--

          A. The legislature finds that:

                (1) approximately one-half of the United States private-sector workforce is not participating in a workplace-sponsored retirement program, a trend that, if it continues, will have severe consequences for retirees, taxpayers, the economy and federal and state safety net programs;

                (2) social security, which many workers depend on, was never meant to be a sole-source retirement program and is woefully inadequate for most retirees to live on; and

                (3) it is necessary for the state to act to protect private-sector employees and taxpayers from the negative effects of retirement insecurity by educating New Mexico's workforce on the importance of saving for retirement, promoting the efforts by employers to adopt retirement programs for employees and assisting employees who do not have access to an employer-offered savings arrangement to initiate individual retirement accounts.

          B. The purpose of the New Mexico Saves Act is to provide for a nonprofit corporation with the responsibility to work with private-sector covered employers and employees throughout New Mexico to provide for voluntary payroll deductions for employee individual retirement accounts to benefit employees upon retirement and to alleviate unsustainable stress on state and federal safety net programs.

     SECTION 3. [NEW MATERIAL] DEFINITIONS.--As used in the New Mexico Saves Act:

          A. "administrative fund" means the New Mexico saves administrative fund;

          B. "board" means the New Mexico saves board of directors;

          C. "covered employee" means a person who is at least eighteen years of age and who is employed by a covered employer, either full time or part time, who has wages or other compensation that is allocable to the state or a person who is self-employed as a sole proprietor or an independent contractor; provided that "covered employee" does not include an employee:

                (1) covered under the federal Railway Labor Act;

                (2) on whose behalf an employer makes contributions to a multi-employer pension trust fund pursuant to the federal Taft-Hartley Act; or

                (3) of federal, state or local government or any agency, department, board, commission, institution or instrumentality of those governments;

          D. "covered employer" means a person engaged in a business, industry, profession, trade or other enterprise with its primary place of business physically located in New Mexico that agrees to execute payroll deduction instructions from covered employees, excluding a federal, state or local government or any agency, department, board, commission, institution or instrumentality of those governments;

          E. "director" means a member of the board;

          F. "financial institution" means a bank, savings and loan association, credit union, broker-dealer, asset manager, insurance company, mutual fund or other financial entity;

          G. "Internal Revenue Code" means the United States Internal Revenue Code of 1986, as amended;

          H. "New Mexico saves" means the retirement savings program that invests payroll deductions of covered employees without any contributions from covered employers;

          I. "New Mexico saves more marketplace" means a web-based marketplace for retirement savings plans for private-sector employers and employees separate from New Mexico saves;

          J. "participating employer" means a covered employer that provides payroll deductions for individual retirement accounts through New Mexico saves but that does not contribute to those accounts;

          K. "program manager" means a financial institution under contract with the board to serve as manager of New Mexico saves and the trust fund and receive contributions on behalf of program participants;

          L. "program participant" means a covered employee who is contributing to a Roth individual retirement account through New Mexico saves or has a Roth individual retirement account balance through New Mexico saves;

          M. "Roth individual retirement account" means a voluntary payroll deduction Roth individual retirement account that conforms to the requirements of Section 408A of the Internal Revenue Code;

          N. "total fees and expenses" means all fees, costs and expenses, including administrative expenses, investment expenses, investment advice expenses, accounting costs, actuarial costs, legal costs, marketing expenses, education expenses, trading costs, insurance annuitization costs and other miscellaneous costs; and

          O. "trust fund" means the trust fund in which the assets of New Mexico saves are held, including voluntary payroll deductions of covered employees or contributions by the self-employed, distributions, operations and administration or management of the trust.

     SECTION 4. [NEW MATERIAL] CORPORATION AUTHORIZED--BOARD OF DIRECTORS--ORGANIZATION--LIMITATION ON LIABILITY.--

          A. A nonprofit organization to provide a retirement program for covered employees is authorized to be formed pursuant to the provisions of the Nonprofit Corporation Act and the New Mexico Saves Act. The name of the corporation shall be "New Mexico saves".

          B. The corporation shall be governed by a board of directors composed of the following:

                (1) the state treasurer or the state treasurer's designee;

                (2) the executive director of the public employees retirement association or the executive director's designee;

                (3) the educational retirement director or the director's designee;

                (4) two members appointed by the governor as follows:

                     (a) one member who has a favorable reputation for skill, knowledge and experience in the field of retirement saving and investments; and

                     (b) one member who has a favorable reputation for skill, knowledge and experience relating to small business;

                (5) two members appointed by the speaker of the house of representatives as follows:

                     (a) one member who is a representative of an association representing employees or who has a favorable reputation for skill, knowledge and experience in the interests of employees in retirement saving; and

                     (b) one member to be a representative of the interests of retirees; and

                (6) two members appointed by the president pro tempore of the senate as follows:

                     (a) one member who has a favorable reputation for skill, knowledge and experience in the interests of employers in retirement saving; and

                     (b) one member who has a favorable reputation for skill, knowledge and experience in retirement investment products or retirement plan designs.

          C. The appointing authorities shall appoint the first members of the board for staggered terms so that the governor appoints one member for two years and one member for four years, the speaker of the house of representatives appoints one member for two years and one member for three years and the president pro tempore of the senate appoints one member for three years and one member for four years. Thereafter, members of the board shall be appointed for four-year terms. A member is eligible for reappointment. Members shall serve until their successors have been appointed and qualified. If there is a vacancy for any reason, the appointing authority shall make a like appointment for the unexpired term.

          D. The board shall:

                (1) elect a chair and other officers it deems necessary; and

                (2) hire an executive director, who shall be the chief administrative officer of the corporation and shall be responsible for the operation of the corporation.

          E. A director, the executive director or any other officer shall not be personally liable for any damages resulting from any:

                (1) negligent act or omission of an employee of the corporation;

                (2) negligent act or omission of another director or officer of the corporation; or

                (3) action taken as a director or officer or a failure to take any action as a director or officer unless the director or officer has breached or failed to perform the duties of the director's or officer's office and the breach or failure to perform constitutes malfeasance or misfeasance.

     SECTION 5. [NEW MATERIAL] CORPORATION--POWERS.--The corporation shall have the powers conferred upon domestic nonprofit corporations by the Nonprofit Corporation Act unless otherwise specified in the New Mexico Saves Act and shall also have the power to:

          A. sue and be sued in its corporate name;

          B. adopt and alter bylaws for its organization and internal management and adopt rules, policies and procedures as necessary and appropriate to implement the provisions of the New Mexico Saves Act and the administration and operation of the New Mexico saves more marketplace, New Mexico saves and the trust fund consistent with the Internal Revenue Code and rules adopted in accordance with that code, including ensuring that New Mexico saves and the trust fund satisfy all criteria for favorable tax treatment and comply with all other applicable federal and state laws;

          C. establish and maintain reserves for the administrative fund;

          D. sell, convey, pledge, exchange, transfer or otherwise dispose of its assets other than the trust fund for consideration upon terms and conditions that the corporation shall determine;

          E. make contracts, incur liabilities or borrow money at rates of interest that the corporation may determine;

          F. make and execute all contracts, agreements or instruments necessary or convenient in the exercise of the powers and functions granted the corporation by the New Mexico Saves Act; provided that the board may delegate such power to the executive director and may limit the scope of that delegation;

          G. receive and administer contracts, government or private grants and donations;

          H. fix, revise from time to time, charge and collect fees and other charges in connection with the New Mexico saves more marketplace or New Mexico saves;

          I. invest and reinvest its funds;

          J. conduct its activities, carry on its operations, have offices and exercise the powers granted by the New Mexico Saves Act;

          K. employ officers and employees that it deems necessary, set their compensation and prescribe their duties;

          L. enter into agreements with this or any other state;

          M. enter into agreements with insurance carriers to insure against any loss in connection with its operations;  and

          N. contract with private and public financial institutions, depositories, consultants, actuaries, counsel, auditors, investment advisers, investment administrators, investment management firms, other investment firms, third-party administrators and other professionals as may be required and to fix and pay their compensation.

     SECTION 6. [NEW MATERIAL] CORPORATION--DUTIES.--Pursuant to policies established by its board and as directed by its executive director, the corporation shall:

          A. participate in or sponsor retirement forums or conferences and make presentations to private-sector employers and employees throughout New Mexico to educate them on the benefits of saving for retirement;

          B. provide a blanket surety bond for all employees and directors in such amount as determined by the board and conditioned on the faithful performance of the duties of each employee during the employee's employment and each director during the director's term of office until the director's successor is appointed and qualified and on a proper accounting for all money and property in the employee's or director's official capacity;

          C. establish and direct the implementation and maintenance of the New Mexico saves more marketplace, New Mexico saves and the trust fund;

          D. cause the New Mexico saves more marketplace, New Mexico saves, the trust fund and arrangements and accounts established under New Mexico saves to be designed, established and operated:

                (1) in accordance with best practices for retirement saving vehicles;

                (2) to encourage participation, saving, sound investment practices and appropriate selection of investment options, including any default investments;

                (3) to maximize simplicity and ease of administration for covered employers;

                (4) to minimize costs, including by collective investment and economies of scale;

                (5) to require portability of benefits; and

                (6) to avoid preemption of New Mexico saves by federal law;

          E. establish procedures for the timely and fair resolution of program participant and other disputes related to accounts or program operation;

          F. develop and implement an outreach plan to gain input and disseminate information regarding the New Mexico saves more marketplace, New Mexico saves and retirement savings in general, including timely information to covered employers regarding New Mexico saves and how it applies to them, with special emphasis on their ability at any time to sponsor a specified tax-favored retirement program that would exempt them from any responsibilities under New Mexico saves;

          G. ensure that all contributions to Roth individual retirement accounts under New Mexico saves and any fees and charges shall be used only to:

                (1) pay benefits to program participants;

                (2) pay the cost of administering New Mexico saves and the New Mexico saves more marketplace;

                (3) make investments for the benefit of New Mexico saves; and

                (4) ensure that no assets of the New Mexico saves more marketplace, New Mexico saves or the trust fund are encumbered, expended or otherwise used for any purpose other than those specified in the New Mexico Saves Act;

          H. evaluate the need for, and procure if and as needed, insurance against any and all loss in connection with the property, assets or activities of New Mexico saves and the trust fund;

          I. collaborate with and evaluate the role of financial advisors or other financial professionals and financial institutions, including those assisting and providing guidance for program participants;

          J. require competitive selection pursuant to requests for proposals for personal service contracts over twenty thousand dollars ($20,000);

          K. discharge its duties and see to it that each director discharges that director's duties as a fiduciary with respect to the New Mexico saves more marketplace and New Mexico saves solely in the interest of the program participants and for the exclusive purpose of providing benefits to program participants and defraying reasonable expenses of administering the program and the trust fund with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent person acting in a like capacity and familiar with those matters would use in the conduct of an enterprise of a like character and with like aims; and

          L. perform such other activities as are needed to further the purposes of the New Mexico Saves Act.

     SECTION 7. [NEW MATERIAL] APPLICATION OF OTHER LAWS.--

          A. The corporation formed pursuant to the New Mexico Saves Act is separate and apart from the state and shall not be deemed an agency, public body or other political subdivision of the state for purposes of applying laws relating to personnel, procurement of goods and services, gross receipts tax, disposition or acquisition of property, capital outlay and per diem and mileage.

          B. Information obtained by the corporation that is proprietary or information about covered employees or accounts or participants in the New Mexico saves more marketplace is confidential and not subject to inspection pursuant to the Inspection of Public Records Act.

          C. The corporation, its officers, directors and employees shall be granted immunity from liability for any tort as provided in the Tort Claims Act and may enter into agreements with insurance carriers to insure against a loss in connection with its operations even though the loss may be included among losses covered by the risk management fund of New Mexico.

     SECTION 8. [NEW MATERIAL] EXECUTIVE DIRECTOR--POWERS AND DUTIES.--

          A. The executive director of New Mexico saves may:

                (1) hire, fire and recommend to the board compensation for staff, as needed; and

                (2) contract for legal, fiscal, investment and other expert advisors and service providers, none of whom shall be directors and all of whom shall serve at the pleasure of the board.

          B. The executive director shall:

                (1) oversee requests for proposals or other public competitions at the board's request;

                (2) conduct any business necessary for the efficient operation of the board and New Mexico saves;

                (3) develop and disseminate educational information and tools designed to educate program participants, covered employers, covered employees and other state residents about the benefits of planning and saving for retirement and information to help them decide the level of participation and savings strategies that may be appropriate for them, including information in furtherance of financial capability and financial literacy;

                (4) if necessary, determine the eligibility of an employer or employee to participate in New Mexico saves; and

                (5) perform other duties as assigned by the board.

     SECTION 9. [NEW MATERIAL] BOARD AND STAFF REQUIREMENTS AND PROHIBITIONS--CONFLICTS OF INTEREST--PRIVATE RIGHT OF ACTION.--

          A. Directors and staff of the corporation shall comply with the Gift Act, the Governmental Conduct Act and the Open Meetings Act in the same manner as state agencies and state employees.

          B. Directors or any member of the corporation's staff shall not:

                (1) directly or indirectly have any interest in the making of any investment of New Mexico saves or in gains or profits accruing from any such investment;

                (2) borrow any New Mexico saves-related or trust fund-related funds or deposits or use any such funds or deposits in any manner for personal gain or as an agent or partner of others; or

                (3) become an endorser, surety or obligor on investments made by New Mexico saves.

          C. If any director or employee of the corporation has an interest, either direct or indirect, in any contract to which New Mexico saves is or is to be a party, such interest shall be disclosed to the board in writing and shall be set forth in the minutes of the board. The director or employee having such interest shall not participate in any action by the board with respect to such contract.

          D. Any person harmed by an action taken by the board when there was an undisclosed conflict of interest or the person participated in any transaction involving such conflict of interest or failed to notify the board of such conflict may bring a civil suit against the board or person so conflicted who participated in a transaction.

     SECTION 10. [NEW MATERIAL] INVESTMENT POLICY--DEVELOPMENT AND IMPLEMENTATION.--The board shall develop and direct staff to implement an investment policy that defines New Mexico saves' investment objectives, that is consistent with the program's objectives and that provides for policies and procedures consistent with those investment objectives. To that end, the investment policy shall:

          A. designate appropriate default investments that include a mix of asset classes, such as target date funds and balanced funds;

          B. seek to minimize program participant fees and expenses of investment and administration; and

          C. include investment options available to account owners established as part of New Mexico saves and other program features that are intended to achieve maximum possible income replacement balanced with an appropriate level of risk in a Roth individual retirement account-based environment consistent with the investment objectives of the investment policy. The investment options may encompass a range of risk and return opportunities and allow for a rate of return commensurate with an appropriate level of risk in view of the investment objectives of the policy. The menu of investment options shall:

                (1) take into account the nature and objectives of New Mexico saves; and

                (2) consider the desirability, based on behavioral research findings, of limiting investment choices to a reasonable number and the extensive investment choices available to participants in the event that they roll over to an individual retirement account outside New Mexico saves.

     SECTION 11. [NEW MATERIAL] NEW MEXICO SAVES MORE MARKETPLACE.--

          A. The "New Mexico saves more marketplace" is a voluntary web-based marketplace to connect more small businesses with private-sector financial service firms that provide a range of retirement savings options for employers to offer to their employees. The marketplace established by the board is intended to help reduce the educational burdens that serve as barriers to entry into the retirement market for businesses with fewer than one hundred employees by educating them on plan availability and by promoting, without mandating employer participation, qualified low-burden retirement savings vehicles. The marketplace may result in more workers saving for retirement throughout their lives, while offering portability and convenience throughout their careers and ensuring that the people who participate in a marketplace plan have all the protections offered by federal law.

          B. The board may act in concert with other states offering a similar New Mexico saves more website. The board shall provide public notice of the availability of and the process for inclusion on the New Mexico saves more marketplace website before it becomes publicly available. The marketplace shall be available to the public before the board opens New Mexico saves for enrollment, and the marketplace website address shall be included on any internet website posting or other materials regarding New Mexico saves before it is offered to the public by the board. The New Mexico saves more marketplace shall be implemented no later than July 1, 2020.

          C. The board shall:

                (1) design the operation of the New Mexico saves more marketplace as a website to connect employers with retirement savings plans, ensuring that the design does not favor a particular kind of service provider or business model;

                (2) develop marketing materials; and

                (3) promote the benefits of retirement savings and financial literacy.

          D. The board shall allow all financial service firms that meet the requirements of the board to participate in the New Mexico saves more marketplace. In addition, the board shall not exclude, by policy or otherwise, any retirement plan or option within a plan that meets the requirements of the board and is otherwise allowed under federal or state law, including plan design options that are selected by the employer.

          E. Participation in the New Mexico saves more marketplace by covered employers and employees is voluntary; provided that an employer may use automatic enrollment and automatic escalation of contributions but must allow an employee opt-out option.

          F. The New Mexico saves more marketplace shall offer an array of private retirement plan options, including:

                (1) a simple individual retirement-type plan;

                (2) a payroll deduction individual retirement-type plan; and

                (3) a plan described in Section 401(a) or 403(b) of the Internal Revenue Code.

          G. The New Mexico saves more marketplace shall allow, but shall not require, the availability within approved plans of distribution options that provide income in retirement, such as systematic withdrawal programs, guaranteed lifetime withdrawal benefits and annuities.

          H. The board may establish administrative fees. Such fees shall be deposited in the administrative fund.

     SECTION 12. [NEW MATERIAL] NEW MEXICO SAVES--CREATED-- IMPLEMENTATION.--

          A. "New Mexico saves" is the voluntary private-sector payroll deduction Roth individual retirement account program created by the board in accordance with the provisions of the New Mexico Saves Act.

          B. New Mexico saves shall:

                (1) provide that the individual retirement account to which contributions are made shall be a Roth individual retirement account;

                (2) allow covered employees in New Mexico to voluntarily choose to contribute to a Roth individual retirement account through New Mexico saves, including allowing covered employees to contribute to a Roth individual retirement account through payroll deductions to New Mexico saves automatically, if approved by the board and allowed pursuant to federal law;

                (3) provide that the default option shall be a Roth individual retirement account with a target date fund investment and a contribution rate determined by the covered employee; provided that the covered employee may choose to stop participating altogether, choose a different investment from among the options available or choose to contribute at a higher or lower contribution rate, subject to the Roth individual retirement account contribution dollar limits applicable under the Internal Revenue Code;

                (4) provide for direct deposit of contributions into one or more investments selected by New Mexico saves;

                (5) be professionally managed;

                (6) not allow employer contributions by covered employers;

                (7) report on the status of each program participant's trust fund account to be provided to each program participant at least annually;

                (8) when possible and practicable, use existing employer and public infrastructure to facilitate contributions, recordkeeping and outreach and use pooled or collective investment arrangements;

                (9) provide that each program participant owns the contributions to and earnings on amounts contributed to the participant's trust fund account under New Mexico saves and that the state, the board and covered employers have no proprietary interest in those contributions or earnings;

                (10) be designed and implemented in a manner consistent with federal law to the extent that it applies to and is consistent with New Mexico saves not being preempted by the federal Employee Retirement Income Security Act of 1974;

                (11) keep total fees and expenses as low as possible;

                (12) adopt policies and procedures governing the distribution of funds from New Mexico saves, including such distributions as may be permitted or required by New Mexico saves and any applicable provisions of tax laws, with the objectives of maximizing financial security in retirement, helping to protect spousal rights and assisting program participants with the challenges of decumulation of savings. The board shall have the authority, in its discretion, to provide for one or more reasonably priced distribution options to provide a source of fixed regular retirement income, including income for life or for the program participant's life expectancy or for joint lives and life expectancies, as applicable; and

                (13) adopt policies and procedures promoting portability of benefits, including the ability to make tax-free rollovers or transfers from individual retirement accounts in New Mexico saves to other individual retirement accounts or to tax-qualified plans that accept such rollovers or transfers as long as any rollover is initiated by program participants and not solicited by agents or brokers.

          C. If a covered employer fails to transmit a payroll deduction contribution to New Mexico saves, on the earliest date the amount withheld from the covered employee's compensation can reasonably be segregated from the covered employer's assets, but not later than the fifteenth day of the month following the month in which the covered employee's contribution amounts are withheld from the covered employee's paycheck, the failure to remit such contributions on a timely basis shall be subject to the same sanctions as employer misappropriation of employee wage withholdings.

     SECTION 13. [NEW MATERIAL] POLICIES AND PROCEDURES FOR NEW MEXICO SAVES.--The board shall adopt policies and procedures to implement New Mexico saves that: 

          A. establish the processes for enrollment and contributions to payroll deduction individual retirement accounts, including elections by covered employees, withholding by participating employers of program participants' payroll deduction contributions from wages and remittance for deposit to the program participants' individual retirement accounts and voluntary enrollment and contributions by self-employed persons;

          B. establish the processes for withdrawals, rollovers and direct transfers from individual retirement accounts in the interest of facilitating portability and maximization of benefits;

          C. establish processes for phasing in enrollment of eligible persons, including phasing in enrollment of covered employees by size or type of covered employer, beginning January 1, 2021 and substantially ending January 1, 2022; and

          D. require outreach to covered employers, covered employees and the public regarding New Mexico saves. The rules shall specify the contents, frequency, timing and means of required disclosures from New Mexico saves to covered employees, covered employers, program participants and participating employers and other interested parties. These disclosures shall include:

                (1) the benefits associated with tax-favored retirement saving;

                (2) the potential advantages and disadvantages associated with contributing to Roth individual retirement accounts through New Mexico saves;

                (3) the eligibility rules for Roth individual retirement accounts;

                (4) that the program participant is solely responsible for determining whether and, if so, how much the program participant is eligible to contribute on a tax-favored basis to a Roth individual retirement account; provided that New Mexico saves, the covered employer, the state, the board, any director or other state official or employee of the state is not responsible for that determination;

                (5) the penalty for excess contributions to Roth individual retirement accounts and the method of correcting excess contributions;

                (6) instructions for enrolling, making elections to contribute or to decline to contribute and making elections regarding contribution rates, type of individual retirement accounts and investments;

                (7) instructions for implementing and for changing the elections;

                (8) the potential availability of a program participant's tax credit, including the eligibility conditions for the credit and instructions on how to claim it;

                (9) statements that New Mexico saves, the board, the staff, a covered employer or the state does not offer tax, investment or other financial advice, and that the program participant should contact appropriate professional advisors and that only the program participant is liable for decisions the program participant makes in relation to New Mexico saves;

                (10) statements that payroll deduction individual retirement accounts are not intended to be employer-sponsored retirement plans and that New Mexico saves is not an employer-sponsored retirement plan;

                (11) the potential implications of account balances in New Mexico saves for the application of asset limits under certain public assistance programs;

                (12) that the program participant is solely responsible for investment performance, including market gains and losses, and that individual retirement accounts and rates of return are not guaranteed by New Mexico saves, the board, individual directors, board staff, covered employers or the state or any of its officers or employees;

                (13) additional information about retirement and saving and other information and tools designed to promote financial literacy and capability, which may take the form of links to or explanations of how to obtain such information; and

                (14) how to obtain additional information about New Mexico saves.

     SECTION 14. [NEW MATERIAL] PROTECTION FROM LIABILITY FOR COVERED EMPLOYERS.--

          A. New Mexico saves is not an employer-sponsored plan. A covered employer is not liable for and does not bear responsibility for:

                (1) the decision to participate or not to participate in New Mexico saves by a covered employee;

                (2) any specific elections under New Mexico saves made by program participants;

                (3) program participants' or the board's investment decisions;

                (4) the administration, investment, investment returns or investment performance of New Mexico saves, including any interest rate or other rate of return on any contribution or Roth individual retirement account balance;

                (5) the design or administration of New Mexico saves or the benefits paid to program participants;

                (6) a program participant's awareness of or compliance with the conditions and other provisions of the tax laws that determine which persons are eligible to make tax- favored contributions to individual retirement accounts, in what amount and in what time frame and manner; or

                (7) any loss, failure to realize any gain or any other adverse consequences, including adverse tax consequences or loss of favorable tax treatment, public assistance or other benefits incurred by a program participant as a result of participating in New Mexico saves.

          B. No covered employer shall be or be considered to be a fiduciary in relation to New Mexico saves or the trust fund or any other arrangement of New Mexico saves.

     SECTION 15. [NEW MATERIAL] PROTECTION FROM LIABILITY FOR THE STATE.--

          A. The state or any agency, department, board, commission, institution, officer or employee of the state:

                (1) has no responsibility for compliance by program participants with the conditions and other provisions of the Internal Revenue Code that determine which persons are eligible to make tax-favored contributions to individual retirement accounts, in what amount and in what time frame and manner;

                (2) has no duty, responsibility or liability to any party for the payment of any benefits under New Mexico saves, regardless of whether sufficient funds are available in New Mexico saves to pay such benefits;

                (3) does not and shall not guarantee any interest rate or other rate of return on or investment performance of any contribution or account balance; and

                (4) is not liable or responsible for any loss, deficiency, failure to realize any gain or any other adverse consequences, including any adverse tax consequences or loss of favorable tax treatment, public assistance or other benefits, incurred by a program participant as a result of participating in New Mexico saves.

          B. The debts, contracts and obligations of New Mexico saves or the board are not the debts, contracts and obligations of the state or any of its agencies, departments, boards, commissions or institutions or any of its officers and employees. Neither the faith and credit nor the taxing power of the state is pledged directly or indirectly to the payment of the debts, contracts and obligations of New Mexico saves or the board.

     SECTION 16. [NEW MATERIAL] CONFIDENTIALITY OF PARTICIPANT AND ACCOUNT INFORMATION.--Individual account information of New Mexico saves pertaining to program participants, including names, addresses, telephone numbers, email addresses, personal identification information, investments, contributions and earnings, is confidential and shall be maintained as confidential:

          A. except to the extent necessary to administer New Mexico saves in a manner consistent with the New Mexico Saves Act, the tax laws of this state and the Internal Revenue Code; or

          B. unless the person who provides the information or is the subject of the information expressly agrees in writing to the disclosure of the information.

     SECTION 17. [NEW MATERIAL] COLLABORATION AND COOPERATION.--The board may enter into a memorandum of understanding or other agreement with a state agency to have the board receive outreach, technical assistance, enforcement and compliance services, collection or dissemination of information pertinent to New Mexico saves, subject to such obligations of confidentiality as may be agreed or required by law, or for other services or assistance. A state agency that enters into an agreement with the board shall collaborate to provide the outreach, assistance, information and compliance or other services or assistance to the board. The agreement shall cover the costs incurred by the state agency in gathering and disseminating information and the reimbursement of costs for any enforcement activities or assistance.

     SECTION 18. [NEW MATERIAL] NEW MEXICO SAVES ADMINISTRATIVE FUND.--

          A. The board shall establish the "New Mexico saves administrative fund" in any bank, savings and loan, credit union or other appropriate financial institution. The fund consists of:

                (1) money from the payment of application, administrative or other fees and the payment of other money due the board;

                (2) grants, gifts and donations;

                (3) money collected from contributions to or investment returns or assets of New Mexico saves or other money collected by or for New Mexico saves or pursuant to arrangements entered into pursuant to New Mexico saves to the extent permitted by federal and state law; and

                (4) earnings from investment of money in the fund.

          B. The board shall ensure that New Mexico saves is self-sustaining. To allow for the start-up and continuing operation, maintenance, administration and management of New Mexico saves until there is a sufficient balance in the administrative fund and New Mexico saves can generate sufficient funding through assessed fees and other charges, the board may borrow working capital as may be necessary for this purpose; provided, however, that loans shall be in the name of New Mexico saves and the board; and provided further that such loans shall be payable solely from the administrative revenue of New Mexico saves and shall not be considered a general obligation or other debt of the state. The board may enter into long-term procurement contracts with one or more financial providers that provide a fee structure that would assist New Mexico saves in avoiding or minimizing the need to borrow. The board shall not in any manner warrant or intimate that any state assets are or may be available to pay off any loans.

          C. The board may use money in the administrative fund solely to pay the administrative costs and expenses of New Mexico saves and the administrative costs and expenses the board incurs in the performance of its duties pursuant to the New Mexico Saves Act.

     SECTION 19. [NEW MATERIAL] AUDITS AND ANNUAL REPORTS.--

          A. The board shall cause an accurate account of all of New Mexico saves', the trust fund's and the board's activities, operations, receipts and expenditures to be maintained. Each year, a full audit of the books and accounts of the board pertaining to those activities, operations, receipts and expenditures, personnel, services and facilities shall be conducted by a certified public accountant and shall include direct and indirect costs attributable to the use of outside consultants, independent contractors and any other persons for the administration of New Mexico saves. For the purposes of the audit, the auditors shall have access to the properties and records of New Mexico saves and the board and may prescribe methods of accounting and the rendering of periodic reports in relation to projects undertaken by New Mexico saves.

          B. By August 1 of each year, the board shall submit to the governor, the state treasurer and the appropriate committees of the legislature an audited financial report, prepared in accordance with generally accepted accounting principles, detailing the activities, operations, receipts and expenditures of New Mexico saves and the board during the preceding calendar year. The report shall also include projected activities of New Mexico saves and the board for the current calendar year.

          C. The board shall prepare an annual report on the operation of New Mexico saves to be provided to appropriate state officials and made available to all program participants, participating employers and the general public.

     SECTION 20. [NEW MATERIAL] REQUIRED PARTICIPATION UNDER CERTAIN CONDITIONS.--If, after five years from the effective date of the New Mexico Saves Act, the board determines, based on state data, that the percentage of private-sector employees without access to a payroll deduction retirement plan remains above thirty percent, all covered employers shall be required to offer their employees the opportunity to automatically contribute to New Mexico saves through payroll deductions, unless a covered employer offers a qualified retirement plan, including a plan qualified pursuant to Section 401(a), 401(k), 403(a), 403(b), 408(k), 408(p) or 457(b) of the Internal Revenue Code. The board shall have the authority to phase in this requirement and establish enforcement provisions.

     SECTION 21. TEMPORARY PROVISION--DATES OF IMPLEMENTATION--CONDITIONS ON IMPLEMENTATION.--

          A. The New Mexico saves board of directors shall establish New Mexico saves so that covered employees may begin contributing to New Mexico saves no later than January 1, 2021.

          B. The New Mexico saves board of directors may phase in New Mexico saves so that the ability to contribute first applies on different dates for different classes of covered employees, including covered employees of covered employers of different sizes or types, and second applies to self-employed workers or independent contractors. Any staged or phased-in implementation schedule shall be substantially completed no later than January 1, 2022.

          C. The New Mexico saves board of directors shall not implement New Mexico saves if and to the extent that it determines that New Mexico saves is preempted by the federal Employee Retirement Income Security Act of 1974. Accordingly, if and as needed, the board shall implement New Mexico saves in a severable fashion to the extent practicable, if and to the extent that the board determines that:

                (1) a portion or aspect of New Mexico saves is preempted by that act, the board shall not implement that portion or aspect of New Mexico saves but shall proceed to implement the remainder of New Mexico saves to the extent practicable; or

                (2) some but not all of the payroll deduction individual retirement account arrangements or other arrangements pursuant to New Mexico saves are or would be employee benefit plans pursuant to that act, the board shall proceed to implement New Mexico saves with respect to the other arrangements pursuant to New Mexico saves to the extent practicable.

     SECTION 22. SEVERABILITY.--If any part or application of the New Mexico Saves Act is held invalid, the remainder or its application to other situations or persons shall not be affected.

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