The Virginia House of Delegates has passed a bill that would direct the governing board of the state’s 529 college savings plan to establish an automatic enrollment payroll deduction individual retirement account (IRA) retirement savings program, to be known as the VirginiaSaves Program.
Participation in the program would be mandatory for eligible employers, defined in the bill as self-employed individuals, sole proprietors and nongovernmental employers having five or more employees that do not offer a qualified retirement plan to their employees. The bill has been referred to the state Senate’s Committee on Finance and Appropriations.
The bill calls for the 529 plan board to appoint a program advisory committee “to provide sophisticated, objective and prudent administrative and investment advice and direction, as requested by the board.” According to the bill, “Members of the committee shall demonstrate extensive experience in one or more of the following areas: retirement plan design, retirement plan investments, domestic or international equity or fixed-income securities, cash management, alternative investments, institutional real estate investments or managed futures.”
The 529 plan board will be responsible for setting the default automatic deferral rate for eligible participants, as well as default annual deferral escalation rates. The board is also tasked with developing education and outreach campaigns to eligible employers and eligible employees and exploring incentives to encourage participation in the program by employers and employees, “including a grant program to incentivize compliance with the program and to defray the costs of small businesses with five to 25 eligible employees.”
If the program is established, Virginia will join Illinois, Washington, Oregon and California as states that mandate private employer participation in a state-run retirement program.
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