Tax credits for retirement plan startup costs and automatic enrollment
The bill creates two income and franchise tax credits that may be claimed by
small businesses that have 100 or fewer employees who received at least $5,000 in
compensation during the preceding year. Both credits are based on similar federal
tax credits. The first credit may be claimed by small businesses for the costs of
setting up and administering a retirement plan and educating employees about the
plan. The credit is 50 percent of the costs, limited to the greater of $500 or the lesser
of $5,000 or $250 multiplied by the number of non-highly compensated employees
who are eligible to participate in the plan. The credit may be claimed for three
consecutive years and may be not be claimed for any costs that were deducted under
federal law. The second credit may be claimed by small businesses that provide for
automatic enrollment in their retirement plans. The credit is $500 and may be
claimed for three consecutive years, beginning with the year in which the small
business first provides for automatic enrollment.
For further information see the state fiscal estimate, which will be printed as
an appendix to this bill.
The people of the state of Wisconsin, represented in senate and assembly, do
enact as follows:
SB1076,1 1Section 1. 14.57 of the statutes is created to read:
SB1076,3,2 214.57 Same; attached boards.
SB1076,3,9 3(1) WisEARNS board. There is created a WisEARNS board that is attached
4to the state treasurer under s. 15.03. Of the members appointed under pars. (a) to
5(e), at least one must have experience in the field of investments, at least one must
6have experience as the owner of a business that employs between 5 and 50 people,
7and at least one must be an employee who is not eligible for or does not have access
8to an employer-sponsored retirement plan. The board shall consist of the following
9members appointed for 4-year terms:
SB1076,3,1010 (a) The state treasurer or his or her designee.
SB1076,3,1111 (b) The secretary of financial institutions or his or her designee.
SB1076,4,3
1(c) One member who has a favorable reputation for skill, knowledge, and
2experience in the field of retirement saving and investments, appointed by the
3governor.
SB1076,4,54 (d) One member who has a favorable reputation for skill, knowledge, and
5experience relating to small business, appointed by the governor.
SB1076,4,96 (e) One member who is a representative of an association representing
7employees or who has a favorable reputation for skill, knowledge, and experience in
8the interests of employees in retirement saving, appointed by the speaker of the
9assembly.
SB1076,4,1210 (f) One member who has a favorable reputation for skill, knowledge, and
11experience in the interests of employers in retirement saving, appointed by the
12president of the senate.
SB1076,4,1513 (g) One member who has a favorable reputation for skill, knowledge, and
14experience in retirement investment products or retirement plan designs, appointed
15by the state treasurer.
SB1076,4,1616 (h) One member appointed by the investment board.
SB1076,4,1817 (i) One member appointed, notwithstanding s. 15.07 (4), by a majority vote of
18all of the members identified in pars. (a) to (h).
SB1076,4,22 19(2) Membership prohibited. No individual appointed under sub. (1) (a) to (h)
20may be a dealer or broker in securities, or be employed by an entity that is primarily
21a dealer or broker in securities, and any member who accepts such employment shall
22vacate his or her membership.
SB1076,2 23Section 2. 14.69 of the statutes is created to read:
SB1076,4,24 2414.69 WisEARNS program. (1) Definitions. In this section:
SB1076,4,2525 (a) “Board" means the WisEARNS board.
SB1076,5,3
1(b) “Earnings” means all remuneration for employment or services provided to
2an individual in this state, including salary, fees, bonuses, and including the cash
3value of all remuneration paid in any medium other than cash.
SB1076,5,74 (c) “Eligible employee” means an employee who is 18 years of age or older who
5works in this state and whose private employer does not offer a retirement savings
6plan or who is not eligible to participate in a qualified retirement savings plan offered
7by his or her private employer.
SB1076,5,88 (d) “Investment administrator” means the vendor selected under sub. (3) (e).
SB1076,5,99 (e) “Plan" means the WisEARNS plan established under sub. (3).
SB1076,5,1410 (f) “Private employer” means any person engaging in any activity, enterprise
11or business in this state that has conducted such activity, enterprise, or business in
12this state for at least 2 years after the effective date of this paragraph .... [LRB inserts
13date], and did not offer a retirement plan qualified under the Internal Revenue Code
14during those 2 years.
SB1076,5,1615 (g) “WisEARNS retirement account" means a retirement savings account
16established under the plan.
SB1076,5,1817 (h) “WisEARNS savings account” means a savings account established under
18the plan that is not a retirement savings account.
SB1076,5,22 19(2) Duties of treasurer, executive director, and board. (a) The treasurer
20shall recommend an executive director of the plan to the board, which shall appoint
21an executive director outside the classified service, to serve at the pleasure of the
22board. The executive director may not be a member of the board.
SB1076,5,2423 (b) The executive director appointed under par. (a) shall appoint staff for the
24plan outside the classified service.
SB1076,6,5
1(3) Establishment of plan. The board shall establish, implement, and oversee
2a plan that meets the requirements specified in sub. (8) that shall enroll eligible
3employees beginning not more than 2 years after the effective date of this subsection
4.... [LRB inserts date]. Before establishing and implementing the plan, the board
5shall do all of the following:
SB1076,6,86 (a) Conduct a legal analysis regarding the applicability of the federal Employee
7Retirement Income Security Act of 1974, 29 USC 1001 to 1461, and the Internal
8Revenue Code to the proposed plan.
SB1076,6,129 (b) Enter into interagency agreements with the department of revenue, the
10department of financial institutions, and the department of workforce development
11to assist the board in providing outreach services to private employers and
12employees.
SB1076,6,1713 (c) Prepare and issue a request for information from prospective vendors of
14retirement savings accounts described in 26 USC 408 (a), individual retirement
15annuities described in 26 USC 408 (b), individual retirement bonds, and individual
16savings accounts to determine the feasibility of the proposed plan and the existence
17of plans in the private market that meet the requirements set forth in sub. (8).
SB1076,6,2018 (d) Investigate ways of allowing individuals who are not automatically enrolled
19in the plan to enroll in the plan and make contributions to retirement savings
20accounts.
SB1076,7,221 (e) Based on the results of the request for information under par. (c), prepare
22and issue a request for proposals from prospective vendors and select a vendor. The
23board shall determine the factors to be considered in selecting a vendor for the plan,
24which shall include the ability of the vendor to meet all of the requirements of the
25plan set forth in sub. (8) (a) to (z). Sections 16.705 and 16.75 do not apply to a contract

1entered into under this section. Before awarding a contract under this section, the
2board shall do all of the following:
SB1076,7,43 1. Conduct a cost-benefit analysis to identify and compare the total cost,
4quality, and technical expertise of the vendors that submitted proposals.
SB1076,7,115 2. Review the independence and relationship, if any, of the vendors that
6submitted proposals to employees of the board and the disclosure of any former
7employment of the vendor or employees of the vendor with the board, to minimize the
8likelihood of selection of a vendor that provides or is likely to provide services to
9industries, client groups, or individuals who are the object of state regulation or the
10recipients of state funding to a degree that the vendor's independence would be
11compromised.
SB1076,7,1812 3. If the vendor or employees of the vendor have access to federal tax
13information received directly from the federal internal revenue service or from a
14source that is authorized by the federal internal revenue service, for the performance
15of services under the contract under this section, require proof of a background
16investigation on each individual performing the services. Such a background check
17shall meet the standards established by the federal internal revenue service under
1826 USC 6103 (p) (4) (C).
SB1076,7,2019 (f) Ensure compliance by the plan with all applicable provisions of the Internal
20Revenue Code and U.S. department of treasury regulations.
SB1076,7,25 21(5) Ineligible vendor list. The board shall maintain a list of persons that are
22or have been a party to a contract under this section that have violated a provision
23of this section or a contract under this section. The board shall annually forward this
24list to the department of administration for inclusion in the ineligible vendor list
25under s. 16.705 (9).
SB1076,8,1
1(6) Powers of board. The board may do any of the following:
SB1076,8,42 (a) Enter into contracts or other arrangements for any of the following services
3as necessary for implementing and overseeing the plan and otherwise carrying out
4the purposes of this section:
SB1076,8,75 1. The services of financial institutions and depositories and of consultants,
6accountants, attorneys, investment advisers, investment administrators, 3rd-party
7administrators, and other professionals.
SB1076,8,98 2. The services of other state agencies under interagency agreements under
9sub. (3) (b).
SB1076,8,1310 (b) Solicit and accept contributions, gifts, grants, and bequests for the
11WisEARNS plan administration trust fund or for any other purpose for which a
12contribution, gift, grant, or bequest is made and received. Moneys received under
13this paragraph shall be deposited in the WisEARNS plan administration trust fund.
SB1076,8,1914 (c) Enter into agreements with other governmental entities in this state or
15outside this state, which maintain retirement savings programs similar to
16WisEARNS, to collectively invest the assets of the plan to the extent allowed by
17federal law to benefit retirement savings account holders participating in the plan
18by achieving efficiencies designed to minimize costs for the plan and retirement
19savings account holders participating in the plan.
SB1076,8,20 20(7) Duties of board. The board shall do all of the following:
SB1076,8,2121 (a) Promulgate rules for the administration of the plan.
SB1076,8,2522 (b) Collect application, account, or administrative fees to defray the costs of
23administering the plan at the lowest cost possible. Fees collected under this
24paragraph shall be deposited in the WisEARNS plan administration trust fund. Fees
25under this paragraph may not be linked to the value of the trust fund.
SB1076,9,5
1(c) Establish a policy for the investment of moneys contributed to a retirement
2savings account, and direct the investment of such moneys in a manner that is
3consistent with any investment restrictions established by the board. Those
4investment restrictions shall be consistent with the objectives of the plan and with
5the standard of responsibility specified in s. 25.15 (2).
SB1076,9,86 (d) Evaluate the need for, and procure as needed, insurance to cover any
7liabilities of the plan and to cover each member of the board for loss or liability
8resulting from the board member's act or omission as a member of the board.
SB1076,9,109 (e) Determine the eligibility of employers, employees, or individuals to
10participate in the plan.
SB1076,9,1211 (f) Establish policies for emergency withdrawals from WisEARNS savings
12accounts.
SB1076,9,1513 (g) Annually review the performance of vendors regarding, at a minimum,
14investment returns, fees, and customer service, and publish results of the review on
15the plan's Internet site.
SB1076,9,1716 (h) Exercise any other powers as may be necessary to oversee the plan and
17otherwise carry out the purposes of this section.
SB1076,9,19 18(8) Requirements for plan. The board shall design the plan so that it meets
19all of the following requirements:
SB1076,9,2320 (a) The plan allows eligible individuals employed for compensation in this state
21by a private employer in this state to contribute to WisEARNS accounts through
22payroll deductions. The plan allows self-employed individuals with earnings in this
23state to contribute to WisEARNS accounts.
SB1076,9,2524 (b) The plan requires all private employers in this state to withhold and remit
25employee contributions to the plan through payroll deductions. If an employer offers

1a qualified retirement plan under the Internal Revenue Code, including a plan
2qualified under section 401 (a) or (k), 403 (a) or (b), 408 (k), or 457 (b) of the Internal
3Revenue Code, the employer does not need to withhold and remit employee
4contributions for employees who are eligible to participate in the
5employer-sponsored plan.
SB1076,10,76 (c) Except as provided in par. (d), the plan provides that the default individual
7retirement account is a Roth IRA account.
SB1076,10,108 (d) If the plan offers options for account types other than a Roth IRA, the plan
9allows an enrolled eligible employee to select any of these other account types for
10investing contributions under the plan.
SB1076,10,1311 (e) The plan provides an eligible employee who is enrolled in the plan with
12multiple investment options within each account type, which may include any of the
13following investment options:
SB1076,10,1414 1. A stable value or capital preservation fund.
SB1076,10,1615 2. A target date index fund or age-based fund that automatically rebalances
16asset allocations based on the eligible employee's age.
SB1076,10,1717 3. A low-cost fund focused on income generation.
SB1076,10,1818 4. A low-cost fund focused on asset growth.
SB1076,10,1919 5. A low-cost fund focused on balancing risk and return.
SB1076,10,2020 (f) The investment policy for the plan includes all of the following concepts:
SB1076,10,2121 1. Best practices in the industry for retirement savings vehicles.
SB1076,10,2222 2. The promotion of portability of retirement savings accounts.
SB1076,10,2323 3. The minimization of fees and expenses.
SB1076,10,2524 4. The maximization of possible income replacement, balanced with
25appropriate levels of risk.
SB1076,11,5
1(g) The plan requires the investment administrator to offer to each enrolled
2eligible employee, before the employee makes his or her investment selections, a tool
3allowing the employee to identify the employee's risk tolerance and projected
4retirement date as an aid to the employee in selecting suitable investments under
5the plan.
SB1076,11,156 (h) The plan requires that the first $400 of an enrolled eligible employee's
7contributions be deposited in a WisEARNS savings account and thereafter, unless
8the employee selects a different investment option, the employee's contributions be
9to a WisEARNS retirement account and deposited in a fund described in par. (e) 2.
10The plan shall allow an employee to select a different investment option before the
11first $400 is deposited in a WisEARNS retirement account. An employee shall be
12allowed to withdraw the first $400 for emergency use from the employee's
13WisEARNS savings account, and contributions subsequent to the withdrawal shall
14be deposited in the WisEARNS savings account until the amount in the employee's
15WisEARNS savings account is restored to $400.
SB1076,11,2016 (i) Except as provided in par. (k), during an eligible employee's first year of
17enrollment in the plan, the participating employer's payroll deduction each pay
18period shall be at a rate of 5 percent of the employee's gross wages, and this deducted
19amount shall be remitted to the investment administrator as the employee's account
20contribution.
SB1076,11,2321 (j) Except as provided in par. (k), a participating employer shall increase the
22payroll deduction rate under par. (i) by 1 percent per year until the payroll deduction
23rate is the maximum allowed under the Internal Revenue Code.
SB1076,12,3
1(k) An enrolled eligible employee may elect a different payroll deduction rate
2than that provided for in pars. (i) and (j), except that the rate may not be less than
31 percent or more than the maximum allowed under the Internal Revenue Code.
SB1076,12,54 (L) The plan sets forth a process for enrollment of eligible employees in the
5plan, which shall include all of the following processes:
SB1076,12,66 1. Automatic enrollment of eligible employees in the plan.
SB1076,12,77 2. Opting out of enrollment in the plan before any payroll deduction is made.
SB1076,12,98 3. Opting out of enrollment in the plan at any time after a payroll deduction
9is made.
SB1076,12,1110 4. Changing the payroll deduction rate from that provided for in pars. (i) and
11(j)
SB1076,12,1212 (m) The plan provides a process for all of the following:
SB1076,12,1513 1. Employer withholding from employees' wages contributions to WisEARNS
14accounts and remittance of those contributions to the investment administrator of
15the plan.
SB1076,12,1716 2. Eligible employees' and self-employed individuals' nonpayroll contributions
17to their WisEARNS retirement accounts.
SB1076,12,1918 3. Emergency withdrawals from WisEARNS savings accounts in accordance
19with procedures established by the board under sub. (7) (f).
SB1076,12,2120 (n) The plan requires contributions to WisEARNS accounts to be deposited
21directly with the investment administrator of the plan.
SB1076,12,2422 (o) The plan, to the greatest extent possible, uses existing employer and public
23infrastructure to facilitate contributions to WisEARNS accounts and outreach to
24employees and private employers.
SB1076,13,2
1(p) The plan prohibits employer contribution to an employee WisEARNS
2account.
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