Strengthening Financial Security Through Short-Term Savings Accounts Act of 2018
This bill allows employers to enroll employees in short-term savings accounts that are funded using automatic contributions deducted from participating employees' wages.
For each pay period, the employer must transfer to the account an amount equal to the percentage of the employee's compensation or a fixed amount, as determined by the employer.
Employees may elect to adjust, stop, or pause their contributions. The balance in an account may not exceed $10,000 (adjusted annually for inflation) and must be made readily available to the employee at any time.
[Congressional Bills 115th Congress]
[From the U.S. Government Publishing Office]
[S. 3218 Introduced in Senate (IS)]
<DOC>
115th CONGRESS
2d Session
S. 3218
To allow employers to offer short-term savings accounts with automatic
contribution arrangements for financial emergencies.
_______________________________________________________________________
IN THE SENATE OF THE UNITED STATES
July 17, 2018
Ms. Heitkamp (for herself, Mr. Cotton, Mr. Booker, and Mr. Young)
introduced the following bill; which was read twice and referred to the
Committee on Health, Education, Labor, and Pensions
_______________________________________________________________________
A BILL
To allow employers to offer short-term savings accounts with automatic
contribution arrangements for financial emergencies.
Be it enacted by the Senate and House of Representatives of the
United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Strengthening Financial Security
Through Short-Term Savings Accounts Act of 2018''.
SEC. 2. PURPOSE.
The purpose of this Act is to improve financial security,
facilitate convenient and affordable access to all types of employer
sponsored short-term savings accounts, reduce leakage, and complement
overall retirement savings.
SEC. 3. STAND-ALONE SHORT-TERM SAVINGS ACCOUNTS.
(a) In General.--An employer may make available to employees a
stand-alone, short-term savings account, using an automatic
contribution arrangement (as defined in section 514(e)(2) of the
Employee Retirement Income Security Act of 1974 (29 U.S.C. 1144(e)(2)))
in accordance with this Act. An employer that offers employees a short-
term savings account shall deduct amounts from each participating
employee's wages in accordance with subsection (e) and transfer such
amounts to a savings account that meets the requirements of subsection
(b).
(b) Account Requirements.--
(1) In general.--A short-term savings account offered in
accordance with subsection (a) shall--
(A) have no minimum balance requirements,
reasonable fees as determined by a joint rulemaking by
the Secretary of Labor and the Secretary of the
Treasury, in consultation with other financial
regulators, and a maximum account balance of not to
exceed $10,000, adjusted annually for inflation and by
the Secretary of the Treasury;
(B) have a balance that is made readily available,
in whole or in part, at any time to an individual who
owns the account, subject to any reasonable, limited
restrictions imposed on withdrawals pursuant to the
terms of the arrangement; and
(C) make available to the individual who owns the
account, not later than 5 business days after the
individual terminates employment, the entire account
balance.
An employer may structure and adapt such short-term savings
account to assist employees with short-term financial
emergencies, so long as such savings accounts meet the minimum
standards set forth in this Act.
(2) Coordination.--An employer may coordinate with a bank,
credit union, or payroll card provider that is licensed by the
Federal Government or a State government offering a short-term
savings account under subsection (a), including--
(A) an FDIC insured pooled account that the
employer opens in the name of the employer for which
the employer maintains responsibility, subject to
reasonable fees as defined in section 1022.380 of title
31, Code of Federal Regulations, and New Opinion No. 8
of the General Counsel of the Federal Deposit Insurance
Corporation (73 Fed. Reg. 67155 (November 13, 2008)), a
variation of a savings account for a short-term savings
account offered under subsection (a); and
(B) an individual account opened in the name of the
employee for which the employee maintains
responsibility.
(3) Regulations.--The Secretary of the Treasury, in
consultation with the Secretary of Labor, shall promulgate
regulations carrying out this subsection. Such regulations
shall address the responsibility of employers to establish and
maintain reasonable claims procedures, any associated penalties
for failure to comply with this Act, the timing and notice of
benefit determination, how the funds must be invested and
minimum interest requirements, and the manner and content of
benefit determination, rights of participants in these
accounts, among other things as they determine are necessary.
(4) Applicability.--Notwithstanding any other provision of
law, an employer may designate an account for direct deposit
for a short-term savings account offered under subsection (a).
(c) Account Sponsor Requirements.--Employers--
(1) shall have a fiduciary responsibility to ensure that--
(A) any account offered in accordance with
subsection (a) meets the requirements of subsection
(b);
(B) relevant information about participating
employees is submitted safely and securely to the
insured depository institution or insured credit union;
(C) amounts are properly deducted from employees'
wages and transferred to the financial institution on
behalf of the employees in accordance with subsection
(f);
(D) employees have clear instructions and an easy
means to make changes to contributions or stop them
entirely at any time; and
(E) employees have clear guidance on how they may
access their money and how quickly they will receive
their money upon request; and
(2) have no other fiduciary responsibility beyond the
responsibilities described in paragraph (1).
(d) Applicability of Banking Laws.--
(1) In general.--Except as provided in paragraph (2),
Federal banking laws (including regulations) shall apply to
short-term savings accounts as if the short-term savings
accounts were savings accounts.
(2) Know your customer laws.--Notwithstanding any other
provision of law, a bank, credit union, or payroll card
provider offering a short-term savings account under subsection
(a) shall be treated as if it were an ERISA plan, for purposes
of rules relating to Anti-Money Laundering, Customer
Identification Program (CIP), Suspicious Activity Report (SAR)
requirements, or any other rules required to establish the
identity of the account holder before an account for a short-
term savings account is opened in accordance with this Act. The
Secretary may prescribe regulations which would establish
minimum standards that such an arrangement would be required to
satisfy in order for this subsection to apply with respect to
such an account.
(e) Preemption of State Anti-Garnishment Laws.--Notwithstanding any
other provision of law, this section shall supersede any law of a State
which would directly or indirectly prohibit or restrict the use an
automatic contribution arrangement for a short-term savings account, as
if it were an ERISA plan. The Secretary may prescribe regulations which
would establish minimum standards that such an arrangement would be
required to satisfy in order for this subsection to apply with respect
to such an account.
(f) Transfers to Accounts.--The account sponsor shall transfer each
pay period--
(1) to the short-term savings account an amount equal to
the percentage of the employee's compensation, or a fixed
amount, as the account sponsor determines; and
(2) employees shall have the ability to adjust, stop, or
pause, their contributions as they see fit.
(g) Disclosure Requirements.--An account sponsor shall disclose in
writing, or electronically if the employee so elects, to the
participating employee within 5 business days before the commencement
of the contributions to the account--
(1) a short-term savings account description, including the
contours, all terms and conditions, and fees associated with
the short-term savings account;
(2) describe the tax treatment of the short-term savings
account and the tax treatment of any tax favored account that
is offered;
(3) any rules with respect to, deposits or contributions
into the account, maintenance of the account, investments,
balances, escalations not to exceed 4 percent and withdrawals,
replenishment of the accounts, balance caps and other features
of the account; and
(4) the access and availability to account information and
related account information to participating employees.
(h) Effective Date.--The provisions of this Act shall be effective
upon the date of enactment of this Act.
SEC. 4. SHORT-TERM SAVINGS ACCOUNT WITHIN A RETIREMENT PLAN.
(a) In General.--Not later than one year after the date of
enactment of this Act, the Secretary of the Treasury or the Secretary's
delegate shall issue regulations or other guidance that interprets and
applies the rules of the Internal Revenue Code of 1986 applicable to
tax-qualified plans and arrangements described in sections 219(g)(5),
408 (including 408(q) and 408A), and 457(b) of such Code in a manner
that facilitates the offering and operation, including automatic
enrollment and automatic escalation, of short-term savings arrangements
as part of or in conjunction or coordination with, any such tax-
qualified plan or arrangement.
(b) Requirements.--Any short-term savings account that is part of a
tax-qualified plans and arrangements described in sections 219(g)(5),
408 (including 408(q) and 408A), and 457(b) of the Internal Revenue
Code of 1986 shall comply with applicable plan requirements, including
provisions for the retention of assets in a qualified trust, timely
payment of assets, and distribution of assets upon plan or participant
termination. Any savings account that is not part of a tax-qualified
plan, bank or credit union, shall be subject to appropriate regulations
by the Department of Treasury.
SEC. 5. PILOT PROGRAM.
The Secretary of the Treasury may establish a pilot program that
incentivizes employers to set up short-term savings accounts under this
Act. Any employer that participates in the pilot program shall be
eligible to receive not more than $400 per employee account.
SEC. 6. STUDY OF EFFECTIVENESS OF SHORT-TERM SAVINGS ACCOUNT OPTIONS.
Not later than 1 year after the date of enactment of this Act, the
Comptroller General shall study, and report to the Committee on
Finance, the Committee on Banking, Housing, and Urban Affairs, and the
Committee on Health, Education, Labor, and Pensions of the Senate and
the Committee on Ways and Means of the House of Representatives, the
effectiveness of various methods for developing the savings accounts
described in this Act, including after-tax employee contributions to a
plan described in section 401(k) of the Internal Revenue Code of 1986,
deemed treatment of such plans as a Roth plan for purposes of such
Code, and the use of depository accounts, including payroll cards.
<all>
Introduced in Senate
Read twice and referred to the Committee on Health, Education, Labor, and Pensions.
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