California IRA Program Moves Forward

By ASPPA Net Staff • November 24, 2014 • 0 Comments

California’s state-sponsored retirement plan has taken another step forward with the issuance of an RFP for a consultant to conduct a market analysis, feasibility study and to design the program.

With this request for proposal (RFP), the Secure Choice Retirement Savings Investment Board says the contractor will:

  • assist the board with program design for the purposes of the market analysis, financial feasibility study and legal feasibility study;
  • conduct the market analysis and financial feasibility study; and
  • provide technical support for the legislative process if any further state or federal legislation is required.

The California Secure Choice Retirement Savings Trust would be a state-sponsored retirement plan for private-sector workers in California who currently lack access to a retirement plan through their employers.

According to the RFP, the program design would be narrowly tailored, as necessary or advisable, for the purposes of the market analysis, including financial feasibility study and legal feasibility study. The market analysis would be used to determine likely levels of participation and elements of the program that could maximize participation, maximize the likelihood of private sector financial providers offering products and services necessary to the program and minimize inconvenience or disruptions to employers. Finally, the feasibility study would include a financial analysis to determine whether likely demand and participation would make it possible for the proposed program to be self-sustaining as the statute requires.

The SCRSIB says that the contractor selected with this RFP will need to coordinate its work with the law firm selected to conduct the legal feasibility study, which would determine whether the program, as designed in the program design phase, “meets legal requirements specified in the Secure Choice Retirement Savings Trust Act.” including a directive NOT to implement this program “…if the IRA arrangements offered fail to qualify for the favorable federal income tax treatment ordinarily accorded to IRAs under the Internal Revenue Code, or if it is determined that the program is an employee benefit plan under the federal Employee Retirement Income Security Act.”

The goal as stated in the RFP is to get applications by Jan. 5, 2015; award a contract to a consultant on Jan. 26, 2015; and for that consultant to begin its work at the end of February 2015.
The RFP does not give a timeline about when the board expects the work to be completed.