Assigned to FIN FOR
COMMITTEE
Assigned to FIN FOR
COMMITTEE
ARIZONA STATE SENATE
Fifty-Third Legislature, Second Regular Session
deferred compensation plans; governing committee
Purpose
Makes various changes to the state deferred compensation plan statutes.
Background
Laws 1972, Chapter 133 established the Governing Committee for Tax Deferred Annuity and Deferred Compensation Plans (Committee) for the purpose of: 1) investigating and approving tax deferred compensation and annuity programs which give state employees income tax benefits authorized under federal law; and 2) entering into agreements with life insurance companies authorized to do business in Arizona, bank trustees and custodians, as well as investment counseling firms registered with the United States Securities and Exchange Commission.
Current law outlines Committee membership as follows: 1) three state employees appointed by the Governor; 2) the Director of the Arizona Department of Administration (ADOA), or their designee; 3) the Superintendent of the Arizona Department of Financial Institutions, or their designee; 4) the Director of the Arizona Department of Insurance, or their designee; and 5) the Director of the Arizona State Retirement System, or their designee (A.R.S. § 38-871).
State employees who participate in tax deferred annuity and deferred compensation programs approved by the Committee must provide their employers with written authorization to make reductions or deductions in their remuneration, as provided in an executed deferred compensation agreement. ADOA is required to initiate payroll reductions or deductions for approved tax deferred compensation and annuity plans as directed by each participating employee (A.R.S. §§ 38-872 and 38-873). Deferred compensation plans currently available to state employees include a 457(b) Traditional Deferred Compensation Plan, a 457(b) Roth Deferred Compensation Plan and a 401(a) Deferred Compensation Plan.
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
1. Renames the Committee as the Governing Committee for Deferred Compensation Plans.
2. Modifies requirements for the three Governor-appointed Committee members by allowing the Governor to appoint either of the following:
a) individuals who have an account balance in a deferred compensation plan overseen by the Committee, who may be contributing or noncontributing participants and either retired or nonretired; or
b) members of the public who are not deferred compensation plan participants with at least 10 years of relevant experience in either finance, investment management, pension or retirement plans.
3. Specifies that Committee members are subject to state conflict of interest statutes.
4. Clarifies that the Committee may enter into agreements with companies that possess demonstrable experience in areas related to deferred compensation plans.
5. Requires the Committee to meet quarterly or more frequently, as the Committee deems necessary. Current law requires the Committee to meet monthly or more frequently, as the Chairman of the Committee deems necessary.
6. Requires the Committee to arrange for a performance review of the deferred compensation plans or participation in benchmarking surveys or studies at least every five years. Current law requires a performance audit at least once every three years.
7. Removes the requirement for the Committee to adopt rules governing the solicitation of employees by persons offering deferred compensation plans to such employees.
8. Removes the option for state employees to participate in tax deferred annuities and removes references to tax deferred annuities throughout the applicable sections of statute.
9. Makes technical and conforming changes.
10. Becomes effective on the general effective date.
House Action
BI 1/11/18 DP 6-2-0-0
3rd Read 2/06/18 34-24-1-0-1
Prepared by Senate Research
February 26, 2018
FB/lb