Hiring parties could contribute to independent contractors' benefit accounts

Hiring parties and other contributors may put money into a portable benefit account owned by an independent contractor. The account belongs to an independent contractor who has a work contract with the hiring party. A hiring party may contribute only after the contractor opts in through a clear written agreement; contributions are voluntary, and the contractor may opt out at any time. A hiring party must treat contributions as compensation and may not require a particular account provider. The contractor chooses the provider and benefit plans; a plan must name someone other than the hiring party as its beneficiary. The act would take effect January 1, 2027.

Independent contractors would own their accounts, and account providers would have to safeguard and report on the funds. These rules cover portable benefit accounts owned by independent contractors and the providers that administer them. Contractors may stop contributions, change plans, or transfer the balance, subject to reasonable disclosed transfer costs. Funds may pay only for listed health, insurance, transportation, and retirement benefits, reasonable disclosed account fees, or distribution to the owner. Providers must keep funds separate, send statements at least quarterly, and act in the owner's interest. Nonbank providers must maintain financial protection against certain losses; providers may not make distributions depend on continued work. Providers must disclose fees before an account opens or contributions are made, and give at least 30 days' notice of material fee changes.

The bill would set state tax and reporting rules for portable benefit accounts. The tax rules cover taxpayers and portable benefit account providers. A taxpayer could deduct contributions only to the extent they were included in adjusted gross income. Withdrawals not used for an allowed benefit plan would be added back when calculating North Carolina taxable income. Compensation deposited into an account would be exempt from withholding. Providers would have to give the Secretary of Revenue requested account information, but the Secretary could request it no more than once per calendar year. The act would apply to taxable years beginning on or after January 1, 2027.