Wisconsin employers would enroll workers in savings unless they opt out

A WisEARNS board attached to the state treasurer would oversee savings through payroll deductions. Covered workers would be at least 18 and work in Wisconsin without access to their employer’s retirement plan. Workers could opt out before any payroll deduction, and employers could not contribute to their accounts. Before starting the plan, the board would review federal legal requirements and seek information from account providers. Enrollment would begin no more than two years after the plan-establishment section takes effect.

Employers would deduct a default share of enrolled workers’ pay for savings unless workers choose otherwise. These defaults would apply to workers enrolled in WisEARNS. The board would set rules for emergency withdrawals from the separate savings account. Workers could choose a different deduction rate or opt out of the first-$400 savings arrangement before that money is deposited. The default retirement account would be a Roth IRA, a type of personal retirement account. Later contributions would go into a fund based on the worker’s age or expected retirement date unless the worker chooses another investment. The default deduction would be 5% of gross pay in the first enrollment year, then increase by one percentage point each year until reaching the maximum allowed under federal tax law.

Eligible small businesses could claim state tax credits for retirement-plan startup costs and automatic enrollment. Covered startup costs would include setting up and running a retirement plan and teaching employees about it. Eligible businesses would have 100 or fewer employees who each received at least $5,000 in compensation during the previous year. The startup credit would cover 50% of eligible costs. Its cap would be the greater of $500 or the smaller of $5,000 and $250 per eligible employee who is not highly paid under the tax rules. Costs deducted under federal law could not also count toward the startup credit. The automatic-enrollment credit would start in the year the business first offers automatic enrollment.

The WisEARNS board would select account providers outside specified state contracting rules and perform its own required checks. These rules would cover providers hired to operate WisEARNS. The board would list providers that violate the program law or their contracts. Before awarding a contract, the board would compare providers’ costs, quality, and technical skills and review relationships that could compromise their independence. Background checks would be required for people handling federal tax information covered by the provision. Each year, the board would send its list of violating providers to the Department of Administration for inclusion on the state’s list of ineligible contractors.