VirginiaSaves Bill Sent Back to Governor’s Desk

The pending legislation would make Virginia the next state to offer a state-run retirement plan for workers who do not have access to a plan through their employer.  

The VirginiaSaves bill was passed by the Virginia General Assembly in late February and sent to Gov. Ralph Northam (D) in March. Northam sent it back to the General Assembly with a recommendation to remove a provision that limits eligible employees in the program to employees who work a minimum of 30 hours per week.

The House of Delegates approved Northam’s recommendation April 7 in a 55-45 vote, but the state Senate rejected it by a 29-11 margin. Northam now faces a May 7 deadline to sign or veto the legislation. He has indicated that he would sign it into law. 

The provision which changed the eligible employee definition to individuals who are employed at least 30 hours per week was based on an amendment offered by Sen. Chap Petersen (D-Fairfax) during the Senate floor debate on Feb. 19. Petersen noted at the time that not accepting the amendment would kill the bill.  

Both the House of Delegates (52-41) and the Senate (21-15) approved the final conference report to the measure (HB 2174) that would create the VirginiaSaves program on Feb. 27. 

Private Auto-IRA Programs Would Qualify

The final version of the legislation includes an amendment supported by the American Retirement Association that would allow for private auto-IRA programs to meet the retirement plan coverage requirement in the bill.  

On Feb. 16, the Virginia Senate Finance and Appropriations Committee approved a substitute amendment which included the changes sought by the ARA’s government affairs team clarifying the types of retirement plan products Virginia employers can use to meet the new requirement to include automatic enrollment payroll deduction IRA programs offered by the private sector. The substitute amendment also changed the definition of what constitutes an eligible employer from employers with five or more employees to employers with 25 or more employees who do not already have a retirement plan. 

HB 2174 also specifies that a participating employer retains the option at all times to set up any type of employer retirement plan, including plans qualified under Code Sections 401(a), 403(a), 403(b), 408(k) or 408(p), at which point that employer would no longer be considered an eligible employer and may cease making contributions to the program. 

Other provisions stipulate that any employer which is not an eligible employer may facilitate the participation of its eligible employees in the program. Moreover, self-employed individuals and eligible employees whose employers do not enroll in the program may participate in the program in accordance with the conditions prescribed by the program’s board.

If Gov. Northam signs the bill, enrollment would begin on July 1, 2023, or as soon as practicable thereafter.