Washington Small Business Retirement Marketplace

What is the Washington Small Business Retirement Marketplace?

The Washington Small Business Retirement Marketplace is a virtual marketplace where qualified financial services firms offer low-cost retirement savings plans to businesses with less than 100 employees, including sole proprietors and self-employed individuals.

The Washington Small Business Retirement Marketplace was signed into law by Governor Inslee on May 18, 2015. The Marketplace will be operated by the Washington Department of Commerce and is expected to be fully operational in 2017.

How do we list our retirement plan on the Marketplace?

Before the Department of Commerce will approve retirement plans for listing on the Marketplace, either the Department of Financial Institutions or the Office of the Insurance Commissioner must verify that the plan meets the requirements set forth in RCW 43.330.732(7) and RCW 43.330.735.

If you are offering a securities-based retirement plan, you must apply to the Department of Financial Institutions for verification. If you are offering an insurance-based retirement plan, you must make a filing with the Office of the Insurance Commissioner.

How do we apply for verification?

To apply to the Department of Financial Institutions for verification of your retirement plan, you must submit the following:

  1. A completed Application for Verification form marked "initial application";
  2. A copy of the retirement plan agreement;
  3. A copy of the materials routinely used to market the retirement plan to eligible employers;
  4. Any additional documents necessary to identify the funds and other investment products to be offered under the plan, specify the plan's fees and roll-over options, and disclose historical investment performance for the investment products in the plan; and
  5. The prospectus for each balanced fund and target date fund or other similar fund offered under the retirement plan.

What is the application fee?

There is no fee to submit an Application for Verification.

What are the verification criteria?

The Department of Financial Institutions will review the retirement plan and the financial services firm offering it to verify that the plan meets the following requirements set forth in RCW 43.330.732(7) and RCW 43.330.735:

  1. The financial services firm offering the retirement plan must be licensed or hold a certificate of authority and be in good standing with the department of financial institutions, or be regulated by a federal agency with authority over banking, securities, or broker-dealer firms, and meet all federal laws and regulations to offer retirement plans;
  2. The retirement plan must offer a minimum of two product options:
    1. A target date or other similar fund, with asset allocations and maturities designed to coincide with the expected date of retirement; and
    2. A balanced fund.
  3. The retirement plan must include the option for enrollees to roll pretax contributions into a different individual retirement account or another eligible retirement plan after the enrollees cease participation in the retirement plan offered on the Washington small business retirement marketplace;
  4. The financial services firm offering the retirement plan may not charge the participating employer an administrative fee and may not charge enrollees more than one hundred basis points in total annual fees;
  5. The financial services firm offering the retirement plan must provide information about the product's historical investment performance; and
  6. Participation in a retirement plan offered on the Washington small business retirement marketplace shall be voluntary for both eligible employers and qualified employees.

What happens after we apply for verification?

If you and the retirement plan that you offer meet the above requirements, the Department of Financial Institutions will issue a Letter of Verification. If you receive a Letter of Verification, you are eligible to seek listing of your retirement plan on the Marketplace. You must apply separately to the Department of Commerce for listing.

You may find information on how to apply to the Department of Commerce here: http://www.commerce.wa.gov/about/PoliciesandInitiatives/Pages/marketplace.aspx

What if we amend our Retirement Plan after receiving a Letter of Verification?

If you propose to make material amendments to your retirement plan or its underlying investment options during the effectiveness period of the Letter of Verification, you must amend your application for verification in accordance with WAC 208-710-070 if you intend to continue to list the plan on the Marketplace.

To amend your application, you must submit the following to the Department of Financial Institutions at least 30 days prior to the proposed amendment of the retirement plan:

  1. A completed Application for Verification marked “amendment”; and
  2. The most recent versions of the retirement plan, marketing materials, prospectuses, and other plan documents required by WAC 208-710-040(2) through (5).

How long will the Letter of Verification be effective?

The Letter of Verification will be effective for twelve months.

May we renew a Letter of Verification?

Yes. You may apply to renew verification for subsequent twelve-month periods by submitting the following to the Department of Financial Institutions at least 30 days prior to the expiration date:

  1. A completed Application for Verification form marked "renewal";
  2. The most recently updated versions of the retirement plan, marketing materials, prospectuses, and other plan documents required by WAC 208-710-040(2) through (5); and
  3. A report indicating the number of eligible employers in Washington who established retirement plans under the financial service provider's approved plan in the last year. The report shall include the total number of new retirement accounts opened in Washington by qualified employees as a result of the adoption of the approved plan by eligible employers in Washington.

Links

Questions

If you have questions regarding the Small Business Retirement Marketplace, please email Jill Vallely at jill.vallely@dfi.wa.gov or contact the Department of Financial Institutions at (360) 902-8760.