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. Retirement plans listed on the Marketplace must meet certain minimum requirements.

The Washington Department of Commerce operates the Marketplace. The Department of Financial Institutions is responsible for verifying that retirement plans listed on the Marketplace meet statutory requirements.

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";
  2. A copy of the retirement plan agreement;
  3. A copy of the materials routinely used to market the retirement plan to eligible employers and/or individuals;
  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;
  5. The prospectus for each balanced fund, target date fund, and other fund offered under the retirement plan; and
  6. A summary of the retirement plan’s investment options, fees, and other features. The summary should include, but not necessarily be limited to, the following information:
    1. The type of retirement plan (e.g. SIMPLE IRA);
    2. The investment options available in the retirement plan;
    3. The fee structure applicable to the different investment options in the retirement plan (including fees payable to the financial services firm offering the retirement plan and any other service providers);
    4. The identity of the custodian of enrollee accounts;
    5. The rollover options for enrollees in the retirement plan;
    6. Whether the financial services firm offering the retirement plan will recommend investments to enrollees, and if so, how the firm will communicate to enrollees the option to select investments other than the recommended investments;
    7. A list of documents an employer must complete to establish the retirement plan and its business relationship with the financial services firm offering the plan;
    8. A list of the documents enrollees must complete to establish their retirement account and their relationship with the financial services firm offering the plan; and
    9. Disclosure of any other fees associated with the retirement plan.

What is the application fee?

There is no fee to submit an Application for Verification.

How do we submit our completed application form?

Please mail your completed application form to the following address:

Washington Dept. of Financial Institutions
Securities Division
PO Box 9033
Olympia, WA 98507-9033

Do we need to submit a separate application form for each retirement plan we want to list on the Marketplace?

No. If your firm offers multiple retirement plans, you may list them on the same application form provided that you submit a separate retirement plan summary and plan agreement for each retirement plan.

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, except that financial services firms may charge retirement plan enrollees a de minimis fee for new and/or low balance accounts in amounts negotiated and agreed up by the Department of Commerce and the financial services firm;
  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 fees are included in the annual fee limitation of 100 basis points?

A financial services firm offering a retirement plan on the Marketplace may not charge enrollees in the plan more than 100 basis points in total annual fees. This limitation is inclusive of all fees charged to enrollees for participating in the plan, such as management fees, custodial fees, expenses charged for the underlying funds or investment products offered in the retirement plan, and any other fees or commissions that the firm charges to enrollees for the administration of the plan.

An exception to the 100-basis-point limitation is a de minimis fee for new and/or low balanced accounts negotiated with the Department of Commerce pursuant to RCW 43.330.735(11) and WAC 365-65-080(2).

We want to create a retirement plan consisting of investment products offered by our broker-dealer partners. Can we apply for verification of our retirement plan even though we are not licensed with a securities, banking, or insurance regulator?

Pursuant to RCW 43.330.732(7) and RCW 43.330.735(6), financial services firms offering plans on the Washington Small Business Retirement Marketplace must be licensed by either the Department of Financial Institutions or the Office of the Insurance Commissioner. Accordingly, to offer a retirement plan on the Marketplace, an unlicensed firm must either register as a broker-dealer, or file an application in the name of a brokerage firm partner who is licensed.

What happens after we apply for verification?

If you and the retirement plan that you offer meet the requirements for verification, the Department of Financial Institutions will issue a Letter of Verification. However, if the retirement plan does not meet the requirements, the Department of Financial Institutions will issue a deficiency letter. The deficiency letter affords the applicant the opportunity to make changes in order to comply with the statutory requirements.

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 can find information on how to apply to the Department of Commerce here: http://www.commerce.wa.gov/growing-the-economy/business-services/small-business-retirement-marketplace/

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).

We previously negotiated a de minimis fee with the Department of Commerce. We now want to change that fee. What do we do?

If the financial services firm previously negotiated a de minimis fee with respect to new and/or low balance accounts pursuant to WAC 365-65-080(2), the Department of Commerce and the financial services firm must negotiate and agree upon any proposed changes to such fee. After you negotiate the change in the de minimis fee with the Department of Commerce, you must submit an amended application to the Department of Financial Institutions.

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.