Employee Benefits/UH/DOE

Authorizes the University of Hawaii and the Department of
Education to establish custodial accounts for the deposit of
annuity payments of employees of the University of Hawaii and the
Department of Education.  (SD1)

THE SENATE                              S.B. NO.           S.D. 1
TWENTIETH LEGISLATURE, 1999                                
STATE OF HAWAII                                            

                   A  BILL  FOR  AN  ACT


 1      SECTION 1.  Chapter 303, Hawaii Revised Statutes, is amended
 2 by adding a new section to be appropriately designated and as
 3 follows:
 4      "303-    Limitation on liability.  The department of
 5 education, the University of Hawaii, and the State of Hawaii
 6 shall not be held liable for the sums deferred or the results of
 7 any investment product."
 8      SECTION 2.  Chapter 303, Hawaii Revised Statutes, is amended
 9 as follows:
10      1.  By amending the title to read:
11                           "CHAPTER 303
13      2.  By amending section 303-1, Hawaii Revised Statutes, to
14 read:
15      "303-1 Purpose.  The purpose of this chapter is to provide
16 the means by which employees of the department of education and
17 the University of Hawaii may qualify for the favorable benefits
18 of section 403(b) of the Internal Revenue Code of [1954,] 1986,
19 as amended."
20      3.  By amending section 303-2, Hawaii Revised Statutes, to

Page 2                                                     951
                                     S.B. NO.           S.D. 1

 1 read:
 2      "303-2 Contract for purchase of annuity[.] or investment
 3 in custodial account.  The department of education and the
 4 University of Hawaii, on behalf of any employee of the respective
 5 institutions, may enter into a written agreement with any [such]
 6 employee to purchase for the employee [an]:
 7      (1)  An annuity contract from an insurer who holds a
 8           certificate of authority under section 431:3-201 [or
 9           who offers an];
10      (2)  An annuity contract qualified under section 401(k) of
11           the Internal Revenue Code[,] of 1986, as amended, which
12           provides a nationwide retirement trust for a group of
13           college or university football coaches who, due to the
14           nature of their jobs, change employers frequently.
15      The department of education or the University of Hawaii may
16 pay amounts to a custodial account established on behalf of the
17 employee pursuant to section 403(b)(7) of the Internal Revenue
18 Code of 1986, as amended."
19      4.  By amending section 303-3, Hawaii Revised Statutes, to
20 read:
21      "303-3  [Premium withholding.] Withholding.  The department
22 of education and the University of Hawaii may also enter into an
23 agreement under which the employer shall withhold from the salary

Page 3                                                     951
                                     S.B. NO.           S.D. 1

 1 of the employee the amount [of the premiums] payable on account
 2 of the annuity contract[,] or custodial account, and shall make
 3 [such premium] the payments on behalf of the employee.  The
 4 department of education and the University of Hawaii may contract
 5 with third parties to administer plans for the withholding of
 6 amounts from the salaries of their employees payable on account
 7 of annuity contracts or custodial accounts and for making
 8 payments on their behalf.  Costs for implementing and
 9 administering these plans shall be borne by the employees
10 maintaining annuity contracts or custodial accounts."
11      5.  By amending section 303-4, Hawaii Revised Statutes, to
12 read:
13      "303-4 Adoption of rules.  Each employer may adopt rules
14 to implement this chapter including, but not [by way of
15 limitation,] limited to:
16      (1)  [the] The method of filing an election to accept an
17           adjustment in earnings and revocation of the
18           election[,];
19      (2)  [the] The effective date of an election[,];
20      (3)  [changes] Changes in the amount of the adjustment in
21           earnings[,]; and 
22      (4)  [selection] Selection of the insurance company or
23           companies from which the annuity contracts are to be

Page 4                                                     951
                                     S.B. NO.           S.D. 1

 1           purchased[.] or to which payments into a qualified
 2           custodial account are to be made."
 3      SECTION 3.  Statutory material to be repealed is bracketed.
 4 New statutory material is underscored.
 5      SECTION 4.  This Act shall take effect on January 1, 2000.