REPORT TITLE:
Flexible spending accounts


DESCRIPTION:
Requires that all Flexible Spending Accounts participants
contributions, interest earned, and forfeited balances be held in
trust outside the state treasury so that the assets are outside
the reach of creditors and are used for the benefit of the plan
participants.  Requires the interest earned on the contributions
and forfeited participant balances to be used to defray monthly
participant fees and other administrative costs.  (HB2519 HD1)

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
                                                        2519
HOUSE OF REPRESENTATIVES                H.B. NO.           H.D. 1
TWENTIETH LEGISLATURE, 2000                                
STATE OF HAWAII                                            
                                                             
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                   A  BILL  FOR  AN  ACT

RELATING TO FLEXIBLE SPENDING ACCOUNTS.



BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

 1      SECTION 1. Chapter 78, Hawaii Revised Statutes, is amended
 
 2 by adding to part II a new section to be appropriately designated
 
 3 and to read as follows:
 
 4      "78-    Flexible spending accounts.  (a)  As used in this
 
 5 section:
 
 6      (1)  "Contributions" means the employee pretax compensation
 
 7           reductions contributed to the plan; and
 
 8      (2)  "Flexible spending accounts" and the "plan" mean a
 
 9           flexible spending accounts plan for state employees
 
10           authorized by section 125 of the Internal Revenue Code
 
11           of 1986, as amended, and established in accordance with
 
12           this part.
 
13      (b)  In addition to any other powers and duties authorized
 
14 by law, the department or agency charged with administration of
 
15 the flexible spending accounts may enter into all contracts
 
16 necessary to establish, administer, or maintain the plan.
 
17      (c)  The contributions, interest earned, and forfeited
 
18 participant balances of the plan shall be held in trust for the
 
19 benefit of the participants and the plan.  The department or
 

 
Page 2                                                     2519
                                     H.B. NO.           H.D. 1
                                                        
                                                        

 
 1 agency charged with administration of the plan may hold these
 
 2 funds in trust outside the state treasury.
 
 3      (d)  The contributions, interest earned, and forfeited
 
 4 participant balances shall not be subject to the general
 
 5 creditors of the State.
 
 6      (e)  The interest earned and forfeited participant balances
 
 7 shall be used to defray participant fees and other administrative
 
 8 costs as determined by the department or agency charged with
 
 9 administration of the plan."
 
10      SECTION 2.  New statutory material is underscored.
 
11      SECTION 3.  This Act shall take effect upon its approval.