(1)  A defined contribution retirement plan is established for members of the of the Employees’ Retirement System of Rhode Island (ERS) and the Municipal Employees’ Retirement System of Rhode Island (MERS).

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(2)  The defined contribution retirement plan is a plan in which retirement savings are accumulated in an individual account for the exclusive benefit of the member or beneficiaries. The plan is established effective July 1, 2012, at which time contributions by employers and members begin.

(3)  The defined contribution plan established by this chapter is intended to qualify under 26 U.S.C. §§ 401(a), 414(d), and 414(k) (Internal Revenue Code) in effect from time to time as a qualified governmental retirement plan established and maintained by the state for its employees, for the employees of participating political subdivisions, public corporations, and public organizations of the state, and for the employees of other employers whose participation is authorized by this chapter.

(4)(a)  Exclusive benefit. All funds of the plan shall be held in one or more trusts, in one or more custodial accounts treated as trusts in accordance with section 401(f) of the Internal Revenue Code, or in a combination thereof. Under any trust or custodial account, it shall be impossible at any time prior to the satisfaction of all liabilities with respect to employees and their beneficiaries, for any part of the corpus or income to be used for, or diverted to, purposes other than the payment of retirement savings benefits to employees and their beneficiaries. However, this requirement shall not prohibit: (i) The return of a contribution within six (6) months after the plan administrator determines that the contribution was made by a mistake of fact; or (ii) The payment of expenses of the plan in accordance with applicable law.

(b)  Vesting on plan termination. In the event of the termination (within the meaning of the Internal Revenue Code) of the plan, the amounts credited to members’ accounts shall become fully and immediately vested.

(c)  Forfeitures. Amounts forfeited by an employee shall not be applied to increase the benefits of any other employee, and shall reduce employer contributions as shall be set forth in the plan document.

(d)  Required distributions. In no event shall a member receive contributions in any year that exceed the limitation set forth in section 415(c) of the Internal Revenue Code.

(e)  Limitation on benefits. Benefits shall not be payable to the extent that they exceed the limitations imposed by section 415 of the Internal Revenue Code, 26 U.S.C. § 415, as adjusted from time to time pursuant to section 415(d) of the Internal Revenue Code. In no event shall the member receive a retirement benefit in any year that exceeds the limitations set forth in section 415(b) of the Internal Revenue Code.

(f)  Limitation on compensation. Benefits and contributions shall not be computed with reference to any compensation that exceeds the maximum dollar amount permitted by section 401(a)(17) of the Internal Revenue Code as adjusted for increases in the cost-of-living.

(5)  The state investment commission shall select an appropriate third-party administrator for the plan and shall adopt such plan, trust and/or custodial documents, with such features and attributes as the commission determines necessary or advisable in its discretion to effectuate the provisions of this chapter in accordance with the following:

(a)  The commission shall select one or more firm(s) or company(ies) to provide retirement plan investment, plan administration, and communication services to employees who participate in the defined contribution plan. The plan shall provide for appropriate long-term retirement oriented investments, and shall include annuity or annuity-like options as determined by the commission. In determining the firm or the company to provide these plan services, the commission shall consider all of the following:

(i)  The financial stability of the company or firm.

(ii)  The cost of the investments, plan administration, and services to the members.

(iii)  The experience of the company or firm in providing defined contribution retirement plans.

(iv)  The experience of the company or firm in providing plan education, counseling, and advice to participants of defined contribution plans.

(v)  Any criminal convictions, securities or antitrust law violations, material civil or regulatory fines or judgments against the company or firm which the company or firm shall be required to disclose to the commission as part of the selection process.

(b)  The defined contribution retirement plan shall include an option that any disbursement of the accumulated assets in a participant’s defined contribution plan account or accounts may be made as a life annuity. The defined contribution retirement plan may offer participants a menu of lifetime annuity options, either fixed or variable, or a combination of both.

(c)  Accumulations in the defined contribution plan are intended to be for retirement purposes and loans or hardship distribution options permitted under the plan, if any, shall be structured for the primary purpose of this plan to support members in their retirement.

(d)  The plan shall provide education, counseling and objective employee-specific plan advice to employees.

(e)  The plan shall include a limited number of investment options which shall include either: (i) Investment portfolio options that are constructed to reflect different risk profiles such as conservative, moderate and aggressive; and/or (ii) Options constructed to reflect different risk profiles that automatically reallocate and rebalance contributions as an employee ages.