HF 3402

1st Engrossment - 89th Legislature (2015 - 2016) Posted on 03/30/2016 12:36pm

A bill for an act
relating to financial institutions; regulating retirement, health savings, and
medical savings accounts; providing asset protection; amending Minnesota
Statutes 2014, sections 47.01, by adding a subdivision; 47.75, subdivision 1;
48.15, subdivision 4.

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

Section 1.

Minnesota Statutes 2014, section 47.01, is amended by adding a subdivision
to read:

new text begin Subd. 6. new text end

new text begin Health savings accounts and medical savings accounts. new text end

new text begin Health savings
accounts and medical savings accounts are a type of health insurance plan and it is a
purpose of this statute to regulate these accounts.
new text end

Sec. 2.

Minnesota Statutes 2014, section 47.75, subdivision 1, is amended to read:

Subdivision 1.

Retirement, health savings, and medical savings accounts.

(a) A
commercial bank, savings bank, savings association, credit union, or industrial loan and
thrift company may act as trustee or custodian:

(1) under the federal Self-Employed Individuals Tax Retirement Act of 1962, as
amended;

(2) of a medical savings account under the federal Health Insurance Portability and
Accountability Act of 1996, as amended;

(3) of a health savings account under the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003, as amended; and

(4) under the federal Employee Retirement Income Security Act of 1974, as amended.

new text begin (b) Assets in an account described in paragraph (a), clauses (2) and (3), must be
used for the reimbursement of health care expenses and are not assignable or subject
to execution, levy, attachment, garnishment, or other legal process, except as provided
in section 518.58, 518.581, or 518A.53.
new text end

deleted text begin (b) deleted text end new text begin (c) new text end The trustee or custodian may accept the trust funds if the funds are invested
only in savings accounts or time deposits in the commercial bank, savings bank, savings
association, credit union, or industrial loan and thrift company, except that health savings
accounts may also be invested in transaction accounts. Health savings accounts invested in
transaction accounts shall not be subject to the restrictions in section 48.512, subdivision
3. All funds held in the fiduciary capacity may be commingled by the financial institution
in the conduct of its business, but individual records shall be maintained by the fiduciary
for each participant and shall show in detail all transactions engaged under authority
of this subdivision.

Sec. 3.

Minnesota Statutes 2014, section 48.15, subdivision 4, is amended to read:

Subd. 4.

Retirement, health savings, and medical savings accounts.

(a) A state
bank may act as trustee or custodian:

(1) of a self-employed retirement plan under the federal Self-Employed Individuals
Tax Retirement Act of 1962, as amended;

(2) of a medical savings account under the federal Health Insurance Portability and
Accountability Act of 1996, as amended;

(3) of a health savings account under the Medicare Prescription Drug, Improvement,
and Modernization Act of 2003, as amended; and

(4) of an individual retirement account under the federal Employee Retirement
Income Security Act of 1974, as amended, if the bank's duties as trustee or custodian are
essentially ministerial or custodial in nature and the funds are invested only (i) in the
bank's own savings or time deposits, except that health savings accounts may also be
invested in transaction accounts. Health savings accounts invested in transaction accounts
shall not be subject to the restrictions in section 48.512, subdivision 3; or (ii) in any
other assets at the direction of the customer if the bank does not exercise any investment
discretion, invest the funds in collective investment funds administered by it, or provide
any investment advice with respect to those account assets.

new text begin (b) Assets in an account described in paragraph (a), clauses (2) and (3), must be
used for the reimbursement of health care expenses and are not assignable or subject
to execution, levy, attachment, garnishment, or other legal process, except as provided
in section 518.58, 518.581, or 518A.53.
new text end

deleted text begin (b) deleted text end new text begin (c) new text end Affiliated discount brokers may be utilized by the bank acting as trustee or
custodian for self-directed IRAs, if specifically authorized and directed in appropriate
documents. The relationship between the affiliated broker and the bank must be fully
disclosed. Brokerage commissions to be charged to the IRA by the affiliated broker should
be accurately disclosed. Provisions should be made for disclosure of any changes in
commission rates prior to their becoming effective. The affiliated broker may not provide
investment advice to the customer.

deleted text begin (c) deleted text end new text begin (d) new text end All funds held in the fiduciary capacity may be commingled by the financial
institution in the conduct of its business, but individual records shall be maintained by
the fiduciary for each participant and shall show in detail all transactions engaged under
authority of this subdivision.

deleted text begin (d) deleted text end new text begin (e) new text end The authority granted by this section is in addition to, and not limited by,
section 47.75.