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Resolutions block DOL safe harbors for state and local retirement programs for private-sector workers

Retirement
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By Precious Abraham and Ann Marie Breheny | May 30, 2017

Blocking the DOL safe harbors does not prohibit states and localities from moving forward with these savings programs, but it puts them on less certain legal ground.

On April 13, President Trump signed House joint resolution (H.J. Res. 67) into law, which nullifies the safe harbor for retirement savings programs established by local governments for private-sector workers. On May 17, he signed H.J. Res. 66, which rescinds a comparable safe harbor for retirement savings programs established by state governments. The safe harbors, which were established in regulations from the Department of Labor (DOL), would exempt these plans from ERISA.1

According to the administration, the DOL “rules allow a new type of State-based retirement plan that would lack important Federal protections, and they would give a competitive advantage to these public plans.”

These retirement savings programs generally require private employers to facilitate enrollment in state-run payroll deduction savings programs for employees without access to an employer-provided retirement plan. Five states — California, Connecticut, Illinois, Maryland and Oregon — have already adopted such programs. Oregon’s program, which is slated to begin on November 15, will require employers with 100 or more private-sector employees to register with the program, either to certify that they offer workers access to a qualified retirement plan or to enroll them into the state-run auto-IRA program. Blocking the DOL safe harbors does not prohibit these savings programs from moving forward, but it puts them on less certain legal ground.

These joint resolutions will prevent the DOL from reissuing a rule that is substantially the same as the disapproved rule without congressional authorization.


Endnote

1. See “House votes to undo rule on state retirement programs for private-sector workers,” Willis Towers Watson Insider, April 2017; and “DOL issues final rules for state-mandated retirement savings programs,” Willis Towers Watson Insider, October 2016.

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