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June 13, 2017

New Laws Nullify State and Local Government Savings Option Programs (article)

Over the past couple years, several states passed laws creating a state payroll deduction savings program, some with an automatic enrollment feature, that require private sector employers to offer, or at least facilitate, retirement plans for their workforce. The Department of Labor’s Employee Benefits Security Administration (EBSA) stepped into this arena by issuing guidance to assist states in establishing these saving arrangements to avoid creating a conflict between these types of programs and ERISA.  EBSA had issued rules applicable to state-run programs (see Savings Options Aplenty, Benefit Beat, 9/12/16), followed by a set of rules applicable to savings arrangements established by qualified state political subdivisions, such as cities and counties (see Retirement Savings: An Important Goal, Benefit Beat, 1/10/17).

 

President Trump recently signed two laws (H.J. Res. 66 on May 18, 2017 and H.J.Res.67 on April 13, 2017) that essentially nullify both sets of EBSA rules.  What this means is that the EBSA rules providing a safe harbor framework for these types of retirement savings option programs are essentially void and thus, these types of programs would not be protected under the law.  This notwithstanding, several states continue to work on legislation to promote retirement savings options for individuals who are not otherwise eligible for employer-provided retirement plans.


The information contained in this article is provided as general guidance and may be affected by changes in law or regulation. This article is not intended to replace or substitute for accounting or other professional advice. Please consult a CBIZ professional. This information is provided as-is with no warranties of any kind. CBIZ shall not be liable for any damages whatsoever in connection with its use and assumes no obligation to inform the reader of any changes in laws or other factors that could affect the information contained herein.   

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