The U.S. House of Representatives has taken the first step in a congressional effort to overturn recent regulations issued by the Department of Labor that are intended to guide state governments that want to establish payroll-deduction IRA savings programs for private sector workers having no workplace retirement plans.
The House passed on an essentially party-line vote the first Resolution of Disapproval (House Joint Resolution 66) that would essentially nullify August, 2016, DOL final regulations providing an ERISA safe harbor for state-coordinated plans of this type. This safe harbor means that, while the programs would offer the protections afforded to all IRAs, they would not be subject to certain requirements specific to qualified retirement plans.
More than half the states have either passed enabling legislation or are considering legislation to put such plans in place. A second Resolution of Disapproval (H.J. Res. 67) was similarly passed and would block an amendment that extends the guidance to cover sufficiently large local units of government, such as New York City or Philadelphia.
In order to roll back these regulations, the same measures must now be passed in the U.S. Senate. Congress has the power under the Congressional Review Act of 1996 to withdraw regulations by such a procedure if done within 60 legislative days of a regulation’s publication in the Federal Register. If there are not 60 legislative days between a regulation’s publishing and the end of the congressional session, a fresh 60-day disapproval opportunity is given Congress at the start of the next congressional session. That is the case with these DOL regulations. If these Resolutions of Disapproval succeed, DOL could not issue substantially similar regulations in the future.
While the resolutions passed comfortably in the House, it is expected that the outcome in the Senate—where Republicans hold a very slim majority—is less than certain.