The U.S. Senate today voted 50-49 to disapprove and thereby withdraw the DOL final regulations that granted an ERISA safe harbor for payroll withholding IRA savings plans established by municipalities for private sector workers. This disapproval was first passed in the House of Representatives, and then referred to the Senate. It must also be signed by President Trump in order to take effect, but his signature is considered a foregone conclusion.
Still pending in the Senate is a companion Resolution of Disapproval for the statewide IRA savings program regulations. That Resolution was previously passed in the Republican-controlled House on an essentially party-line vote. It is unclear at this time when, or if, the Senate will consider and vote on whether to disapprove these regulations for state-wide retirement programs. There is speculation that if the Senate does act on this Resolution of Disapproval, it might not do so until after Congress’ April recess and therefore, not until mid-April.
Such action, officially called a “Resolution of Disapproval,” is authorized under the Congressional Review Act, which allows Congress the opportunity to withdraw federal agency-issued regulations if such action is initiated within 60 legislative days after regulations issuance.
These now-disapproved regulations were intended to assure qualifying large municipalities, such as New York City, Philadelphia, etc., that IRA-based savings programs they establish for private sector workers within their jurisdictions would not be subject to certain requirements of the Employee Retirement Income Security Act (ERISA). Such programs would instead be subject to the Internal Revenue Code provisions and protections already in place for IRAs.
The DOL in December, 2016, added these municipality-specific regulations to earlier regulations granting states the same ERISA safe harbor for IRA-based savings plans. Several states, including Oregon, Illinois, and California, are well along in implementing such programs for private sector workers who have no employment-based retirement plan. More than half the states have either passed enabling legislation, or are actively considering it.