Senate Votes to Withdraw DOL’s State-Coordinated IRA Program Regulations

The U.S. Senate voted 50–49 to disapprove—and therefore withdraw—Department of Labor (DOL) regulations pertaining to IRA-based retirement savings programs established by states.

Under the procedures of the Congressional Review Act, the Senate voted in favor of a Resolution of Disapproval for these DOL regulations, following a similar disapproval in the House of Representatives. If signed by President Trump, these regulations are not only withdrawn, but may not be proposed in the future in substantially similar form.

The regulations were first proposed in 2015 and finalized in 2016, granting a safe harbor to states that might establish voluntary or mandatory IRA-based savings programs for certain private sector employers within their borders that do not offer another retirement plan. The safe harbor was intended to provide assurance to employers and state governments that the IRA-based savings programs they might establish would not be brought under, or found to violate the terms of, the Employee Retirement Income Security Act (ERISA). ERISA governs employer-sponsored qualified retirement plans—those multi-participant plans that generally must meet stringent nondiscrimination, contribution, and other requirements. Under the now withdrawn regulations, these requirements would have been inapplicable to state-sponsored IRA programs if certain conditions were met.

Following disapproval of these regulations, states that have established such IRA-based programs—and those considering them—must now evaluate the extent to which the absence of a DOL safe harbor will influence their implementation.

More than half of the states have already passed enabling legislation or are considering legislation to put IRA-based retirement savings programs in place. Many states have announced that they will proceed without the protections of the 2016 safe harbor, relying instead on previous guidance for any necessary exemptions.