President Trump’s Signature Completes Congress’ Revocation of DOL State Auto-IRA Regulations

President Trump signed House Joint Resolution (H.J. Res.) 66, a resolution of disapproval under the Congressional Review Act that nullifies 2016 Department of Labor (DOL) final regulations that granted states a regulatory safe harbor for automatic enrollment IRA savings programs. Several states, including Oregon, Illinois, California, Connecticut, and Maryland, are in the process of establishing such programs for employees of certain private sector employers that do not offer another type of retirement plan. More than half the states are at some stage of examining state-coordinated savings programs for their private sector workers.  These final regulations were written to grant assurance to employers (and state governments) that participation in such programs would not be viewed as establishing an employee benefit plan subject to the conditions imposed by the Employee Retirement Income Security Act (ERISA).

These now-revoked regulations were issued in proposed form in 2015, and finalized in August 2016. Because of the timing of their release in final form near the end of the Obama administration, they were subject to revocation under the Congressional Review Act by majority vote of both U.S. Senate and House of Representatives, and signature by the President. On May 3, 2017, the Senate voted 50-49 to disapprove these regulations, following an earlier disapproval vote by the House. As a consequence of this action by House and Senate and signature by President Trump, no regulations substantially similar in nature may be issued by the DOL. (Similar regulations that granted large municipalities a safe harbor to establish IRA-based savings programs for private sector workers were the subject of an earlier resolution of disapproval and revocation, under H.J. Res. 67.)

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 the 2016 DOL safe harbor may influence their implementation. Several states have indicated that they will proceed without the clarifications of this safe harbor, relying instead on other guidance for any necessary exemptions.