Trade Group Settles Lawsuit Challenging Oregon’s State-Sponsored IRA Savings Program

The ERISA Industry Committee (ERIC), a trade group that describes itself as representing large employers on health and retirement issues, has settled a lawsuit filed in October 2017 against the Oregon Retirement Savings Board.

ERIC had charged that OregonSaves—a retirement program for private sector workers with no workplace plan—conflicts with the Employee Retirement Income Security Act of 1974 (ERISA), and therefore OregonSaves requirements are preempted by that federal law. The lawsuit was filed in U.S. District Court for the District of Oregon.

OregonSaves requires most employers offering no retirement plan to enroll employees in its payroll withholding Roth IRA savings program. In order to be exempt from participating, employers that sponsor a plan must communicate this to the program. ERIC contended that this information-sharing requirement places a burden on employers that violates ERISA, and therefore, under preemption principles, the requirement should not be enforced.

The lawsuit did not proceed to the point where the Court ruled on the OregonSaves employer exemption procedure, which requires an employer to indicate online that it has a retirement plan, and the plan type.

Under the terms of the settlement, Oregon employers seeking exemption may inform OregonSaves of their ERIC member status, which can then be confirmed with ERIC. (No alternative procedure is provided under this settlement for Oregon employers that sponsor a retirement plan and are not ERIC members.)

ERIC has indicated at its website that it intends to work with regulators in hopes of finding an alternate means of providing information on plan sponsorship, whether to OregonSaves or to other state-sponsored programs seeking similar information.