{"id":48,"date":"2016-08-26T10:18:48","date_gmt":"2016-08-26T14:18:48","guid":{"rendered":"http:\/\/blogs.duanemorris.com\/benefitslaw\/?p=48"},"modified":"2016-08-26T10:27:49","modified_gmt":"2016-08-26T14:27:49","slug":"u-s-department-of-labor-finalizes-regulations-authorizing-states-to-establish-retirement-savings-programs","status":"publish","type":"post","link":"https:\/\/blogs.duanemorris.com\/benefitslaw\/2016\/08\/26\/u-s-department-of-labor-finalizes-regulations-authorizing-states-to-establish-retirement-savings-programs\/","title":{"rendered":"U.S. Department of Labor Finalizes Regulations Authorizing States to Establish Retirement Savings Programs"},"content":{"rendered":"

Blog post by Lawrence I. Davidson<\/a><\/em><\/p>\n

On August 25, 2016, the U.S. Department of Labor (DOL) released its Final Rule that will facilitate state legislatures in establishing employee retirement savings programs that are ERISA compliant.\u00a0 Currently, roughly one-third of all workers do not have an opportunity to save for retirement through retirement savings accounts offered by their employers.\u00a0 To date, eight states, including Illinois and California, have already passed legislation which creates retirement savings account programs for employees.\u00a0 While the specific rules of these employee retirement savings programs vary for each state, all of them have the purpose of encouraging residents of their State to save for retirement.\u00a0 Often this is accomplished through a state \u201cauto-IRA\u201d law which requires employers that do not offer workplace retirement savings programs to automatically enroll their employees in payroll deduction IRAs administered by the state.\u00a0<\/p>\n

One of the major concerns of these state retirement savings programs has been that such legislation would be preempted by ERISA.\u00a0 The DOL\u2019s final rule provides that such state retirement savings programs are not an ERISA plan and will likely not be preempted by ERISA if the programs (i) are established by and administered by the state, (ii) provide for a limited employer role, and (iii) are voluntary for employees.\u00a0 The Final Rule provides that each state must be responsible for investing the employee savings and must also select the investment alternatives from which the employee will choose.\u00a0 With regard to the limited employer role, the Final Rule limits employer activities to certain ministerial tasks, such as collecting the payroll deductions and remitting them to the program and distributing official state notices about the program to the employees.\u00a0 In the state administered programs, the employer is not permitted to contribute employer funds to the IRA and the employer participation in the retirement program must be required by state law, not voluntary.\u00a0 Finally, the program must be voluntary for the employees.\u00a0 An automatic enrollment requirement is allowed.\u00a0 However, the employee must be given notice of and have the right to opt out of the program.<\/p>\n

We anticipate the Final Rule will become effective around November 1, 2016.\u00a0 Employers can anticipate that additional states now will push ahead with their own efforts to create state retirement savings programs, now that the DOL final rules have been issued.<\/p>\n

From a practical perspective, employers should consider taking this opportunity to review their current employee retirement savings programs with counsel to ensure compliance with current state laws and should be prepared for potential future state legislation in this area.<\/p>\n

\n

\"Larry<\/a>About Lawrence I. Davidson<\/h2>\n

Read Larry’s bio<\/a>. View all posts by Lawrence I. Davidson<\/a><\/span><\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Blog post by Lawrence I. Davidson On August 25, 2016, the U.S. Department of Labor (DOL) released its Final Rule that will facilitate state legislatures in establishing employee retirement savings programs that are ERISA compliant.\u00a0 Currently, roughly one-third of all workers do not have an opportunity to save for retirement through retirement savings accounts offered … <\/p>\n

Continue reading “U.S. Department of Labor Finalizes Regulations Authorizing States to Establish Retirement Savings Programs”<\/span><\/a><\/p>\n","protected":false},"author":6,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[5],"tags":[73,74,70,71,72],"ppma_author":[94],"class_list":["post-48","post","type-post","status-publish","format-standard","hentry","category-employee-benefits","tag-dol","tag-lawrence-davidson","tag-retirement-plans","tag-state-employee-retirement-plans","tag-u-s-department-of-labor"],"authors":[{"term_id":94,"user_id":6,"is_guest":0,"slug":"duanemorris3","display_name":"Duane Morris","avatar_url":"https:\/\/secure.gravatar.com\/avatar\/843ff6e7a8fe5fc92109b47a45f34b6cf0ea499e6e788db23456c838b0ae6747?s=96&d=blank&r=g","0":null,"1":"","2":"","3":"","4":"","5":"","6":"","7":"","8":""}],"_links":{"self":[{"href":"https:\/\/blogs.duanemorris.com\/benefitslaw\/wp-json\/wp\/v2\/posts\/48","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/blogs.duanemorris.com\/benefitslaw\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/blogs.duanemorris.com\/benefitslaw\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/benefitslaw\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/benefitslaw\/wp-json\/wp\/v2\/comments?post=48"}],"version-history":[{"count":0,"href":"https:\/\/blogs.duanemorris.com\/benefitslaw\/wp-json\/wp\/v2\/posts\/48\/revisions"}],"wp:attachment":[{"href":"https:\/\/blogs.duanemorris.com\/benefitslaw\/wp-json\/wp\/v2\/media?parent=48"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/benefitslaw\/wp-json\/wp\/v2\/categories?post=48"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/benefitslaw\/wp-json\/wp\/v2\/tags?post=48"},{"taxonomy":"author","embeddable":true,"href":"https:\/\/blogs.duanemorris.com\/benefitslaw\/wp-json\/wp\/v2\/ppma_author?post=48"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}