Joint Resolution Nullifies DOL Rule on State Savings Programs | Practical Law

Joint Resolution Nullifies DOL Rule on State Savings Programs | Practical Law

On May 3, 2017, the Senate approved a Congressional Review Act (CRA) resolution, H.J. Res. 66, to nullify the Department of Labor (DOL) August 2016 final regulation on state-based savings programs (SSPs) for private sector employees (SSPs regulation). The regulation would have established a safe harbor for certain SSPs established pursuant to state payroll deduction programs so that these SSPs are not considered pension plans under ERISA. While the SSPs regulation arguably provided an simpler environment in which SSPs could operate by reducing uncertainty about the application of ERISA to these programs, H.J. Res 66 does not preclude states or their political subdivisions from operating SSPs.

Joint Resolution Nullifies DOL Rule on State Savings Programs

Practical Law Legal Update w-007-9888 (Approx. 4 pages)

Joint Resolution Nullifies DOL Rule on State Savings Programs

by Practical Law Employee Benefits & Executive Compensation
Published on 08 May 2017 • USA (National/Federal)
On May 3, 2017, the Senate approved a Congressional Review Act (CRA) resolution, H.J. Res. 66, to nullify the Department of Labor (DOL) August 2016 final regulation on state-based savings programs (SSPs) for private sector employees (SSPs regulation). The regulation would have established a safe harbor for certain SSPs established pursuant to state payroll deduction programs so that these SSPs are not considered pension plans under ERISA. While the SSPs regulation arguably provided an simpler environment in which SSPs could operate by reducing uncertainty about the application of ERISA to these programs, H.J. Res 66 does not preclude states or their political subdivisions from operating SSPs.
On May 3, 2017, the Senate approved a Congressional Review Act (CRA) resolution, H.J. Res. 66, to nullify the Department of Labor (DOL) August 2016 final regulation on state-based savings programs (SSPs) for private sector employees (SSPs regulation) and it was presented to President Trump for his signature on May 5, 2017.
The SSPs regulation would have established a safe harbor for certain SSPs established pursuant to state payroll deduction programs so that these SSPs are not considered pension plans under the Employee Retirement Income Security Act of 1974 (ERISA). President Trump signed a companion CRA resolution (H.J. Res. 67) into law on April 13, 2017, which nullified a December 2016 final DOL regulation that would have established a safe harbor for SSPs established by political subdivisions of states (for more information on that regulation, see Legal Update, DOL Issues Rules on Savings Programs Established by State Political Subdivisions).
The intent of the SSPs regulation, similar to the companion regulation for political subdivisions of states, was to increase certainty that states could require employers without retirement plans to participate in these programs by removing (or limiting) an employer's argument that the SSP was preempted by ERISA (see Practice Note, ERISA Litigation: Preemption of State Laws). However, while the SSPs regulation arguably provided an simpler environment in which SSPs could operate by reducing uncertainty about the application of ERISA to these programs, H.J. Res. 66 and H.J. Res. 67 do not preclude states or their political subdivisions from operating (or continuing to operate) SSPs. Many states have already developed a structure for or have begun operating SSPs, including California, Oregon, Illinois, Maryland and Connecticut, and it is possible that these states, and other states exploring the possibility of SSPs, will move forward with these programs.
For more information on the SSPs regulation, see Legal Update, DOL Issues Rules on State-Based Savings Programs and Expert Q&A: Impact of DOL's Proposed Safe Harbor on State-Based Savings Programs on Employers and the Private Retirement Plan Market.