May 9, 2017 (Updated May 18, 2017)
On May 3, 2017, the Senate joined the House of Representatives in passing House Joint Resolution 66, which nullifies the Department of Labor’ (DOL) rule that created a safe harbor for states to establish retirement saving programs for employees of private sector employers. President Trump signed the Joint Resolution on May 17, 2017. On April 13, 2017, the President signed House Joint Resolution 67, which nullified the DOL’s companion clarifying rule for cities and other political subdivisions to establish similar programs.
The DOL rules provided a safe-harbor design that would have exempted workplace payroll deduction Individual Retirement Account (IRA), savings programs established by states and/or large cities, that followed the safe-harbor design, from being preempted by the Employee Retirement Income Security Act (ERISA). Generally, the rules under ERISA governing private sector retirement plans supersede any state or local laws relating to private sector plans. The DOL adopted these rules to strengthen existing law and the legal argument that such programs were not preempted by ERISA.
Both DOL rules were nullified under the Congressional Review Act, which allows Congress to invalidate a rule within a specified period after it is adopted by means of a joint resolution that “disapproves” the rule and declares it to have “no force or effect.”
Officials of several states that are adopting such programs have said they will continue to move forward with them as the rules provide clarification of existing regulations that are believed to permit the implementation of these payroll-deduction IRA plans. Whether the programs are preempted by ERISA may ultimately be determined by the courts.