The U.S. Department of Labor (DOL) has published a notice of proposed rulemaking and an interpretive bulletin meant to guide states as they create Employee Retirement Income Security Act (ERISA)-compliant programs that help more workers save for retirement.
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While employers would make the automatic deductions from employee paychecks, employees and states would retain control of the program and IRA accounts. Employers could not prevent workers from declining to participate in the program.
The DOL has also published an interpretive bulletin regarding the creation of state-based ERISA-compliant 401(k) plans that are open to businesses and workers. In addition to payroll deduction IRAs and state-based 401(k)s, the bulletin gives several examples of approaches to creating state retirement savings programs that may avoid being preempted under ERISA.
Both automatic IRAs and state-based ERISA plans have been created, or are being considered, by various states. A lack of clarity of this area of the law has made other states reluctant to move forward with plans to create additional retirement savings opportunities for workers. The DOL’s guidance is meant to give states clear information as they move forward in creating programs.