Congress Blocks Rule Allowing State-Run Retirement Savings Plans for Private Employees

May 05, 2017

Using a procedure to roll back relatively new regulations, the Senate eliminated a Department of Labor rule that would have allowed states to establish retirement plans that automatically enroll private sector employees who do not have such plans.  The Obama-era rule created significant administrative burdens on large employers by effectively creating a "safe harbor" under ERISA by asserting such state plans are not subject to the law’s requirements.  The result was that it potentially required employers to automatically enroll part-time employees into the state plan and withhold employee contributions while enabling those employees to opt-out of the plan when they wanted to.  President Trump is expected to sign the resolution, which will also prevent future administrations from promulgating a similar regulation.  It will be the 14th rule that Congress and the President have struck down through the Congressional Review Act process.