Senate Slated to Vote on Rolling Back State-Run Auto-IRA Safe Harbor

Senate Republicans feel they have the votes to undo the Department of Labor’s rules crafting a safe harbor that exempted states’ auto-IRA programs from ERISA.

The vote on H.J.Res. 66, a Congressional Review Act (CRA) resolution cancelling the Obama administration’s regulation on state government-run retirement plans, is expected to occur today. It would be the 14th CRA resolution of disapproval sent to the president’s desk this year.

In April President Trump signed legislation that blocks the Obama-era DOL’s safe harbor exempting municipalities’ auto-IRA programs from ERISA.

CRA Queue

The action, taken under the Congressional Review Act, allows Congress to consider and pass legislation to overturn any significant regulation if that legislation is ultimately signed by the president. Generally, that is an extremely high threshold, since presidents support their administrations’ rulemaking authority in nearly every case. But when a new president (particularly one from the opposite political party) takes office, and Congress, particularly when in control of that new president’s party, is so inclined, the CRA can become – for a certain amount of time at least – an effective tool to undo what has been recently done with just a simple majority vote, and isn’t subject to a filibuster in the Senate.

The current CRA window applies to any significant Obama-era rule that was either finalized or made effective after June 13, 2016 – including the DOL’s state plan rule, which was finalized in August 2016 and became effective in October 2016.

The House of Representatives took action to nullify the rules designed for state-run plans for private sector workers in February. The political subdivision safe harbor was finalized in December 2016 and became effective in January 2017.

Impact ‘Ed’

Of course, even if that vote occurs and the state-run retirement safe harbors are undone, that won’t necessarily undo the work that has been done, or stop the state-run initiatives underway – though it would potentially undermine the clarity and encouragement that the Obama administration had sought to provide these programs.

Indeed, several of the programs under development have already announced their determination to forge ahead, regardless.

States that have enacted state-run IRA programs include MarylandConnecticutIllinois, Massachusetts and Oregon. While none of these programs have become operational to date, Oregon has pledged to open its program for enrollment on a pilot program basis by July 2017.

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