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Trump Closes Safe Harbor for City-Run Programs

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

Last month the U.S. Senate passed, by a vote of 50-49, the Congressional Review Act resolution. Under the CRA, Congress has a window of time to consider and pass legislation to overturn any significant regulation if that legislation is signed by the president. The current CRA window applies to any significant Obama-era rule that was either finalized or made effective after June 13, 2016.

The House of Representatives took action to nullify both the rules designed for “political subdivisions” (cities and counties) and another 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.

The DOL’s state plan rule was finalized in August 2016 and became effective in October 2016. So both DOL rules are subject to the current CRA window.

While President’s Trump’s signature on H.J. Res. 67 nullifies the DOL’s rule assuring cities that such programs would be exempt from ERISA, that doesn’t necessarily undo the work that has been done. To date, New York City, Philadelphia and Seattle have taken steps to set up such programs.