State Initiatives Transforming the Retirement Savings Landscape

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On November 22, 2017, Seattle became the first city to enact a city-facilitated retirement savings plan, which will take the form of an auto-IRA. It will be the tenth government-facilitated program in the nation designed to expand access to retirement savings options for private sector workers.

Seattle now joins several states currently working on program implementation, including California, Connecticut, Illinois, Maryland, and Vermont. Two states – Oregon and Massachusetts – have already opened their programs for enrollment and Washington is scheduled to open its program in early 2018.

In 2017, at least 22 states and cities introduced legislation to address the retirement savings gap among private-sector workers. Since 2012, 40 states have acted to implement, study or consider legislation to establish state-facilitated retirement savings programs.

 

Source: Georgetown University’s Center for Retirement Initiatives

DOL Administrative Policies Related to Publicly Sponsored Payroll-Deduction IRAs and ERISA-Covered Plans

On November 18, 2015, Interpretive Bulletin 2015-02 “regarding certain state laws designed to expand the retirement savings options available to their private sector workers through ERISA-covered retirement plans” was issued and effective immediately.

On August 30, 2016, the U.S. Department of Labor published a final rule for savings arrangements established by states for non-governmental employees.

  1. Final rule for State Auto-IRA Programs describing a safe-harbor for state laws that require employers to facilitate enrollment in state-administered payroll deduction individual retirement accounts (IRAs).
  2. The White House Fact Sheet: Making it Easier to Save for Retirement and news release.

On December 20, 2016, the U.S. Department of Labor published a final rule for qualified state political subdivisions (e.g., cities, counties) that establish payroll deduction IRA savings program for workers who do not have access to workplace savings arrangements. This “city” rulemaking amends the final rule for state-sponsored retirement savings.

  1. Final rule for savings arrangements established by qualified state political subdivisions for non-governmental employees.
  2. On September 29, 2016, the CRI submitted comments to the U.S. Department of Labor regarding its proposed rule for savings arrangements established by state political subdivisions for non-governmental employees. Click here to view the letter.

For a summary of the issues addressed by DOL in the final state rule, the proposed “city” rule, and the Interpretive Bulletin, see Groom Law Group’s August 29, 2016 memo.

On January 19, 2017, the U.S. Department of the Treasury issued a final rule governing retirement savings bonds. In this final rule, Treasury offers nonmarketable, electronic retirement savings bonds for certain retirement savings programs established by states or certain of their political subdivisions.

On April 13, 2017, House Joint Resolution 67 became law. This resolution was introduced under the Congressional Review Act, which provides Congress a window of 60 legislative days to halt regulations. This resolution nullifies the final rule for savings arrangements established by qualified state political subdivisions for non-governmental employees (the “city” rule).

On May 17, 2017, House Joint Resolution 66 became law. This resolution was introduced under the Congressional Review Act, which provides Congress a window of 60 legislative days to halt regulations. This resolution nullifies the final rule for savings arrangements established by states for non-governmental employees (the “state” rule).

All the latest updates are on the DOL EBSA’s website.

CRI POLICIES

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INFOGRAPHIC: 2017 STATE LEGISLATION

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