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EBSA Fact Sheet on State Savings Programs for Non-Government Employees
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]Link to more items from this source
[Guidance Overview]
Nov. 16, 2015
"The proposed regulation describes circumstances under which a state-required payroll deduction savings IRA program would not give rise to an employee pension benefit plan under ERISA and, therefore, should not be preempted by ERISA.... The state must be responsible for investing the employee savings or for selecting investment alternatives from which employees may choose.... The state also must adopt measures to ensure that employees are notified of their rights under the program, and create a mechanism for enforcement of those rights.... [I]f the program requires automatic enrollment, employees must be given appropriate notice and have the right to opt out. Moreover, since employees own their IRAs, they must have the ability to withdraw their money under normal IRA rules without any other cost or penalties.

"[T]he employer's activities must be limited to ministerial activities such as collecting payroll deductions and remitting them to the program ... The employer may have no discretionary authority or control over the employees' IRAs or the operation of the IRA program. Employers cannot contribute employer funds to the IRAs.

"The proposed regulation has a 60-day comment period....

"[The DOL also has] issued an Interpretive Bulletin to assist states interested in helping employers establish ERISA-covered plans for their employees. Under one approach, the state would establish a marketplace to connect eligible employers with retirement plans available in the private sector market.... Under another approach, the state would make available a 'prototype plan' that individual employers could adopt. Each employer that adopts the prototype would sponsor an ERISA plan for its employees, and the state or a designated third-party could assume responsibility for most administrative and asset management functions of an employer's prototype plan. Under a third approach, a state would establish a 'multiple-employer plan' or MEP that eligible employers could join rather than establishing their own separate plan. The MEP would be run by the state or a designated third-party.

"States would have the option of requiring IRA programs under [the safe harbor set forth in proposed regulations being issued simultaneously with this interpretative bulletin], facilitating or sponsoring ERISA-covered plans in accordance with this interpretive bulletin, or both."

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