[Official Guidance]

Text of DOL Interpretive Bulletin 2015-02: State Savings Programs That Sponsor or Facilitate Plans Covered by ERISA (PDF)
15 pages. "This document sets forth the views of the [DOL] concerning the application of [ERISA] to certain state laws designed to expand the retirement savings options available to private sector workers through ERISA-covered retirement plans....

"One state approach is reflected in the 2015 Washington State Small Business Retirement Savings Marketplace Act [which] requires the state to contract with a private sector entity to establish a program that connects eligible employers with qualifying savings plans available in the private sector market.... The marketplace arrangement would not itself be an ERISA-covered plan, and the arrangements available to employers through the marketplace could include ERISA-covered plans and other non-ERISA savings arrangements....

"Another potential approach is a state sponsored 'prototype plan.' ... The individual employers would assume the same fiduciary obligations associated with sponsorship of any ERISA-covered plans.... [T]he state or a designated third-party could assume responsibility for most administrative and asset management functions of an employer's prototype plan. The state could also designate low-cost investment options and a third-party administrative service provider for its prototype plans.

"A third approach ... involves a state establishing and obtaining IRS tax qualification for a 'multiple employer' 401(k)-type plan, defined benefit plan, or other tax-favored retirement savings program. The Department anticipates that such an approach would generally involve permitting employers that meet specified eligibility criteria to join the state multiple employer plan. The plan documents would provide that the plan is subject to Title I of ERISA and is intended to comply with Internal Revenue Code tax qualification requirements. The plan would have a separate trust holding contributions made by the participating employers, the employer's employees, or both. The state, or a designated governmental agency or instrumentality, would be the plan sponsor under ERISA section 3(16)(B) and the named fiduciary and plan administrator responsible ... for administering the plan, selecting service providers, communicating with employees, paying benefits, and providing other plan services.... As a state-sponsored multiple employer plan (state MEP), this type of arrangement could also reduce overall administrative costs for participating employers in large part because the Department would consider this arrangement as a single ERISA plan. Consequently, only a single Form 5500 Annual Return/Report would be filed for the whole arrangement. In order to participate in the plan, employers simply would be required to execute a participation agreement ...

"In the Department's view, state laws of the sort outlined above interact with ERISA in such a way that section 514 preemption principles and purposes would not appear to come in to play in the way they have in past preemption cases. Although the approaches described above involve ERISA plans, they do not appear to undermine ERISA's exclusive regulation of ERISA-covered plans."

(Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])  

[Official Guidance]

Text of DOL Proposed Regs: Safe Harbor for Savings Arrangements Established by States for Non-Governmental Employees (PDF)
31 pages. "This document contains a proposed regulation under [ERISA] setting forth a safe harbor describing circumstances in which a payroll deduction savings program, including one with automatic enrollment, would not give rise to an employee pension benefit plan under ERISA. A program described in this proposal would be established and maintained by a state government, and state law would require certain private-sector employers to make the program available to their employees. Several states are considering or have adopted measures to increase access to payroll deduction savings for individuals employed or residing in their jurisdictions. By making clear that state payroll deduction savings programs with automatic enrollment that conform to the safe harbor in this proposal do not establish ERISA plans, the objective of the safe harbor is to reduce the risk of such state programs being preempted if they were ever challenged." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])  

[Guidance Overview]

EBSA Fact Sheet on State Savings Programs for Non-Government Employees
"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."

(Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])