The Department of Labor this week announced a series of proposals and regulatory clarifications regarding state-run retirement plans for private workers — including a key clarification regarding state plans and ERISA.
Among the announcements was a proposal to let large cities operate retirement plans for private workers, if there is no statewide plan. From On Wall Street:
The department also proposed an addition to the rule allowing cities to create similar retirement savings plans if they are in a state that lacks a statewide retirement savings program for private sector employees. Under the proposal, the initiative would be limited to cities with populations at least equal to the least populous state, Wyoming, which has about 582,000, according to the U.S. Census.
More than 30 cities had populations greater than that of Wyoming, according to census data.
The department is soliciting comments from the public on the proposal.
Other key notes from Employee Benefit Adviser:
The Labor Department’s new rule aims to expand Americans’ access to tax-advantaged retirement savings plans, by clarifying the regulatory rules that would govern state-run plans.
In order to qualify as a non-ERISA plan, a state-run program would have to be established and administered by the state; provide a limited role for employers; and be voluntary for employees.
State governments had requested regulatory clarification, according to Perez, which he addressed during the call.
“This regulation does not prevent a state from establishing an ERISA plan. There is nothing to stop a state from doing that,” Perez says. “The eight states to which I am referring to, have chosen a different route. Their concern as expressed to me was: How can we establish this voluntary plan in such a way that will not run afoul of ERISA?”