Lawmakers Target Auto-IRAs; California Will Push Back

Republican lawmakers in Washington have set their sights on dismantling state-level auto-IRA programs, such as California’s Secure Choice and similar programs in five states.

Under the Obama administration, the Department of Labor passed rules solidifying states and cities’ authority to create such programs.

In a party-line vote last month, House Republicans voted to roll back the rules. Now the Senate, and then President Trump, will weigh in.

California is already vocally defiant of the idea of dismantling Secure Choice.

From Bloomberg:

California says it’s ready to defy Congress. “We’re pressing forward with the program,” said Marc Lifsher, a spokesman for the Treasurer’s Office, aiming to launch Secure Choice by early 2019. “If there’s litigation, we’ll litigate.”

Other states are speaking more softly, at least for now. If the Obama administration rules are rescinded, “we in Illinois will have to evaluate next steps,” said Greg Rivara, press secretary for the Illinois State Treasurer. State of Oregon spokesman James Sinks said OregonSaves is “planning to move forward” to launch a pilot program in July of this year. “But it will be moving forward under a new cloud of legal uncertainty [that] creates headaches we don’t want to have,” Sinks said.

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Without the federal government’s blessing, it’s harder to surmise how courts might rule on state auto-IRA programs. The issue has never been squarely addressed by a judge, said Michael Kreps, an Erisa expert who’s a principal at the Groom Law Group in Washington, D.C. “You can make arguments either way, and it’s going to be up to a court to decide,” he said.

Even if the states ultimately win, the controversy could discourage other states and cities from starting their own retirement programs. Meanwhile, more than 100 million U.S. workers continue to go without a workplace retirement account.