The Department of Labor recently released Interpretive Bulletin 2015-02 in which it expresses its views generally in support of state laws “designed to expand workers’ access to retirement savings programs.” Concerns about inadequate retirement savings for employees have prompted some states in recent years to express interest in programs that would (in theory, at least) encourage small employers to adopt retirement plans. Some of the proposals involve non-ERISA, IRA-based programs. (Please see our November 19, 2015 Technical Update for a review of proposed regulations to implement these programs.) Other states have proposed strategies to increase the adoption of ERISA-covered plans (“ERISA-plans”). The Interpretive Bulletin primarily addresses the concern that ERISA preemption would preclude states from adopting measures that relate to ERISA-plans.
The DOL notes that states have a suggested several different approaches to promote retirement savings using ERISA-plans. One strategy calls for the state to create a marketplace to connect small employers with ERISA-plans through private sector vendors. The state would determine the standards the vendor would have to meet in terms of fees, investments, and product quality to be included in the marketplace. Employers would not be required to use the marketplace or even adopt a plan. The DOL views the state in this situation as merely offering access to retirement products and not as sponsoring an ERISA-plan or impeding the reporting and disclosure requirements, protective standards, or legal remedies under ERISA.
Another suggested approach calls for the state to sponsor a prototype plan document. Employers would be able to adopt the state-sponsored prototype document, possibly with the ability to customize the plan terms to meet their individual needs. Under this arrangement, each employer is sponsoring its own ERISA-plan. The state could designate a third-party to assume responsibility for most administrative and asset management functions for its prototype plans. The DOL views this arrangement as similar to a financial institution sponsoring a prototype or volume submitter plan document, and not contradictory of ERISA.
The last suggested approach is for the state to adopt a Multiple Employer Plan (“MEP”) that could be joined by eligible employers. The state or a state entity would be the plan sponsor, the plan administrator, and the named fiduciary. The DOL indicates that they would treat this type of arrangement as a single plan, with a single Form 5500 filing requirement. Such plans could be designed to afford employers limited administrative and fiduciary responsibilities. Based on size and volume, a state-sponsored MEP could offer small plan sponsors access to ERISA-plans at a relatively low cost. The DOL contrasts the state sponsored MEP with to its prior opinions that have required groups of employers to have more commonality than mere geographic location in order to sponsor a MEP that the DOL would treat as a single plan. The DOL explains “a state has a unique representational interest in the health and welfare of its citizens that connects it to” in-state employers. This would give the state unique advantages as a MEP sponsor which private financial institutions would not be able to duplicate.
The Interpretive Bulletin makes clear that, in the DOL’s view, the above approaches do not undermine ERISA’s exclusive regulation of ERISA-plans. It is the Department’s view that each of the approaches exists to provide employers with access to ERISA-plans and not to impose any requirements or limitations that contradict the requirements of ERISA. As such, the Department’s position is that no ERISA-preemption issues would innately arise from any of these state-sponsored approaches. The DOL does note that this view is predicated upon the state implementing the approaches in a manner not inconsistent with the requirements and remedies governed by ERISA.
We will address this topic in the December 14th Webcast “Keeping Current”, and at the Orlando Advanced Pension Conference on February 10-12, 2016. See below for details.
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Live Web Seminars
Advanced Cross-Tested Plans Techniques - A 2-part program, 11/30, 12/7, 12:00 PM ET each day
ERISA 03: Affiliated Service Groups, 12/4, 12:00 PM ET
Safe Harbor 401(k) Plans - A 3-part program, 12/8-9-10, 12:00 PM ET each day
ERISA 04: Current Developments and the IRS LESE Project, 12/11, 12:00 PM ET
Keeping Current 2015: The Year in Review, 12/14, 12:00 PM ET
Ethics, 12/18, 12:00 PM ET
ERISA 05: Eligibility FAQs, 12/21, 12:00 PM ET
ERISA 06: A Review of the ASPPA IRS Q&A Discussion, 12/28, 12:00 PM ET
For more details about these programs, and to register online: www.relius.net/events/events.aspx?Web
Orlando Advanced Pension Conference – Feb. 10-12 – Register by January 11 and save $150
See program highlights, agenda, event details, and register online, here:
http://www.relius.net/Events/seminardetail.aspx?CID=26749
Just for ERPAs Workshop, Orlando FL – February 9, 2016
View event details and register online, here:
http://www.relius.net/Events/seminardetail.aspx?EID=26867
Self-study Materials for ERPA Examination Review – Part I and Part II
Last chance to become an ERPA – The IRS announced that effective February 12, 2016, they will no longer offer the ERPA Special Enrollment Exam (ERPA SEE). The final ERPA SEE testing window is January 5 through February 12, 2016. Our well-respected ERISA attorneys have developed these materials to help you perform at your best. Register for the ERPA Self-study Materials and get all of the following:
- Study materials: ERPA test study materials are included in the materials. No need to buy anything else.
- The ERISA Research Guide: From Pension Library, this guide, which includes advanced topical outlines, examples, comments and FAQs, will be made available to you.
- Presentation slides: Download over 270 slides for each ERPA exam, put together by our attorneys. These slides are filled with principles and examples to help you focus your study on the test subjects.
- Practice Tests: Training that includes 150 multiple-choice questions for each ERPA test; and additional practice questions on your own review time. This lets you see the areas where you need to study.
- Experience: Collaboration of SunGard’s Relius nationally recognized attorneys.
See more details and purchase online: https://www.relius.net/Products/ERPAStudyMaterials.aspx
Archived Web Seminars – Have some down time this end of the year? Register for these newly recorded events:
ERISA 01: Correcting Elective Deferral Failures
Who's the Employer/Ee Series - 5 segments
1099-R: An Ongoing Challenge
Effect of Death on Retirement Plans
Distributions, Taxation & After-Tax Contributions
Prohibited Transactions
For program details about archived Web seminars, and to register: www.relius.net/events/events.aspx?Archive
Pensions on Peachtree, Atlanta, GA – April 25-26, 2016 – Save the Dates!
The professional educators at SunGard are joining forces with the Ferenczy Benefits Law Center, LLP, based in Atlanta and Knoxville, to bring you their third annual conference. Program details and online registration will be available in January 2016, here.
Whether private employers will broadly embrace – or even adopt – state-supported retirement plans remains to be seen. However, it is clear that states could be powerful new entrants into the retirement plan marketplace. With this Interpretive Bulletin, the DOL has given states the green light to move pursue strategies that encourage increased adoption of retirement plans by in-state employers. |
