For their next rollback of an Obama-era rule, the GOP wants to tighten up on a new kind of retireme
Republicans learn to love a regulation
For their next rollback of an Obama-era rule, the GOP wants to tighten up on a new kind of retirement savings plan.
By Danny Vinik
03/27/17 01:37 PM EDT
The GOP Congress hasn't had much luck getting big policies passed under President Donald Trump, but it's been very efficient at repealing themquietly using its powers under the 1996 Congressional Review Act to roll back Obama-era regulations on oil companies, coal companies, and workplace injury tracking, among others. It's all part of the Republican campaign promise to roll back nuisance rules that impose burdens on states and private companies.
But in a twist, the next two rules to get the axe might do just the opposite. As soon as this week, the Senate is poised to overturn two Department of Labor rules that concern retirement savings. But instead of tying firms in red tape, the rules actually reduce the burden of regulations on states and businesses trying to help people save for retirement. So repealing them would put the obstructive regulations right back in place.
The disagreement stems from laws passed in five statesCalifornia, Connecticut, Illinois, Maryland and Oregonthat require employers without 401(k)-style retirement plans to automatically enroll their workers in state-run retirement accounts. The idea is to create a new, automatic retirement-saving option for the millions of workers who don't have access to any kind of retirement plan that deducts from their paycheck. (Though auto-enrolled, workers could opt out.)
Those laws might not seem like they'd involve the federal government at all, except that a 1974 law, the Employment Retirement Income Security Act (ERISA), ties employers up in a number of rules if they establish or maintain a worker's retirement account. ERISA is intended to protect workers, but it also makes retirement plans more costly to run, and is a big part of why many smaller employers don't offer 401(k) plans. When the five states passed the new savings law, firms started to worry they'd be held liable to ERISA standards, making the new laws just as expensive as running their own 401(k)s, even though they only function as middlemen.
So last fall, the Department of Labor issued two rulesone for states and one for municipalitiesproviding a safe harbor so that auto-IRA plans will not fall under burdensome ERISA requirements. These "safe harbor" rules are the ones the GOP wants to roll back.