401k Legislative Update

State-Based Retirement Plan Initiatives

While Congress has been unable to reach a consensus regarding whether automatic IRAs should be mandated for employers that do not offer retirement plans, a number of states have moved forward on this initiative, passing their own state-based retirement savings programs.

Recently, 26 Senators wrote a joint letter to urge President Obama to take action to help facilitate the state-based efforts. The joint letter asks that the President direct the Department of Labor and the Treasury Department to “remove any potential uncertainty with respect to the application of federal law to the state-based reform initiatives.” Specifically, the letter suggests that DOL and IRS should clarify that the state-based savings programs passed by California and Illinois, and any similar IRA-based savings programs enacted by states in the future, will not be:

  • Impacted by ERISA and
  • That contributions to these programs will be tax-preferred at the federal level

Additionally, the Senators asked for guidance on what other types of state-based IRA programs and program features could be adopted without triggering ERISA.

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This information is provided as a reference tool for your convenience and may not represent a complete list of all events that apply to your plan.

For Plan Sponsor Use Only – Not for Use with Participants or the General Public. This information is not intended as authoritative guidance or tax or legal advice. You should consult with your attorney or tax advisor for guidance on your specific situation.

Tracking: 1-363372