A Labor Department rule governing state-based retirement plans for the private sector has taken its final step toward finalization, after the regulatory agency sent the measure to the Office of Management and Budget for review.
The OMB, which received the measure last week, reviews all proposed and final rules, looking particularly at economic consequences. It has up to 90 days to review the rule, but the assessment will likely take around half that time, said Judy Miller, director of retirement policy at the American Retirement Association.
The OMB's review of the DOL's recently released conflict of interest rule, also known as the fiduciary rule, took a little more than two months, for example.
The Department of Labor rule, titled “Savings Arrangements Established by States for Non-Governmental Employees,” offers a route for states to establish payroll-deduction savings programs for employees who don't have access to a retirement plan through the workplace, while minimizing states' liability.
States such as Illinois and Maryland have recently passed laws to establish workplace automatic-enrollment IRA programs (also known as auto-IRAs), while others such as Washington and New Jersey have passed legislation to set up retirement-plan marketplaces.
Around 30 states have either passed legislation or are considering similar bills.
However, states have expressed concern that such plans would fall under the purview of the Employee Retirement Income Security Act of 1974, exposing them to fiduciary liability. The DOL's rule, which the OMB received July 22, will offer a safe harbor for states to avoid ERISA pre-emption.
“I know the states are very eager to have it,” Ms. Miller said.
The DOL proposed its rule in November 2015.