President Trump signs resolution to effectively kill city auto-IRA rule

The president's advisers have signaled he'll sign a bill to make it unlikely that state auto-IRAs are put into place as well

Apr 13, 2017 @ 5:19 pm

By Greg Iacurci

President Donald J. Trump on Thursday signed into law a resolution that nullifies Obama-era retirement rules meant to encourage cities and other municipalities to develop auto-IRA programs for private-sector workers.

The resolution, H.J. Res. 67, was passed by the Senate in late March and by the House in mid-February, largely along party lines, with Republicans in favor of overturning the rule.

The regulation, issued by the Department of Labor a month before Mr. Trump took office in January, was meant to ease liability concerns among cities when creating automatic-enrollment, payroll-deduction individual retirement account programs to be offered through the workplace.

Cities such as New York, Philadelphia and Seattle have expressed interest in developing auto-IRAs as a way to help close the gap in retirement plan coverage that exists primarily among small businesses, which are less likely than large employers to offer a 401(k) or similar retirement plan.

The rule, called "Savings Arrangements Established by Qualified State Political Subdivisions for Non-Governmental Employees," offered a safe harbor for qualifying municipalities that would exempt their programs from federal retirement law, the Employee Retirement Income Security Act of 1974, if they met certain conditions.

The DOL issued a similar rule governing state auto-IRAs in August. The House passed a resolution to kill this rule as well, but the Senate hasn't yet voted on it.

Five states have passed legislation to set up auto-IRAs, and several others are considering doing the same. Observers expect this push will slow if Mr. Trump ultimately nullifies the DOL's state rule as well.

The resolutions of disapproval were promulgated under the Congressional Review Act, which provides lawmakers a window of 60 legislative days to vote to halt regulations. Such resolutions only require a simple majority to pass and aren't subject to filibuster.

Mr. Trump has now signed at least five bills under the CRA to cancel Obama-era regulations. Only one successful CRA challenge to a regulation had occurred prior to the Trump administration taking office, under President George W. Bush in 2001.

If the resolution regarding state auto-IRA rules also makes its way to the president's desk, advisers have signaled they will recommend he sign it into law.

That position, however, runs counter to one expressed by an adviser to Mr. Trump when he was campaigning for the presidency.

"[Mr.]Trump believes any states that want to set up their own auto-IRAs have every right to do so, and he doesn't want to interfere with their initiatives," Ms. Furchtgott-Roth, a senior fellow at the Manhattan Institute, a conservative think tank, said at a Politico/AARP panel in October.

0
Comments

What do you think?

View comments

Recommended for you

Sponsored financial news

RIA Data Center

Use InvestmentNews' RIA Data Center to filter and find key information on over 1,400 fee-only registered investment advisory firms.

Rank RIAs by

Featured video

INTV

Why some retirement plan advisers think Fidelity is invading their turf

InvestmentNews editor Frederick P. Gabriel Jr. and reporter Greg Iacurci talk about this week's cover story that looks at whether Fidelity Investments is stepping on the toes of retirement plan advisers.

Latest news & opinion

Broker protocol: Indecision over recruiting agreement is rampant

Ruckus over recruiting agreement has even wirehouse lifers wondering if it's time

Cetera reportedly exploring $1.5 billion sale

The company confirmed it's talking to investment bankers to 'explore how to best optimize [its] capital structure at lower costs.'

Advisers bemoan LPL's technology platform change

Those in a private LinkedIn chat room were sounding off about fears the independent broker-dealer will require a move to ClientWorks before it is fully ready.

Speculation mounts on whether others will follow UBS' latest move to prevent brokers from leaving

UBS brokers must sign a 12-month non-solicit agreement if they want their 2017 bonuses.

Maryland jumps into fiduciary fray with legislation requiring brokers to act in best interests of clients

Legislation requires brokers to act in the best interests of clients.

X

Hi! Glad you're here and we hope you like all the great work we do here at InvestmentNews. But what we do is expensive and is funded in part by our sponsors. So won't you show our sponsors a little love by whitelisting investmentnews.com? It'll help us continue to serve you.

Yes, show me how to whitelist investmentnews.com

Ad blocker detected. Please whitelist us or give premium a try.

X

Subscribe and Save 60%

Premium Access
Print + Digital

Learn more
Subscribe to Print