Tax group fights to stop California’s auto-IRA program

A conservative tax lobbying group is not finished with its legal fight against California’s auto-IRA program.

The Howard Jarvis Taxpayers Association on April 1 appealed a district court’s dismissal of the group’s lawsuit against the California Secure Choice Retirement Savings Program. The program, which launched last year, requires businesses to automatically enroll workers into the program, unless those companies already provide workplace retirement accounts.

The district court judge last month ruled that CalSavers is not a plan under the Employee Retirement Income Security Act and is therefore not preempted by that part of the law. That decision followed a previous dismissal, though the plaintiffs were given the chance to amend their complaint.

The state’s deadline for businesses with 100 or more employees to comply is June 30, and it is phasing in that requirement for smaller businesses over time.

The case was filed in 2018 in U.S. District Court in the Eastern District of California.

Last year, the lawsuit caught the attention of the Trump administration, which sided with the plaintiffs. In September, the Justice Department filed a statement of interest with the court, urging the judge to deny the auto-IRA program’s motion to dismiss. The DOJ had similarly argued that the program ran afoul of ERISA, meaning that the state law is inconsistent with federal law.

The state is among many that have either considered or moved forward with public retirement-savings accounts for private-sector workers. The need for savings is evident in California, as nearly 7 million residents do not have access to employer sponsored plans, the state has noted.

“We remain confident in the district court’s two prior rulings strongly in our favor,” CalSavers executive director Katie Selenski said in an email.