DOL to Provide Guidance Regarding State-Based Retirement Programs
In recent years, several states, including Illinois, have passed laws that would require employers who do not offer retirement plans to automatically enroll employees into IRAs. However, there has been concern regarding whether these state laws would be preempted by ERISA. For instance, the Illinois legislation (discussed in this prior alert) that would require all employers with 25 or more Illinois-based employees that do not sponsor a retirement plan to enroll their employees in a Roth-style IRA program, specifically states that the program should not be implemented if it fails to receive an opinion from the Department of Labor (DOL) that exempts the program from ERISA. Consequently, the DOL intends to provide guidance to help reduce the risk of litigation regarding ERISA preemption for state-based retirement programs by the end of the year, as discussed in this DOL blog post. This guidance is expected to pave the way for more state-based employer retirement plan initiatives like the one in Illinois.