Auto-IRAs and Voluntary Marketplaces: States Respond to the Retirement Crisis
Employee Benefits Partner Victoria Zerjav and Associate Michael Romeo published their article "Auto-IRAs and Voluntary Marketplaces: States Respond to the Retirement Crisis" in the October issue of Benefits Magazine to discuss the growing number of states implementing state-sanctioned private sector retirement savings programs and how employers should carefully navigate the varying compliance considerations created by these new plans.
- A growing number of states have passed legislation to create state-sanctioned retirement savings programs, also called secure choice plans. These plans seek to provide access to retirement savings programs to employees whose employers don't offer a retirement plan.
- State programs generally fall into the categories of auto-individual retirement account (IRA) programs, voluntary payroll deduction IRAs, voluntary open multiple employer plans (MEPs) and voluntary marketplace plans.
- Legal challenges have argued that these plans are preempted by the Employee Retirement Income Security Act (ERISA), but a decision in California appears to establish that ERISA does not preempt these plans as long as they are established, maintained and sponsored by states.
- Employers that do not sponsor a plan subject to ERISA should take note of the compliance issues, including registration deadlines, responsibility to provide education, and the timely handling and remittance of employee contributions.
READ: Auto-IRAs and Voluntary Marketplaces: States Respond to the Retirement Crisis
[Reproduced with permission from Benefits Magazine, Volume 58 Number 10, pages 30-35, October 2021, published by the International Foundation of Employee Benefit Plans (www.ifebp.org), Brookfield, Wisconsin. All rights reserved. Statements or opinions expressed in this article are those of the author and do not necessarily represent the views or positions of the International Foundation, its officers, directors or staff. No further transmission or electronic distribution of this material is permitted.]