The House late Wednesday passed two resolutions to block Obama administration regulations designed to help states develop payroll deduction IRA plans that don't run afoul of the Employee Retirement Income Security Act.
The resolutions of disapproval blocked what GOP lawmakers called "misguided" Obama-era rules finalized last August that would have "forced" some employers to automatically enroll workers in government-run IRAs through payroll deductions.
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Introduced by Rep. Tim Walberg, R-Mich., chairman of the Subcommittee on Health, Employment, Labor and Pensions, and Rep. Francis Rooney, R-Fla., the resolutions would close what the lawmakers say is a regulatory loophole created by the Obama administration and ensure retirement savers continue to receive important safeguards under federal law.
The lawmakers argued that unlike private-sector retirement plans, workers enrolled in these public-sector plans "would not be afforded the important protections" provided by ERISA.
"The regulatory loophole created by the Obama administration puts workers, retirees and taxpayers at risk," Walberg said. "These resolutions remove that risk and restore critical protections that are designed to safeguard the savings of hardworking men and women. This is an important part of our ongoing efforts to strengthen retirement security in this country and ensure every American has the tools and protections they need to retire with financial security and peace of mind."
H. J. Res. 66 would roll back the regulatory "safe harbor" created by the Obama administration that would have resulted in private-sector workers being placed in government-run IRAs managed by states. H. J. Res. 67 would block a second regulation that extended the "safe harbor" to include cities and counties. Both resolutions would prevent a future administration from promulgating similar regulations.
The lawmakers argued the rules would lead to "unintended" consequences, such as fewer small-business retirement plans, as well as a confusing patchwork of state rules.
The Investment Company Institute, a trade group for mutual funds, applauded House passage of the resolutions and urged the Senate "to follow suit, to ensure that these untested retirement programs are required to follow the same consumer protections that have governed employer-sponsored plans for the past 40 years."
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Melanie Waddell
Melanie is senior editor and Washington bureau chief of ThinkAdvisor. Her ThinkAdvisor coverage zeros in on how politics, policy, legislation and regulations affect the investment advisory space. Melanie’s coverage has been cited in various lawmakers’ reports, letters and bills, and in the Labor Department’s fiduciary rule in 2024. In 2019, Melanie received an Honorable Mention, Range of Work by a Single Author award from @Folio. Melanie joined Investment Advisor magazine as New York bureau chief in 2000. She has been a columnist since 2002. She started her career in Washington in 1994, covering financial issues at American Banker. Since 1997, Melanie has been covering investment-related issues, holding senior editorial positions at American Banker publications in both Washington and New York. Briefly, she was content chief for Internet Capital Group’s EFinancialWorld in New York and wrote freelance articles for Institutional Investor. Melanie holds a bachelor’s degree in English from Towson University. She interned at The Baltimore Sun and its suburban edition.
