United States: Oregon Board Adopts Final Rules To Implement Retirement Savings Program

On April 18, 2017, the Oregon Retirement Savings Board adopted final rules to implement the Oregon Retirement Savings Program (known as "OregonSaves") codified at 170-090-0001 et seq. OregonSaves establishes a state-sponsored payroll deduction retirement savings plan requiring Oregon employers that do not offer retirement plans to their employees to make payroll deductions from their workers' wages into the state's program. Despite these final rules, OregonSaves' future still remains uncertain due to the Trump administration's likely rollback of state savings arrangements.

OregonSaves is intended to be construed in a manner consistent with the applicable guidance provided by the U.S. Department of Labor ("DOL") during the Obama administration relating to payroll deduction IRA programs that are not pension plans under ERISA, including but not limited to, 29 CFR§ 2509.99-1 and 29 CFR § 2510.3-2(d). However, the U.S. Senate recently passed H.J. Res 66, blocking the DOL's rule allowing for these state-level automatic enrollment savings programs. President Trump is expected to sign H.J. Res 66, meaning that any state savings programs would be required to comply with ERISA provisions. Thus, their future enforceability is uncertain.

If the plan in Oregon remains, it will begin rolling out on July 1, 2017, with a pilot group of employers. Employers must either register with the program1 or file a certificate of exemption2 by the following deadlines:

  • November 15, 2017, for employers with 100 or more employees;
  • May 15, 2018, for employers with at least 50 but no more than 99 employees;
  • December 15, 2018, for employers with at least 20 but no more than 49 employees;
  • May 15, 2019, for employers with at least 10 but no more than 19 employees;
  • November 15, 2019, for employers with at least 5 but no more than 9 employees;
  • May 15, 2020, for employers with 4 or fewer employees.

Within 60 days after an employer's registration deadline, it must enroll its participating employees by providing the following information: (1) full legal name; (2) social security number or taxpayer ID number; (3) date of birth; (4) mailing address; (5) employee's designated email address. Employees who do not opt out or specify a particular contribution rate will be enrolled using a Standard Election of 5% of their compensation, with auto-escalation at the rate of an additional 1% of their compensation each year, until a maximum of 10% is reached.

Oregon employers play a limited role under OregonSaves, consisting of: (1) collecting contributions and remitting those amounts to the Program Administrator; (2) providing information to the Program Administrator; (3) retaining notice of any employee elections or election changes for no less than three years; (4) recording participating employees' elections in their payroll system in a manner enabling accurate deductions from employee's paychecks; and (5) making clear that the employer's involvement in the program is limited to collecting contributions and remitting them to the Program Administrator.

Below are recommendations for employers to follow in order to demonstrate neutrality with respect to an IRA sponsor, consistent with the DOL's guidance. Below are recommendations for employers to follow to demonstrate neutrality with respect to an IRA sponsor:

  • Ensure any materials distributed to employees regarding IRA payroll deduction programs clearly and prominently state in plain language that the program is completely voluntary;
  • Clearly state that the employer does not endorse or recommend either the sponsor or the funding media;
  • Make clear that other IRA media are available to employees outside the payroll deduction program;
  • Include a statement indicating that an IRA may not be appropriate for all individuals;
  • Explain that the tax consequences of contributing to an IRA through a payroll deduction program are generally the same as the consequences of contributing to an IRA outside the program.

Employers will want to keep apprised of the Trump administration's likely rollback of the mandatory savings program statutes. Littler will continue to monitor developments related to the implementation of OregonSaves.

Footnotes

1 To register, employers will provide the following information through an internet portal: (1) employer name; (2) employer identification numbers (Federal Employer Identification Number and Business Identification Number); (3) employer mailing address; (4) name, title, telephone number, and email address of an individual designated by the employer as the program's point of contact; (5) number of employees.

2 An employer who offers a "Qualified Plan" to some or all of its employees may file a certificate of exemption which will be valid for 3 years from the date of filing so long as the employer continues to offer a Qualified Plan.  A Qualified Plan is defined as "a retirement plan tax-qualified under the Code, section 401(a), section 401(k), section 403(a), section 403(b), section 408(k), section 408(p) or a governmental plan under section 457(b)."

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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