Comment Letter: Proposed Safe Harbor Rules for Secure Choice

Resource Overview

IABG submitted the following comment letter on behalf of our partners to the Deparment of Labor in response to their Proposed Safe Harbor Rule (RIN 1210-AB71)

The Illinois Asset Building Group (IABG) appreciates the opportunity to comment on the proposal by the Department of Labor to create a safe harbor exemption from the Employee Retirement Income Security Act (ERISA) for certain state retirement savings programs. The new proposed rule would clarify the circumstances under which these state programs may be established and maintained without creating retirement plans that are subject to ERISA

We greatly appreciate the efforts of Secretary Perez and the Department to provide a pathway towards greater retirement security for workers. These efforts will allow the Illinois Secure Choice Savings Program to provide access to a critical tool low-income workers need to build financially secure retirements.

IABG led advocacy efforts to pass the Illinois Secure Choice Savings Program and is working closely with the Illinois State Treasurer and the Secure Choice Board on implementation of the program. In recent years we have seen states be an important laboratory for innovative change. As we work to implement Secure Choice, it’s important that Illinois, and other states, have the flexibility necessary to address the retirement savings needs of a diverse workforce – especially low-income workers and workers of color. We are concerned that the structure of the Proposed Safe Harbor limits their ability to be nimble

We are concerned that the Proposed Safe Harbor only applies to employers that are mandated by state law to participate in the payroll deduction program. This will prevent many Illinois workers, employed at small businesses that are not covered by the employer mandate, from participating. The way the Proposed Safe Harbor is structured also creates very serious compliance challenges. We have a fluid labor market. The number of employees working at a particular business can fluctuate from month to month and year to year. It’s very likely that a employee may switch from being covered by the mandate to not being covered and during that time inadvertently auto-enroll an employee.

We ask that the Department remove the mandate condition from the Proposed Safe Harbor and make some clarifying changes to the administrative and operational provisions. This would allow the Proposed Safe Harbor to be a stronger tool for States to partner with the private sector in promoting responsible payroll savings programs that fully protect workers.

Download the complete letter.

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