Auto-Enrollment IRAs Overturned Under Congressional Review Act

Author: Marta Moakley, XpertHR Legal Editor

March 31, 2017

UPDATE: On April 13, 2017, President Donald J. Trump signed into law the below joint resolution.

Congress has voted to overturn the US Department of Labor rule regarding auto-enrollment IRAs. By a vote of 50-49 yesterday, the US Senate passed the House of Representatives' Joint Resolution 67, which disapproves the Department of Labor's (DOL's) rule relating to payroll deduction savings initiatives with automatic employee enrollment. The measure, passed under the Congressional Review Act of 1996 (CRA), now heads to the President's desk for signature.

Under the CRA, Congress may disapprove a rule submitted by a federal agency, thereby stripping the rule of any force or effect. Congress may only disapprove a rule within 60 legislative days after receiving it. If a resolution is introduced in the House or Senate, a joint resolution is then submitted to the President for signature.

The CRA not only allows blockage of the existing rule, but also ensures that the enforcing agency may not submit a "substantially similar rule" absent a change in the law authorizing it to do so.

The DOL's rule required local governments to establish and manage auto-enrollment IRAs for private sector workers, who would contribute to the IRAs via payroll deductions. The DOL's Employee Benefits Security Administration had crafted the rule in order to increase workers' retirement savings.

In a press release, Florida Congressman Francis Rooney, the joint resolution's sponsor, stated, "Hardworking Americans could have been forced into government-run plans with fewer protections and less control over their hard-earned savings. Employers would have faced a confusing patchwork of rules, and many small businesses might have forgone offering retirement plans altogether."

A unified Republican government continues to employ the CRA to overturn regulations issued late in the Obama Administration. The CRA has been invoked by the present Congress to disapprove of rules issued by the Departments of Labor, Health and Human Services, Interior, and Education, as well as the Social Security Administration and the Federal Communications Commission.

Prior to the present Congress, the CRA had been used only once: to disapprove of a Clinton Administration DOL rule on ergonomics standards.