ARA Comments on Proposed Rules for Oregon Retirement Savings Plan
The American Retirement Association on Feb. 21 sent a letter
to the Oregon State Treasury containing its comments on the Oregon Retirement Savings Plan
(ORSP), also known as OregonSaves.
The ARA thanked the Oregon Treasury and the Oregon Retirement Savings Board for its work on the proposed rules, and noted that the ARA “has consistently and actively supported state proposals to expand retirement plan coverage in the private workforce.” The letter adds, “We believe state initiatives should include automatic enrollment, continue to encourage sponsorship of traditional retirement savings arrangements and offer private sector provided alternatives.”
The ARA has two specific concerns and recommendations regarding the proposed rule. “Our first concern relates to the exemption for Oregon employers who offer a ‘qualified plan’ to their employees,” says the letter, and the second is that “the definition of ‘qualified plan’ in Division 5 of the proposal fails to include alternative payroll deduction IRA programs.”
The ARA writes regarding the exemption for Oregon employers that offer a qualified plan to their employees, “It appears that under Division 15(2) of the proposed rules, employers who offer a qualified plan would nevertheless be required to enroll their employees in the OregonSaves program if their plan has a waiting period in excess of 90 days,” and notes that “in a statement posted on the OregonSaves webpage, however, it is noted that this was not intended and that the final rules will be clarified.”
The ARA recommends that the final rules be clarified “in accordance with the statements on the OregonSaves website to specifically exempt any employer that offers a qualified plan whose waiting period and other eligibility provisions comply with federal law.” It also recommends that the exemption “should be valid as long as the employer continues to offer a qualified plan without the need to periodically renew the certificate.”
Definition of ‘Qualified Plan’
As for the definition of “qualified plan,” the ARA says that “the proposal fails to include alternative payroll deduction IRA programs.” Federal regulations, it notes, “permit employers to offer these types of savings programs either as a voluntary savings arrangement or as an employer-sponsored plan subject to federal law and regulation” And there is an added benefit to including these arrangements within the definition of qualified plan, the letter notes: “private-sector providers typically encourage employers to upgrade the program to a traditional 401(k) plan that provides additional benefits, such as employer matching or non-elective contributions.”
The ARA recommends that the definition of a ‘qualified plan’ in the proposed rules be broadened to include payroll deduction IRA programs that are made available outside OregonSaves.