On Monday, The New York City Council Committee on Civil Service and Labor held a public hearing to discuss Introduction 888, which proposes a city-administered automatic IRA program for private employees who do not currently have access to retirement plans through their employer. ERIC testified before the Committee addressing the preservation of ERISA preemption and suggesting changes to the legislation to completely exempt employers that offer ERISA plans. The following are ERIC’s specific recommendations:
Employer Exemption: Int. 888 currently uses a definition of “covered employer” that includes employers that do not provide a retirement plan under ERISA to “eligible employees.” Because the definition of eligible employee does not follow ERISA, ERIC recommends that Int. 888 provide a complete exclusion for all employers that offer a retirement plan under ERISA and not base the exclusion on the definition of an “eligible employee”.
Definition of “Eligible Employee”: In the alternative to the recommendation above, the definition of an “eligible employee” should be amended to conform with the employee eligibility requirements under ERISA. Such ERISA coordination includes changing the eligibility age from 18 to 21 and allowing employers to limit participation in the retirement plan to employees who exceed 1,000 hours of service in a year.
Employer Exemption from Reporting Requirements: The program should automatically exempt—without a reporting or registration requirement—employers that provide a retirement plan to employees in accordance with ERISA.
If you have any questions regarding Introduction 888 or ERIC’s testimony, please do not hesitate to contact me.
Article by Dillon Clair, Retirement and Compensation Policy Associate