In the latest round of state-specific benefits law, Oregon has just issued final regulations for OregonSaves, the new state-mandated payroll deduction IRA savings plan. The plan will launch with a small test group of employers on July 1, 2017, and will roll out in stages after that based on the size of the employer. Employers who already offer a qualified retirement plan (including 401(a), 401(k), 403(a), 403(b), 408(p), or governmental 457(b) plans) will not be required to participate in OregonSaves, but will be required to file a certificate of exemption with the state. This means that every employer in the state of Oregon will be required to take some action.
Oregon employers are required to register with the program or file a certificate of exemption by the registration date. Registration dates are staggered based on the employer’s number of covered employees for Oregon unemployment insurance, as reported on the most recently filed Form OQ, the Oregon Quarterly Tax Report. The first registration date is November 15, 2017, and it applies to employers with 100 or more employees. The registration dates are as follows:
| Employers with this number of employees: | Must register by this date: |
| 100 or more | November 15, 2017 |
| 50-99 | May 15, 2018 |
| 20-49 | December 15, 2018 |
| 10-19 (or zero) | May 15, 2019 |
| 5-9 | November 15, 2019 |
| 1-4 | May 15, 2020 |
Employers who begin business in Oregon after July 1, 2017 must register within 90 days or by the applicable date above, if later. Employers who are required to participate must enroll their employees within 60 days after their registration date and begin remitting payroll deductions after that 60-day period. If the employee does not make a different contribution election or opt out, employers must submit 5% of the employee’s pay (on an after-tax basis) to OregonSaves, with an annual automatic escalation of 1% which begins January 1, 2019.
Employers who submit a certificate of exemption stating that they offer a qualified retirement plan to their employees must do by their registration date. Certificates of exemption are valid for three years or until the employer ceases offering a qualified retirement plan. Employers must resubmit every three years to remain exempt from OregonSaves.
Federal Legislative Issues
In February of this year, the US House of Representatives passed a resolution overturning a Department of Labor rule issued by the prior administration that exempted state-sponsored plans like Oregon’s from complying with ERISA. As of early April, the Senate had approved a similar resolution dealing with plans created by cities, but had not yet voted on the resolution related to state-sponsored plans. Oregon state treasurer Tobias Reed has stated that the 2016 rule provides clarity but repeal of the rule will not stop implementation of Oregon’s plan.
Action Items
It appears that OregonSaves will move forward with its plan to implement a pilot program in July and to roll out to large employers this fall. Oregon employers who offer a qualified retirement plan (many of whom likely fall into the first registration group) should prepare to submit a certificate of exemption by the registration date, and continue to monitor OregonSaves for developments regarding any requirement to participate for employees who are not eligible to participate in the employer plan. These employers should also be prepared to resubmit their certificate of exemption every three years.
Oregon employers who do not already offer a qualified retirement plan should take the following actions:
- Identify the applicable registration date.
- Register by the registration date.
- Identify eligible employees.
- Obtain employee enrollment information packets from OregonSaves and distribute to eligible employees no more than 30 days after the registration date and no more than 30 days after date of hire for new employees.
- Enroll existing employees (based on default enrollment or on employee elections) no more than 60 days after the registration date. Enroll new employees within 60 days following hire.
- Deduct and remit payroll contributions as required.
- Continue monitoring the law and regulations for new developments.