The Oregon state treasurer announced that, starting with wave three, the state will begin automatically exempting from Oregon Saves any employers with a retirement plan already in place, based on Form 5500 data. These employers will not need to take any action if they receive a notice in November 2018 informing them about the automatic exemption. Employers with retirement plans that do not receive an automatic exemption notice will still need to complete the exemption process online at?www.oregonsaves.com. (Email update, Oregon Saves program, October 1, 2018.)

Effective December 15, 2018, Oregon employers with 20 or more employees that do not have a retirement plan in place must sign up for Oregon Saves. Enrollment was required effective May 15, 2018, for employers of 50 or more employees. Employers with 20 — 49 employees should have received an early notice about the program. An employer that didn't receive the notice and should have may contact Oregon Saves Client Services at +1 844 661 1256 or send an email to clientservices@oregonsaves.com.

Applicable employers that have not registered, received an exemption notice or claimed exemption by November can expect another notice about the registration deadline.

As of October 1, 2018, 1,237 employers had registered to facilitate Oregon Saves for their employees. 41,680 employees (73% of those eligible) have enrolled in the program. On average, employees continue to contribute approximately $100 per month, and assets in the program now exceed $7.7 million. The average savings rate is currently 5.15%.

Applicable employers must auto-enroll employees

As we previously reported, under legislation enacted in mid-2015 (HB 2960; Chapter 557, 2015 laws) Oregon employers are required to automatically enroll their employees in the state-established qualified retirement savings plan if there is no other qualified employer retirement savings plan available to them. (EY Payroll NewsFlash Vol. 16, #219,8-6-2015; EY Payroll NewsFlash Vol. 18, #057, 3-16-2017; October 2017 Payroll Perspectives.)

Oregon employers that do not offer a retirement plan to their employees are required to register with Oregon Saves and offer this retirement savings program to their employees. Employers that offer a retirement plan to some or all employees have in the past needed to certify to the program that they offer a qualified plan. Employers that offer a retirement plan to some, but not all, of their employees could, in the future, be required to offer the program to employees that do not qualify for the employer sponsored plan (i.e., part-time employees).

Employers are not required to match any portion of their employees' contributions to state plans through payroll deduction.

Employer requirements

When employers must register for the program depends on the size of the employer. The registration deadlines for employers are scheduled as follows:

• An employer employing 100 or more employees: November 15, 2017
• An employer employing 50 to 99 employees: May 15, 2018
• An employer employing 20 to 49 employees: December 15, 2018
• An employer employing 10 to 19 employees: May 15, 2019
• An employer employing 5 to 9 employees: November 15, 2019
• An employer employing 4 or fewer employees: May 15, 2020

The state will notify employers directly when they are required to register. The notice will include instructions and due dates. Employers may to register before they are notified of their deadline.

Once notified of the requirement, employers will:

• Provide employee data to the state, to allow the state to set up employee accounts
• Provide information about Oregon Saves to employees
• Automatically enroll and begin payroll deductions for employees that do not opt-out of the program
• Keep track of employee opt-out and contribution decisions

The payroll deductions start at 5% of each employee's gross pay, increasing by 1% each year after the employee is in the program for at least six months, until the deduction reaches a maximum of 10%. The employee's contributions will go into an after-tax Roth IRA account. Employees may change the deduction percentage or opt out of (or into) the program at any time.

Materials for employees are posted on the Oregon Saves website. Materials include the auto-enrollment notification for employees, employee opt-out form, an animated video, an employee fact sheet and workplace posters. See also recently promulgated and proposed regulations.

For more information, see the Oregon Saves website.

ERISA industry committee settles legal action against Oregon reporting requirement

The ERISA industry committee (ERIC) on October 12, 2017, filed a lawsuit against the Oregon Retirement Savings Board, requesting an injunction against the reporting requirement Oregon Saves imposes on employers that already provide a retirement plan. According to ERIC, the reporting requirement is in violation of federal law and infringes on an employer's ability to offer ERISA-qualified retirement plans.

On March 26, 2018, the parties settled the lawsuit by agreeing that Oregon Saves will address retirement plan confirmation requests to ERIC for members of the organization.

President Trump issued executive order to strengthen retirement security

On August 31, 2018, President Trump issued an executive order calling for the expansion of access to workplace retirement plans for American workers, particularly for those working for small employers. The order calls for the Department of Labor to issue guidance within 180 days that will reduce regulatory burden and cost and expand access to multiple employer plans, thereby making it easier for small employers to offer retirement benefits to employees.

Ernst & Young insights

Oregon was the first of seven states (California, Connecticut, Illinois, Maryland, New York, Oregon, and Vermont) to begin implementation of state legislation passed to institute state-run programs for private-sector employers without a retirement plan. New Jersey and Washington enacted legislation that would establish a small-business retirement marketplace where employers may voluntarily establish a payroll-deduction IRA plan for employees wishing to participate. Employers are not required to match any portion of their employees' contributions to state plans through payroll deduction.

Illinois begin implementation of the program as of November 1, 2018 (EY Payroll Newsflash Vol. 19, #158, 10-4-2018).

Massachusetts has established a voluntary program (Connecting Organizations to Retirement (CORE)) for small nonprofit organizations. Similar legislation has been introduced in several other states. See the October 2017 issue of Payroll Perspectives for more information.

Other states (i.e., Colorado and Missouri) and cities (i.e., New York City and Seattle) have contemplated instituting auto-enroll retirement plans. However, President Trump's 2017 enactment of HJ Resolutions 66 and 67, disapproving the U.S. Department of Labor rules that allowed states and governmental entities to establish auto-enroll retirement programs to employees has given them pause for thought on further action, although the states that had passed legislation prior to Trump's actions have vowed to press on with their implementation plans.

Representative Richard Neal (D-MA), ranking member of the House Ways and Means Committee, introduced two bills into the 115th Congress (2017–2018) in December 2017, H.R.4523, the Automatic Retirement Plan Act of 2017, and H.R.4524 — Retirement Plan Simplification and Enhancement Act of 2017.

For more information on state mandatory retirement plan requirements see our special report.

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