Abstract

http://ssrn.com/abstract=2258630
 


 



California Dreaming: The California Secure Choice Retirement Savings Trust Act


Edward A. Zelinsky


Yeshiva University - Benjamin N. Cardozo School of Law

April 30, 2013

Connecticut Insurance Law Journal, Vol. 19, 2013
Cardozo Legal Studies Research Paper No. 389

Abstract:     
Half of American workers are not covered by employer-sponsored retirement arrangements. The recently passed California Secure Choice Retirement Savings Trust Act seeks to solve this problem by mandating retirement savings arrangements for California employers, coupled with a public investment vehicle for investing these private retirement savings. The Act is important because of California’s size and status as a trendsetter for other states.

This Article is the first to examine the important legal questions the Act raises under the Internal Revenue Code and ERISA. Contrary to the drafters’ intent, the savings accounts authorized under the Act do not qualify as individual retirement accounts under the Code. Hence, employees participating in savings arrangements established under the Act will not receive the income tax benefits associated with individual retirement accounts.

If the Act were to be amended to make its accounts individual retirement accounts, the Act would survive ERISA preemption under New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Insurance Co., 514 U.S. 645 (1995), though not under Shaw v. Delta Air Lines, Inc., 463 U.S. 85 (1983). Since Travelers is the Court’s more recent and more compelling construction of ERISA preemption, the Act should survive ERISA preemption if the Act is amended to have true individual retirement accounts.

A final section addresses the choices other state legislatures (as well as Congress) confront if they elect to follow part or all of the path on which California has embarked to encourage private retirement savings. President Obama has recently proposed a federal mandate under which employers with more than ten employees would be required to maintain either retirement plans or IRA coverage. The President’s proposal ensures public debate about the appropriate function of government in encouraging retirement savings. The Golden State’s Act will play an important role in that debate. In that debate, I favor state-by-state experimentation rather than any single approach to the task of encouraging greater retirement savings.

Number of Pages in PDF File: 84

Keywords: California, California Secure Choice Retirement Savings Trust Act, retirement, IRA, Roth IRA, payroll deduction savings,401(k), cash balance, ERISA, preemption, Shaw, Travelers

Accepted Paper Series


Download This Paper

Date posted: May 2, 2013  

Suggested Citation

Zelinsky, Edward A., California Dreaming: The California Secure Choice Retirement Savings Trust Act (April 30, 2013). Connecticut Insurance Law Journal, Vol. 19, 2013; Cardozo Legal Studies Research Paper No. 389. Available at SSRN: http://ssrn.com/abstract=2258630

Contact Information

Edward A. Zelinsky (Contact Author)
Yeshiva University - Benjamin N. Cardozo School of Law ( email )
55 Fifth Ave.
New York, NY 10003
United States
212-790-0277 (Phone)
Feedback to SSRN


Paper statistics
Abstract Views: 956
Downloads: 164
Download Rank: 106,236

© 2014 Social Science Electronic Publishing, Inc. All Rights Reserved.  FAQ   Terms of Use   Privacy Policy   Copyright   Contact Us
This page was processed by apollo3 in 1.281 seconds