WASHINGTON - One of two new rules expected from the Labor Department may get changed by Congress, even though in the past the rules would have been final after being published in the Federal Register.
A new law gives Congress the right to study and overturn regulations and opinions issued by government agencies. Private letter rulings issued by the Internal Revenue Service and specific rulings addressed to one company are excluded.
As a result of the new law, employers and lobbying groups now will get a second stab at lobbying Congress to change new pension and investment rules and regulations.
"It gives all the parties another bite at the apple," said Frank McArdle, a consultant with Hewitt Associates L.L.C. in Washington. "There probably will be more lobbying of regulations than what has happened in the past," he added.
"I think it's going to be a very valuable process because it will involve members of Congress in the regulatory process," says Mark Ugoretz, president of the ERISA Industry Committee, Washington. "Members of Congress will finally understand the impact of the laws they pass."
Congress gets 60 legislative days to review each rule and regulation; with less than 60 legislative days left this year, all rules issued after June 1 will not be official until Congress comes back next year.
Two rules expected from the Labor Department will be put on hold at least until next year.
One, expected this week, is the interpretative bulletin on investment education to participants in employee-directed retirement plans. Assistant Secretary of Labor Olena Berg has been trying for more than a year to provide that guidance. The interpretive bulletin isn't controversial and should not have any problems getting passed, observers agreed.
The second is more controversial and may give the new law its first workout.
That one shortens the 90-day maximum window employers have to put employee contributions into their 401(k) plans. Earlier this year, hundreds of plan sponsors criticized the proposed ruling, which tied the contribution rate to the amount of time employers have to withhold taxes on an employee's paycheck. Sources said they are prepared to do battle in Congress if the regulation is too restrictive.
"We would have to use all the different alternatives available to us to review the proposal because the current proposed system would cause significant damage to the system," said David Wray, president of the Profit Sharing/401(k) Council of America, Chicago.
He doesn't think the department will send the regulation to Congress in its proposed form.
