What Is a Federalism Statement for a DOL 401(k) Rule?

Federalism asks who governs. Preemption asks which law controls when federal and State law collide.

Those questions overlap.

They are not identical.

A DOL rulemaking can conclude:

no federalism implications

while ERISA Section 514 still preempts some State laws.

The same rule can leave other State laws fully operative because Congress expressly preserved them.

That is why a Federalism Statement should never be read as:

"State law does not matter."

It answers a narrower Executive Order question.

What Does Executive Order 13132 Examine?

Executive Order 13132 applies special federalism principles to federal policymaking.^[1]

Its central concept is a policy with substantial direct effects on:

• States
• the relationship between the National Government and States
• the distribution of power and responsibilities among levels of government.^[1]

That is a structural test.

The agency is not simply counting:

• regulated companies
• State statutes
• compliance dollars.

It is asking whether federal action changes the governmental relationship in a meaningful way.

State-Regulated Activity Does Not Automatically Satisfy the Test

Retirement products make this point unusually clear.

Insurance is primarily regulated by States.

Securities involve both State and federal regulation.

Banking has overlapping sovereigns.

ERISA can impose federal duties on actors operating in all three markets.

That coexistence does not automatically mean every EBSA rule has a substantial direct effect on States.

The relevant question is:

What does this rule change about governmental authority or State obligations?

That requires more than identifying a State regulator.

What Happens When a Rule Does Have Federalism Implications?

Executive Order 13132 requires agencies to maintain a process for:

meaningful and timely input

from State and local officials.^[1]

Section 6 adds specific requirements for two important situations.

One involves a regulation with federalism implications that:

• imposes substantial direct compliance costs on State and local governments
• and is not required by statute.^[1]

The other involves a regulation with those implications that:

preempts State law.^[1]

Those situations can require early consultation and a separately identified Federalism Summary Impact Statement in the preamble.

What Goes Into a Federalism Summary Impact Statement?

Under the Executive Order, the statement describes matters such as:^[1]

• the extent of prior consultation
• concerns raised by State and local officials
• the agency's position supporting the rule
• the extent to which State and local concerns were met.

The agency also provides OMB relevant written communications from State and local officials.^[1]

This is a procedural accountability device.

It does not itself decide the substantive legality of preemption.

Executive Order 13132 Also Restricts Regulatory Preemption

The order contains specific preemption principles.^[1]

Agencies are directed to construe federal statutes to preempt State law only where:

• Congress expressly provided for preemption
• other clear evidence shows congressional intent
• State authority conflicts with federal authority.

When the statute itself does not preempt, an agency should not casually infer broad rulemaking power to displace State law.^[1]

And regulatory preemption should be restricted to the minimum level necessary to achieve the federal statute's objectives.

That is more disciplined than:

"Federal agency wins because it is federal."

Preemption Is Still a Substantive Legal Question

Executive Order 13132 guides Executive Branch policymaking.

It does not replace:

• constitutional supremacy principles
• congressional text
• ERISA Section 514
• Supreme Court precedent.

A court deciding whether a particular State law is preempted does not stop at the agency's Federalism Statement.

The court asks what federal law actually does.

That is why the Executive Order analysis and ERISA preemption analysis need separate headings in a research memo.

What Does ERISA Section 514(a) Do?

Section 514(a) contains ERISA's broad express preemption provision.^[2]

Subject to statutory exceptions, Titles I and IV supersede State laws insofar as they:

relate to

covered employee benefit plans.^[2]

That provision is part of the statute Congress enacted.

DOL does not create it every time it writes a regulation.

So a new rule can have:

no new federalism implications

while operating inside an already-existing federal statutory framework that preempts certain State law.

That is not contradictory.

What Is the Insurance Savings Clause?

Section 514 also preserves important State authority.

Section 514(b)(2)(A) says ERISA generally should not be construed to exempt or relieve a person from State laws regulating:

• insurance
• banking
• securities.^[2]

That is the savings clause.

It is especially important when 401(k) or IRA advice involves:

• annuities
• insurance producers
• insurers.

Federal ERISA duties do not mean State insurance regulation disappears.

What Does the Deemer Clause Add?

Section 514(b)(2)(B) limits the savings clause.^[2]

A covered employee benefit plan generally cannot simply be:

deemed an insurer

so a State can regulate the plan itself under insurance law.

This helps separate:

State regulation of insurance

from:

direct State regulation of the ERISA plan.

The details can become complex quickly.

For source-hierarchy purposes, the important point is that Section 514 contains:

• preemption
• preservation
• limits on preservation.

Quoting only subsection (a) can materially distort the law.

Federalism Analysis Does Not Replace ERISA's preemption provision Analysis

Suppose a DOL proposal says:

"This rule has no federalism implications."

A vendor then claims:

"Therefore every State insurance requirement remains untouched."

That conclusion does not follow.

The Federalism Statement addresses the Executive Order threshold.

The exact State-law issue still requires:

• the statutory preemption framework analysis
• savings-clause analysis
• potentially other federal statutes
• relevant case law.

The agency's procedural finding is evidence about the rule's governmental effects.

It is not a universal preemption opinion.

AC38 Is a Straightforward 2026 Example

DOL's March 31, 2026 proposed rule on designated investment alternatives includes a Federalism Statement.^[3]

DOL says the proposal has no qualifying effects on:

• States
• the Federal-State relationship
• the distribution of governmental responsibilities.^[3]

The Department invokes ERISA ERISA's State-law provision as part of that discussion.

The conclusion is straightforward:

the investment-selection proposal does not materially change the State-federal structure.

That is the agency's Executive Order 13132 finding.

AC38 Also Contains a Source-Hygiene Warning

The Federalism Statement in the March proposal includes language referring to:

• requirements implemented in a final rule
• fundamental reporting and disclosure requirements.^[3]

But AC38 is:

• an NPRM
• about fiduciary selection of designated investment alternatives.^[3]

That wording appears mismatched to the subject and procedural stage.

The practical lesson is not to speculate about how the language got there.

It is simpler:

procedural preamble text should be checked against the actual rulemaking.

A boilerplate sentence is not operative fiduciary text.

Why Is That Mismatch Worth Noticing?

Because official documents can still contain:

• drafting artifacts
• inherited language
• imprecise cross-topic phrasing.

A researcher who lifts one sentence without context can manufacture a false proposition.

For AC38, the actual proposed amendatory text concerns fiduciary prudence and investment-menu selection.^[3]

It does not become a reporting-and-disclosure rule because one procedural paragraph uses those words.

Source status matters.

So does internal coherence.

The 2026 Paper-Statement Proposal Reaches the Same Bottom Line

The February 2026 proposal concerning paper statements and electronic disclosure safe harbors also includes a Executive Order analysis.^[4]

DOL says the proposal does not directly affect:

• States
• the national-State relationship
• allocation of governmental power.^[4]

That conclusion is unsurprising.

The proposal changes federal ERISA disclosure mechanics for covered plans.

It does not require State agencies to administer the disclosure system.

Historical Electronic-Disclosure Rules Show Consistency

DOL reached the same basic conclusion in the 2020 electronic-disclosure final rule.^[10]

The Department said that regulation had no direct effect on:

• States
• the relationship between federal and State governments
• the distribution of responsibility among levels of government.^[10]

The 2010 target-date disclosure proposal used similar reasoning and expressly cited the preemption statute.^[12]

This is a recurring pattern in ordinary ERISA plan-administration rules.

The federal statutory structure already exists.

The new rule often does not reallocate sovereign authority.

The 2024 fiduciary final rule Is the Harder Case

DOL's 2024 fiduciary rule operated in a market where State regulation was impossible to ignore.^[5]

It affected:

• annuity recommendations
• insurance producers
• insurers
• retirement investment advice.

State insurance departments regulate annuity sales.

Many jurisdictions had adopted versions of the NAIC best-interest model regulation.^[5][6]

This was therefore not a situation where State law was merely theoretical.

There was a real, active regulatory framework.

State Regulators Objected to the Proposal

The NAIC submitted comments in December 2023.^[8][9]

It raised concerns about:

• impact on insurance consumers
• access to lifetime-income products
• DOL's treatment of State insurance regulation
• lack of earlier substantive coordination with State insurance regulators.^[8]

Individual State insurance officials also participated in the record.

Those comments matter because they show:

State regulatory interest was real.

But State concern does not itself establish the Executive Order threshold.

DOL still had to make its own federalism assessment.

What Did DOL Do at Final Stage?

The final rule says DOL:^[5]

• considered the regulatory landscape in the States
• sought to avoid obligations inconsistent with State responsibilities
• had discussions with State-level insurance regulators and State-regulated parties
• intended continued coordination with insurance regulation by the States and securities regulators.

DOL also said the rule did not impose:

• obligations
• costs

on State regulators.^[5]

That distinction helped support its final conclusion.

DOL Preserved the ERISA's preemption provision Savings Clause

The final rule added a provision addressing continued applicability of State law.^[5]

It said the regulation was not intended to change the scope or effect of:

ERISA the statutory preemption framework

including the savings clause for State laws regulating:

• insurance
• banking
• securities.^[5]

That is a precise way to avoid an overbroad reading.

DOL was asserting federal fiduciary authority.

It was not claiming the new regulation erased all State-regulated insurance law.

Can Federal ERISA Duties Be More Protective Than insurance rules imposed by States Rules?

DOL said yes.^[5][6]

The Department concluded that federal retirement-investor protections could be:

• broader
• more stringent

than State-level insurance conduct standards while still leaving State regulation in place.^[5][6]

That creates concurrent obligations.

An insurance professional handling retirement assets may have to satisfy:

• State licensing and insurance-conduct rules
• applicable federal ERISA duties
• exemption conditions.

"State regulated" does not mean:

State only.

Complementary Regulation Is Not the Same as Preemption

This is the conceptual center of the 2024 example.

Two legal regimes can regulate the same transaction.

They may:

• overlap
• complement one another
• impose different standards.

Preemption becomes the issue when a valid federal rule displaces or conflicts with State law under governing doctrine.

DOL said it designed the 2024 rule to work with insurance regulation by the States law, not to invalidate or impair it.^[5][13][14]

That is different from saying the State rule controls the federal question.

Why Did DOL Still Find No Federalism Implications?

The final preamble says the rule had no substantial direct effect on State governments, the Federal-State relationship or the allocation of governmental authority.^[5]

DOL believed:

• State regulators did not incur new obligations or costs
• State-regulated insurance law remained in place
• ERISA supplied DOL's independent federal authority
• the rule did not change ERISA's State-law provision's scope.^[5]

That is the agency's structural reasoning.

It does not mean everyone agreed with the policy.

Consultation Does Not Equal a Concession

A common mistake is:

"DOL talked to State regulators, therefore DOL admitted the rule had qualifying federalism effects."

No.

Agencies can consult because:

• State officials have expertise
• regulated markets overlap
• conflict avoidance is useful
• comments raise legitimate implementation questions.

Executive Order 13132 itself encourages consultation when federal-State conflict is foreseeable.^[1]

Consultation can be prudent even if the agency ultimately concludes the formal threshold is not crossed.

A federalism section Does Not Immunize a Rule

The 2024 fiduciary final rule was later:

• stayed
• vacated.^[7]

The federalism section did not protect it from other legal challenges.

That is another source-hierarchy lesson.

A rule can satisfy or purport to satisfy one procedural Executive Order analysis and still fail under:

• statutory authority
• APA review
• other legal doctrines.

The agency federalism finding is one component of the rulemaking record.

Not a validity certificate.

What About Prohibited-Transaction Exemptions?

The 2024 amendments to PTE 2020-02 and PTE 84-24 also included federalism discussion.^[13][14]

Those materials emphasized:

• the preemption statute
• insurance rules imposed by States regulation
• DOL's effort to avoid inconsistent obligations
• shared State/federal regulation of insurance.^[13][14]

That is useful because a retirement advice package can involve:

• regulation
• exemption.

Each legal instrument needs to be read on its own terms.

The federalism discussion does not merge them.

Federalism vs UMRA

INV-202 covers the Unfunded Mandates Reform Act.

The difference is sharp.

UMRA asks:

Does a qualifying mandate impose threshold-level direct cost on governments or the private sector?

Executive Order 13132 asks:

Does federal policy materially affect States, the Federal-State relationship or the allocation of governmental authority?

A rule can trigger private-sector UMRA analysis and still have:

no the Executive Order threshold.

The 2024 fiduciary rule is the direct example.^[5]

Federalism vs Tribal Consultation

Executive Order 13132 concerns:

• States
• State/local relationships.

Federal agencies use a separate Executive Order framework—Executive Order 13175—for consultation and coordination with Indian Tribal governments.

Those analyses may appear near each other in regulatory preambles.

They should not be collapsed.

"State and local" is not a substitute for:

Tribal government.

Different sovereign relationships are involved.

Worked Example: "No Federalism" Becomes "No Preemption"

Compliance memo quotes AC38:

"No structural State-federal effects."

Then concludes:

"ERISA cannot preempt any State law relevant to the investment menu."

That is unsupported.

AC38's procedural finding does not repeal ERISA's preemption provision.

The correct next step is to identify the actual State law and analyze:

• whether it relates to the plan
• whether a the statutory preemption framework exception applies
• whether another federal or State rule controls.

The preamble analysis is not the end of that analysis.

Worked Example: State-level insurance License Eliminates ERISA Duty

Insurance producer is fully licensed under State law.

Producer recommends an annuity in a retirement transaction.

Memo says:

"insurance regulation by the States regulation occupies the field, so ERISA cannot apply."

Too broad.

ERISA's State-law provision preserves State-regulated insurance law.^[2]

That does not prevent federal ERISA standards from applying where Congress authorized them.

The 2024 DOL rulemaking was built around exactly that concept, even though the rule was later vacated on other grounds.^[5][7]

Concurrent regulation is possible.

Worked Example: State-Regulator Comment Becomes DOL's Position

NAIC comments criticize DOL's proposal.^[8][9]

Article says:

"DOL concluded its rule intruded on State regulation."

Wrong attribution.

The criticism belonged to NAIC.

DOL responded in the final rule and reached a different conclusion.^[5]

A useful account preserves both:

State regulator concern → DOL response.

The disagreement is the story.

Worked Example: the preemption statute(a) Is Quoted Alone

Vendor brief quotes:

"ERISA supersedes any and all State laws..."

and stops.

That omits critical statutory structure.

ERISA's preemption provision(b)(2)(A) preserves State laws regulating:

• State insurance, banking and securities regulation.^[2]

the statutory preemption framework(b)(2)(B) then limits how an ERISA plan itself can be treated under those laws.^[2]

A one-clause quotation can turn a nuanced preemption statute into a false absolute.

Worked Example: UMRA Finding Becomes Federalism Finding

Rule has high private-sector direct costs and triggers UMRA.

Researcher writes:

"Because UMRA applies, the rule has covered federalism effects."

No.

Private-sector cost says nothing by itself about:

• State governmental duties
• State-federal allocation of authority.

The 2024 Retirement Security Rule demonstrates the separation:

UMRA private-sector impact: yes.^[5]

qualifying federalism effects: DOL said no.^[5]

Separate test.

Separate conclusion.

How Should a 401(k) Committee Use a Executive Order analysis?

Usually, it is not a day-to-day compliance section.

Its value is diagnostic.

It can tell a reader:

• whether DOL sees State-government impact
• whether DOL expects State-law preemption issues
• whether State/local consultation occurred
• whether a rule changes the federal-State structure
• whether State law remains part of the compliance landscape.

For most plan committees, the next question is more practical:

Which State and federal rules actually govern this transaction?

That requires the operative sources.

Federalism and Preemption Checklist

Before relying on a federalism section, verify:

Agency conclusion

Did DOL say:

• the Executive Order threshold exist
• no implications exist?

State effect

What State:

• duty
• cost
• authority

changes?

Preemption

Does the rule expressly preempt State law?

Statute

What does ERISA ERISA's State-law provision say?

Savings clause

Is the State law regulating:

• insurance
• banking
• securities?

Deemer clause

Is the State trying to regulate the ERISA plan itself as an insurer or similar entity?

Consultation

Did DOL consult State/local officials?

Author

Is a quoted concern:

• DOL's
• a State regulator's
• an industry commenter's?

Current status

Did the rule:

• take effect
• get amended
• get stayed
• get vacated?

Operative law

What current federal and State sources actually apply?

Those questions prevent a procedural statement from becoming an imaginary preemption holding.

A Practical Source Matrix

Federalism is a source-navigation problem as much as a doctrine problem.

Fast Answers

What is a DOL preamble analysis?

A preamble analysis addressing Executive Order 13132 and whether a rule materially affects States, the Federal-State relationship or the distribution of governmental authority.

Is it the same as ERISA preemption analysis?

No.

What does ERISA ERISA's State-law provision(a) generally do?

It supersedes State laws insofar as they relate to covered employee benefit plans, subject to statutory exceptions.^[2]

What does the savings clause preserve?

State laws regulating insurance, banking and securities.^[2]

What does the deemer clause do?

It generally prevents States from treating a covered ERISA plan itself as an insurer or similar regulated entity to evade ERISA's preemption structure.^[2]

Did AC38 have structural State-federal effects?

DOL said no.^[3]

Did the 2026 paper-statements proposal have them?

DOL said no.^[4]

Did the 2024 fiduciary rule affect State-regulated insurance markets?

Yes.^[5][6]

Did DOL consult State regulators?

The final rule says DOL had discussions with State-level insurance regulators and State-regulated parties.^[5]

Did DOL say the rule changed ERISA the preemption statute?

No. The final rule expressly said it did not intend to change ERISA's preemption provision's scope or savings clause.^[5]

Did DOL nevertheless find covered federalism effects?

No. DOL concluded the final rule did not substantially affect the federal-State relationship.^[5]

Does consultation prove the Executive Order threshold was met?

No.

Is federalism the same as UMRA?

No.

Can a rule with a no-federalism finding still be vacated?

Yes. The 2024 Retirement Security Rule was later vacated for other legal reasons.^[7]

What is the safest one-sentence rule?

Use the Executive Order analysis to understand DOL's view of State-federal structure; use ERISA the statutory preemption framework, applicable State law and current judicial authority to decide actual preemption and compliance.

Sources & References

1. The White House / Federal Register: Executive Order 13132 — Federalism — https://www.federalregister.gov/documents/1999/08/10/99-20729/federalism
2. Legal Information Institute / U.S. Code: 29 U.S.C. §1144 — Other Laws / ERISA Section 514 — https://www.law.cornell.edu/uscode/text/29/1144
3. U.S. Department of Labor — Employee Benefits Security Administration: Fiduciary Duties in Selecting Designated Investment Alternatives — Proposed Rule, 91 FR 16088, March 31, 2026 — https://www.dol.gov/sites/dolgov/files/ebsa/laws-and-regulations/laws/erisa/fiduciary-duties-in-selecting-designated-investment-alternatives.pdf
4. U.S. Department of Labor — Employee Benefits Security Administration / GovInfo: Requirement To Provide Paper Statements in Certain Cases — Proposed Rule, 91 FR 9213, February 25, 2026 — https://www.govinfo.gov/content/pkg/FR-2026-02-25/pdf/2026-03723.pdf
5. U.S. Department of Labor — Employee Benefits Security Administration / Federal Register: Retirement Security Rule — Final Rule, 89 FR 32122, April 25, 2024 — https://www.federalregister.gov/documents/2024/04/25/2024-08065/retirement-security-rule-definition-of-an-investment-advice-fiduciary
6. U.S. Department of Labor — Employee Benefits Security Administration: Retirement Security Rule and Amendments to Class PTEs — Fact Sheet — https://www.dol.gov/agencies/ebsa/about-ebsa/our-activities/resource-center/fact-sheets/retirement-security-rule-and-amendments-to-class-pte-for-investment-advice-fiduciaries
7. U.S. Department of Labor — Employee Benefits Security Administration: Retirement Security Rule — Court Vacatur Resources — https://www.dol.gov/agencies/ebsa/laws-and-regulations/laws/erisa/retirement-security
8. National Association of Insurance Commissioners: NAIC Submits Comments on DOL's Proposed Fiduciary Rule — https://content.naic.org/article/naic-submits-comments-dols-proposed-fiduciary-rule
9. National Association of Insurance Commissioners / U.S. Department of Labor Public Comments: NAIC Comment Letter — RIN 1210-AC02 — https://www.dol.gov/sites/dolgov/files/ebsa/laws-and-regulations/rules-and-regulations/public-comments/1210-AC02/00273.pdf
10. U.S. Department of Labor — Employee Benefits Security Administration: Default Electronic Disclosure by Employee Pension Benefit Plans Under ERISA — Final Rule, 85 FR 31884 — https://www.federalregister.gov/documents/2020/05/27/2020-10951/default-electronic-disclosure-by-employee-pension-benefit-plans-under-erisa
11. U.S. Department of Labor — Employee Benefits Security Administration / GovInfo: Default Investment Alternatives Under Participant Directed Individual Account Plans — Final Rule, 72 FR 60452 — https://www.govinfo.gov/content/pkg/FR-2007-10-24/pdf/07-5147.pdf
12. U.S. Department of Labor — Employee Benefits Security Administration / Federal Register: Target Date Disclosure — Proposed Rule, 75 FR 73987 — https://www.federalregister.gov/documents/2010/11/30/2010-29509/target-date-disclosure
13. U.S. Department of Labor — Employee Benefits Security Administration: Amendment to Prohibited Transaction Exemption 2020-02 — https://www.dol.gov/sites/dolgov/files/EBSA/laws-and-regulations/laws/erisa/retirement-security/prohibited-transaction-exemption-2020-02.pdf
14. U.S. Department of Labor — Employee Benefits Security Administration: Amendment to Prohibited Transaction Exemption 84-24 — https://www.dol.gov/sites/dolgov/files/EBSA/laws-and-regulations/laws/erisa/retirement-security/prohibited-transaction-exemption-84-24.pdf
15. U.S. Departments of Labor, Treasury, and Health and Human Services: Excepted Fertility Benefits — Proposed Rules, 2026 — https://beta.dol.gov/system/files?file=research-data%2F2026-05%2Fexcepted-fertility-benefits-proposed-rules.pdf

Educational Disclaimer

ROIStreet publishes educational content about 401(k) plans, ERISA, Department of Labor rulemaking, federalism, State regulation and preemption. This article is not legal, fiduciary, tax, investment, insurance, regulatory or plan-administration advice. ERISA preemption is highly fact- and law-specific. A DOL Federalism Statement does not conclusively resolve the application or preemption of a particular State statute, regulation or cause of action. Current compliance should be verified against operative federal statutes, current CFR text, valid exemptions, applicable State law, current agency guidance and judicial decisions.

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