SB272 Alabama 2012 Session

Summary

Primary Sponsor

Gerald H. AllenSenator

Republican

Co-Sponsors

Greg J. ReedPaul BussmanPhillip W. WilliamsBryan Taylor

Session

Regular Session 2012

Title

State Personnel Board, adoption of tax deferred annuity and deferred compensation programs for participating employees, Sec. 36-26-14 am'd

Summary

SB272 authorizes the State Personnel Board to create voluntary tax-deferred and other deferred compensation plans for state and local government employees, with optional payroll deductions and additional features.

What This Bill Does

It empowers the board to adopt and maintain deferred compensation plans for state and local employees (excluding county commission employees), including tax-favored options like loans, hardship distributions, Roth deferrals, rollovers, and distributions to purchase a retired public safety officer's health insurance. It allows consolidated billing and professional services so the plans can operate with little to no cost to the state beyond incidental expenses and payroll deductions. Participation is voluntary, with employees authorizing payroll reductions, and state officials will process those deductions. Retirees receiving monthly benefits may have retiree health insurance costs deducted from their deferred compensation distributions, and plan assets are held for the exclusive benefit of participants and their beneficiaries as a statutory trust.

Who It Affects

• State employees and employees of cities, towns, or public entities or corporations under Alabama law may participate in the new deferred compensation plans on a voluntary basis.
• Participants who are receiving monthly retirement benefits may opt to have retiree health insurance premiums deducted from their deferred compensation distributions (per IRS guidelines).

Key Provisions

• Authorize the State Personnel Board to adopt, establish, and maintain deferred compensation plan(s) for state and local government employees, excluding county commission employees, with plans that do not violate tax-favored status (403(b) excluded).
• Plans may include loans, unforeseeable emergency distributions, Roth deferrals, rollovers, transfers to purchase service credit, and distributions to purchase a retired public safety officer's health insurance, while maintaining tax-favored treatment.
• Authorize consolidated billing and arrangement of investment, trustee, administrative, and professional services so plans operate with little or no cost to the state beyond incidental expenses and payroll deductions.
• Participation is voluntary; employees may authorize payroll reductions to fund the plans.
• Finance Director or other appropriate official to initiate payroll deductions as directed by each employee.
• Retirees receiving monthly benefits may have retiree health insurance costs deducted from deferred compensation distributions under IRS guidelines.
• Benefits under these plans are supplemental to existing retirement benefits and the plans are administered as trusts for the exclusive benefit of participants and their beneficiaries.

AI-generated summary using openai/gpt-5-nano on Feb 25, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

State Personnel Board