HB17 Alabama 2016 Session

Summary

Primary Sponsor

Mike Hill

Republican

Session

Regular Session 2016

Title

Taxation, State Personnel Board, tax deferred compensation plan, created, Sec. 36-26-14 am'd.

Summary

HB17 would automatically enroll eligible state and local government employees in a tax-deferred compensation plan with a $10 per pay period deduction, allowing a 90-day opt-out window.

What This Bill Does

The bill authorizes automatic enrollment of eligible employees in the state deferred compensation plan, with a $10 pre-tax deduction per pay period. Employees can opt out within 90 days after their first contribution. During the opt-out period, contributions are invested in options with limited volatility, and after that period, employees can change their investment choices like other participants. The plan is designed to operate without cost to the state, and automatic enrollment includes notice to employees about opt-out rights and investment options.

Who It Affects

• State of Alabama employees who participate in the deferred compensation plan (automatic enrollment with a $10 per pay period contribution, unless they opt out).
• Employees of cities, towns, counties, or other public entities in Alabama that participate in the plan (automatic enrollment requires the employing entity's participation approval, with opt-out rights).
• Employees returning to work after a break in service who are eligible to participate (automatic enrollment may be required by the board or employing entity).

Key Provisions

• Authorizes the State Personnel Board to adopt and maintain one or more tax-deferred compensation plans for state and local employees.
• Allows automatic enrollment of eligible employees in the plan at a set contribution: ten dollars ($10) per pay period of pre-tax compensation.
• Provides a 90-day opt-out period after the employee's first contribution during which the employee can withdraw without penalty.
• Requires initial investment of contributions during the opt-out period into a stable investment option, with the ability to change investments afterward.
• Requires written notice to automatically enrolled employees detailing their opt-out rights and available investment options.
• Ensures plan assets are held for the exclusive benefit of participants and their beneficiaries, and that the plan operates as a trust.
• Effective date: the act takes effect on the first day of the third month after passage and approval.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation