HB5 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

HB5 would automatically enroll eligible state and local employees in the tax-deferred compensation plan, with a 90-day opt-out window.

What This Bill Does

It authorizes automatic enrollment for employees in participating public entities and requires a 1% pre-tax contribution for those enrolled, with the option to opt out within 90 days. It requires written notices and a 90-day opt-out period, during which contributions are invested in a low-volatility option. It clarifies plan administration, costs, and that the plan remains a tax-favored trust supplementing existing retirement benefits.

Who It Affects

• State employees and employees of cities, towns, counties, or public entities who participate in the plan (automatic enrollment with option to opt out; 1% pre-tax contribution).
• Employing entities (State Personnel Board and local public employers) responsible for enrolling employees, providing notices, and handling payroll deductions; counties or county subdivisions must approve participation before their employees can join.

Key Provisions

• Authorizes automatic enrollment in the deferred compensation plan for eligible employees, with the option to opt out within 90 days after enrollment.
• Requires automatic enrollees to contribute 1% of their pre-tax compensation, with the ability to adjust contributions as provided by the plan.
• During the 90-day opt-out period, contributions are invested in a low-volatility option, with flexibility to change investment choices thereafter.
• Requires written notice to automatically enrolled employees detailing opt-out rights and available investment options.
• Plan administration is arranged to minimize state costs beyond incidental expenses; counties must approve participation before their employees join.

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