SB187 Alabama 2016 Session

Summary

Primary Sponsor

Phillip W. Williams

Republican

Session

Regular Session 2016

Title

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

Summary

SB187 would automatically enroll new state and participating public-entity employees in Alabama's tax-deferred compensation plan, with a 90-day opt-out and a $10 per-pay-period contribution.

What This Bill Does

If passed, new hires and employees returning to work could be automatically enrolled in the state's tax-deferred compensation plan. They would contribute $10 per pay period on a pre-tax basis unless they opt out within 90 days. During the 90-day period, contributions are placed in a default investment and, after that, employees can change how their money is invested. Employers must provide written notices about opt-out rights and investment options, and the plan remains tax-favored and supplemental to other retirement benefits.

Who It Affects

• New employees of the State of Alabama and participating cities, towns, counties, or public entities would be automatically enrolled in the plan unless they opt out within 90 days.
• Payroll offices, the State Finance/Comptroller, and other participating employers would implement automatic enrollment, manage the $10 per pay period pre-tax deductions, and provide the required notices to employees.

Key Provisions

• Authorizes automatic enrollment of eligible new hires into the deferred compensation plan with a specified $10 per-pay-period pre-tax contribution.
• Requires a 90-day opt-out period during which the employee can withdraw contributions without penalty.
• Automatically enrolled employees' contributions are invested in a default option during the initial 90 days, with later ability to change investments as allowed by the plan.
• Requires written notice to enrolled employees about their opt-out rights and available investment options.
• Keeps the plan's tax-favored status under federal tax rules and treats it as supplemental to other state retirement benefits.

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