Senate Bill 135 Alabama 2026 Session

Summary

Primary Sponsor

Robert L. StewartSenator

Democrat

Session

2026 Regular Session

Title

Private sector employers and employees; to create the Alabama Retirement Savings Program for the purpose of promoting greater retirement savings for private sector employees

Summary

SB135 would create a state-facilitated Alabama Retirement Savings Program that automatically enrolls eligible private-sector workers in a low-cost, portable retirement savings option funded by payroll deductions.

What This Bill Does

It establishes the Alabama Retirement Savings Program, administered by the Department of Workforce, with a dedicated Fund for enrollees and an Administrative Fund to cover program costs. It requires automatic enrollment for eligible small employers (500 or fewer employees) and their workers, with payroll deductions deposited into the program; employees can opt out and choose contribution levels and IRA options. It offers investment options including a capital preservation fund, a life-cycle fund, and others, with a designated default option and a focus on simplicity and cost savings. The program will roll out in two phases within 24 months of the act’s effective date (June 1, 2026), starting with larger employers, and includes annual audits, public reporting, and limited liability for participating employers.

Who It Affects

• Private-sector employees of eligible small employers (self-employed, sole proprietors, or for-profit businesses with 500 or fewer employees) who will be automatically enrolled or may participate through payroll deductions and choose investment options.
• Eligible employers (self-employed, sole proprietors, or for-profit entities with 500 or fewer employees) who must establish payroll deposit retirement savings arrangements, remit employee contributions, and may contract with third parties to administer the program.

Key Provisions

• Creates the Alabama Retirement Savings Program to connect eligible employers and employees with approved, low-cost retirement savings plans and to promote retirement savings.
• Automatic enrollment and payroll-deposit retirement savings arrangements for participating employers’ employees; employees may opt out and adjust contribution levels and investment options; minimum contribution set at 3% of wages.
• Investment options include capital preservation funds, life-cycle funds, and other options; a default investment option is designated, with the possibility to change or add options over time.
• Fees: administrative costs may not exceed 0.6% of the fund’s balance, with a temporary cap of 0.75% for the first three years; the Administrative Fund can cover startup and ongoing costs, subject to funding rules.
• Participating employers are not fiduciaries and have no liability for employee decisions or investment performance; the program is not employer-sponsored and assets are not state property.
• Two-phase implementation within 24 months after June 1, 2026, with faster rollout for larger employers; open enrollment periods and rules for newly hired employees.
• Annual independent audits and public reports, including details on benefits, enrollees, investment options, fees, and program performance; information to be posted on the department’s website.

AI-generated summary using openai/gpt-5-nano on Feb 12, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Retirement