Amends TCA Title 5; Title 6; Title 7; Title 8 and Title 50.
This bill authorizes a political subdivision, or an instrumentality of a political subdivision with at least 1,000 employees, to implement, adopt, or administer an automatic deferred or tax-sheltered compensation plan for employees.<br /> <br /> Present law authorizes the state and political subdivisions and instrumentalities of the state or political subdivision, to, by contract, agree with any employee to defer a portion of that employee's income and to subsequently purchase or contract with any company licensed to do business in this state to provide a deferred compensation plan, as requested by the employee.<br /> <br /> This bill adds authorization for a political subdivision, or an instrumentality of a political subdivision that has at least 1,000 employees, to implement, adopt, or administer an automatic deferred or tax-sheltered compensation plan for employees of that political subdivision or instrumentality that constitutes an eligible automatic contribution arrangement under section 414(w) of the Internal Revenue Code. Generally, section 414(w) covers the authorization for certain employees to elect to make a withdrawal of default elective contributions from an eligible automatic contribution arrangement; and an eligible automatic contribution arrangement, with certain exceptions, requires a default elective contribution that is a uniform percentage of compensation.<br /> <br /> Under this bill, such deferred or tax-sheltered compensation plan may provide, subject to the notice, election to withdraw, and other requirements of section 414(w) of the Internal Revenue Code, and regulations promulgated thereunder, that employees or a classification of employees eligible to participate in the plan on or after implementation of the plan must participate in the plan as a condition of employment unless such covered employee files notice with the sponsoring employer indicating that person's election not to participate in the manner and in the time period prescribed by the sponsoring employer.<br />
This bill authorizes a political subdivision, or an instrumentality of a political subdivision with at least 1,000 employees, to implement, adopt, or administer an automatic deferred or tax-sheltered compensation plan for employees.<br /> <br /> Present law authorizes the state and political subdivisions and instrumentalities of the state or political subdivision, to, by contract, agree with any employee to defer a portion of that employee's income and to subsequently purchase or contract with any company licensed to do business in this state to provide a deferred compensation plan, as requested by the employee.<br /> <br /> This bill adds authorization for a political subdivision, or an instrumentality of a political subdivision that has at least 1,000 employees, to implement, adopt, or administer an automatic deferred or tax-sheltered compensation plan for employees of that political subdivision or instrumentality that constitutes an eligible automatic contribution arrangement under section 414(w) of the Internal Revenue Code. Generally, section 414(w) covers the authorization for certain employees to elect to make a withdrawal of default elective contributions from an eligible automatic contribution arrangement; and an eligible automatic contribution arrangement, with certain exceptions, requires a default elective contribution that is a uniform percentage of compensation.<br /> <br /> Under this bill, such deferred or tax-sheltered compensation plan may provide, subject to the notice, election to withdraw, and other requirements of section 414(w) of the Internal Revenue Code, and regulations promulgated thereunder, that employees or a classification of employees eligible to participate in the plan on or after implementation of the plan must participate in the plan as a condition of employment unless such covered employee files notice with the sponsoring employer indicating that person's election not to participate in the manner and in the time period prescribed by the sponsoring employer.<br />
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