Bill would let state add automatic enrollment to SMART deferred-comp plan for new hires

Representative Ann‑Margaret Ferrante filed legislation Jan. 17 proposing changes to the Commonwealth’s deferred compensation program known as the SMART Plan that would allow automatic enrollment for certain new employees and modify statutory wording related to contractors. The bill would permit the state treasurer, acting for the Commonwealth, to establish an automatic‑enrollment feature in the SMART Plan and deems that feature an exception to the Massachusetts Wage Act and similar local laws requiring prior employee authorization for payroll deductions. The same automatic‑enrollment authority would be available, by election, to a governmental body’s treasurer or chief financial officer for the body’s deferred compensation program. Under the bill’s terms, automatic enrollment would apply only to new employees hired on or after June 1, 2022. For commonwealth agencies or departments that purchase or make payments into 403(b) contracts or custodial accounts for employees, the feature would apply only if the agency or department affirmatively elects it. Likewise, a governmental body’s automatic enrollment option would take effect only if that governmental body elects to implement it. The draft law sets several specifications for any automatic‑enrollment feature. It may not require deferral above the IRS safe‑harbor maximum percentage; it must include an annual automatic increase in the deferred amount unless an employee opts out of auto‑escalation or chooses a different deferral amount; and employees who are automatically enrolled would have up to 90 days to discontinue participation. The bill says employees who stop participation within 90 days must receive a refund of their account “as soon as practicable.” The bill also requires that the deferred compensation plan document designate a qualified default investment alternative to receive contributions from automatically enrolled employees who do not choose an investment option, and that notices to automatically enrolled participants comply with the Internal Revenue Code and applicable IRS rulings. Separately, the bill would amend section 64 of chapter 29 of the General Laws by replacing the words “independent contractors” with “contracted employees.” It would also add language to section 64B of chapter 29 clarifying that a governmental body’s treasurer or chief financial officer may elect to implement an automatic enrollment feature for its deferred compensation program and that the program must include the specifications listed in the bill. The filing lists no vote or adoption; it is a bill introduction to the General Court. The text notes a similar matter filed in the previous legislative session (House No. 2517, 2023–2024).