REPRESENTATIVE MARKEY ANNOUNCES PASSAGE OF NON-PROFIT DEFERRED COMPENSATION PLAN
(BOSTON) – Representative Christopher Markey (D- Dartmouth) joined his colleagues in the Massachusetts House of Representatives in passing legislation that allows the State Treasurer’s office to offer a tax-deferred retirement savings plan to employees of non-profit organizations.
“Because non-profit organizations often aren’t able to offer their employees extensive retirement options, this bill provides some peace of mind to their employees, who service our charitable groups, staff our arts programs and provide the backbone for so many organizations that help people in the Commonwealth,” said House Speaker Robert A. DeLeo (D-Winthrop). “These NPOs provide critical services for a wide-ranging demographic. The passage of this bill sends the message that our government cares about these groups and the people they help.”
“In too many cases, non-profits simply don’t have the resources to administer a deferred compensation plan for their employees, resulting in countless people being isolated from a safe and secure retirement,” said State Treasurer Steven Grossman. “So many of these workers provide important services that reach underprivileged and struggling segments of our population, and House approval of this bill brings us closer to incentivizing countless people to continue that critical work.”
“Many non-profit organizations have sought to provide a retirement savings plan for their employees, but the administrative costs made it prohibitive”, said Representative John W. Scibak (D-South Hadley). “This legislation will now make it possible and should result in higher worker retention rates and greater financial security for the employees of those organizations. I applaud Treasurer Grossman, Speaker DeLeo and Representative Bradley for their leadership in addressing the current void.”
“I wish to thank Treasurer Grossman for bringing this plan forward and being a vital partner in the legislation’s passage,” said Leader Garrett Bradley (D-Hingham), a sponsor of the bill. “This voluntary 401(k)-like deferred compensation plan will open up a new pre-tax retirement savings opportunity to thousands of non-profit workers whose employers lack the cash overhead to set up retirement plans. These are individuals who earn a lower median income than the state’s workforce as a whole, yet provide vital human services, health care, and education to thousands of residents.”
According to the Boston Foundation, 56% of grassroots organizations with budgets smaller than $250,000 don’t offer any sort of retirement plan to their employees; Fourteen percent of our state’s workforce are in the non-profit sector. Pending final passage of this bill, the State Treasury plans to work with the Internal Revenue Service to establish a solid retirement savings program that would be made available to all of the non-profit organizations in our Commonwealth, a welcome change considering that statistic.
“By and large, individuals that have chosen to work at non-profit organizations do so because they care about the future of their communities,” said Markey, whose district includes the hard-hit towns of Freetown and Lakeville. “Their good work shouldn’t come at the expense of their own future. This legislation allows them to plan for their retirement while continuing to serve in their very critical role.”
The retirement savings plan that the State Treasury is aspiring to create would be similar to a 401(k) or a 403(b). The plan that will be established for NPOs will deduct pre-tax dollars from an employee’s paycheck and invest them in a tax deferred market portfolio. The Treasurer’s Office would administer the participant-funded plan at no cost to taxpayers.
Approved by the House, this bill is now on its way to the Senate and then Governor Deval Patrick for further approval.