Grossman Promotes Non-Profit Deferred Comp Plan
Legislation would Expand Retirement Options for Non-Profit Workers
"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 Grossman. "So many of these workers provide important services that reach underprivileged and struggling segments of our population, and we should prioritize incentives that encourage them to continue that critical work."
In-house administration of deferred compensation plans can prove financially challenging for non-profits, particularly smaller ones. According to the Boston Foundation, a full 56 percent of grassroots organizations with budgets of less than $250,000 do not offer any retirement plans to their employees. Overall, an estimated fourteen percent of the Massachusetts workforce is in the non-profit sector.
Upon approval of the pending legislation, the Treasury plans to work with the Internal Revenue Service to set up a retirement savings plan available to all non-profit organizations in Massachusetts. Much like a 401(k) or 403(b), this plan would 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.
Grossman said that most non-profit workers tend to stay in that sector, and that a lack of viable deferred compensation plans in the sector can impede an entire segment of the workforce from planning appropriately for retirement. Grossman also highlighted the issue of gender inequity, noting that a disproportionate amount of women work at non-profits.
The Treasurer's Office presently oversees tax-deferred retirement savings accounts for over 280,000 government workers, giving it the existing infrastructure and expertise to set up these non-profit accounts.