Massachusetts Treasurer Steven Grossman will sponsor a qualified defined contribution plan open to non-profit organizations with 20 or fewer employees, under a bill signed into law Friday by Gov. Deval Patrick.
A news release from Mr. Grossman's office noted that 14% of the Massachusetts workforce, or 460,000 people, are in the non-profit sector. Chandra Allard, a spokeswoman for Mr. Grossman, said conservative estimates suggest that the new tax-deferred plan will help between 35,000 and 45,000 of those non-profit employees to better save for retirement.
“In too many cases, non-profits simply haven't had the resources” to administer an affordable DC plan, “resulting in countless people being isolated from a safe and secure retirement,” Mr. Grossman said in the news release.
The news release cited a Boston Foundation study noting that 56% of grass-roots organizations in Massachusetts with budgets of less than $250,000 don't offer any retirement plans to their employees.
Now that the bill is law, the IRS has to rule on what specific subsection of section 401 of the Internal Revenue Code the new qualified defined contribution plan will fall under, said Ms. Allard.
Information wasn't immediately available regarding when an RFP could be issued for service providers to administer the plan.