BOSTON – Mass. Gov. Deval L. Patrick last month signed a bill allowing General Treasurer Steven Grossman’s office to offer a tax-deferred retirement savings plan to employees of nonprofit organizations.
According to a statement from Grossman’s office, in-house administration of deferred-compensation plans has proved financially challenging for many nonprofits. According to The Boston Foundation, more than half of grassroots organizations with budgets of less than $250,000 do not offer any retirement plans to their employees. Overall, an estimated 14 percent of the Massachusetts workforce, or 460,000 people, works in the nonprofit sector.
The Treasury will now work with the Internal Revenue Service to set up a retirement savings plan that will be available to all nonprofit organizations in Massachusetts with 20 or fewer employees. 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. •