AN ACT TO AMEND TITLE 29 OF THE DELAWARE CODE RELATING TO DEFERRED COMPENSATION.

New Delaware hires start automatic retirement saving

The law automatically enrolls covered new Delaware state employees in the state's 457(b) retirement savings plan unless they opt out. This includes rehires and workers rehired after retirement who start after the law's effective date. Workers covered by union contracts are excluded unless their contracts expressly allow automatic enrollment. The law takes effect 10 days after the Treasurer publishes notice that payroll upgrades are complete, as certified by the Office of Management and Budget. Contributions generally start within 90 days of employment. The plan's Board sets the starting contribution at no less than 3% of pay. It may set annual increases of 1 or 2 percentage points, based on years of participation, up to 15%. Legal dollar limits still apply. These savings reduce take-home pay while building retirement funds. Employees can change contributions, stop saving, or rejoin later. To get automatic contributions refunded, employees must opt out and request a refund by the Board's deadline. That deadline cannot exceed 120 days after employment starts. Unless employees choose otherwise, savings go into an age-based target date fund. Employees can change future investments and move existing balances under Board rules. The Board decides whether default contributions are before-tax or Roth after-tax savings, affecting current tax withholding. Deferred pay generally is excluded from income-tax withholding calculations, subject to legal exceptions, but remains included for Social Security contributions. It also counts toward contributions and benefits under state employee, judiciary, and state police pension plans. The Board must give advance notice explaining enrollment, rates, investments, employee choices, and refund consequences, and adopt implementation rules. State agencies must provide needed employee data. The Office of Management and Budget administers payroll deductions; the Treasurer accounts for and sends those deductions to the plan.