State agencies, state or educational institutions and political subdivisions of the state shall be authorized to enter into salary reduction agreements with their employees for the purpose of purchasing annuity contracts and deferred compensation plans, offered by insurance companies, banks and savings and loan associations authorized to transact business in New Mexico, when the salary reduction will result in an income tax deferment for the employees under federal law. The salary reduction agreement shall provide that the employer is not liable to the employee in the event the plan provider becomes insolvent or income tax on the salary reductions is not deferred. Such annuity contracts and deferred compensation plans must be approved by the secretary of general services for state agencies and the governing body of political subdivisions for such political subdivisions. State agencies, state or educational institutions and political subdivisions of the state shall further be authorized to deposit or invest funds deducted from an employee's salary or wages pursuant to any such approved deferred compensation plan. Any funds deducted from an employee's salary or wages pursuant to any such deferred compensation plan shall not be subject to any state law regulating or restricting the deposit or investment of public funds.
History: 1953 Comp., § 5-4-18, enacted by Laws 1968, ch. 49, § 1; 1977, ch. 65, § 1; 1978, ch 37, § 1; 1981, ch. 155, § 11; 1983, ch. 301, § 20.
ANNOTATIONSFunds credited to employee's deferred account are governed by state laws relating to the deposit and investment of public funds. 1980 Op. Att'y Gen. No. 80-33.
Funds not distinguishable from county's public funds. — Funds credited to an employee's deferred account are owned by the county, are subject to claims of county creditors and are not distinguishable from the public funds of the county. 1980 Op. Att'y Gen. No. 80-33.
Deducted amounts not wholly exempt from public funds laws. — The legislature did not, by the 1981 amendment to this section, wholly exempt deducted amounts, which are public funds, from all laws regulating public funds, including the Procurement Code. 1987 Op. Att'y Gen. No. 87-35.
Agreement with company administering deferred compensation program. — The public employee's retirement board's administrator's agreement with the company providing professional services by administering and marketing the state's deferred compensation program must be let for proposals pursuant to the Procurement Code, 13-1-28 NMSA 1978 et seq., to the extent the administrator receives as compensation an amount exceeding $20,000, although the administrator's sole compensation under the contract derives from sales commissions, etc., from the underwriter. 1987 Op. Att'y Gen. No. 87-35.
Am. Jur. 2d, A.L.R. and C.J.S. references. — Income tax: premiums paid by employer for annuity payable to employee as taxable income of latter, 7 A.L.R.2d 766.
Income tax: right of employer to deduct, for income tax purposes, premiums paid on annuity contracts for benefit of employees, 9 A.L.R.2d 280.
67 C.J.S. Officers and Public Employees § 223.