Indiana would match workers’ savings if funded and payments continue

The state would put one dollar into a worker’s retirement account for each dollar the worker saves. This covers state employees who contribute to the state’s retirement savings plan. The match could not exceed $28 per paycheck or the money available in the two-year state budget. The budget agency could pause payments during extraordinary financial trouble, then resume or repay missed matches if enough money is available. Matches would apply after December 31, 2026.

The state would close covered members’ medical accounts, move their balances to the general fund, and deposit an equal amount in retirement accounts. Retired members, their spouses and dependents, and members eligible for an extra contribution are exempt. A member could make a final choice to join a successor medical account during open enrollment, no later than December 1, 2026. Federal tax rules could limit the account changes. Covered members would get a separate one-time retirement deposit based on age and years of service. The account closings and equal-amount retirement deposits would apply after December 31, 2026.

The state would exclude people who begin covered state jobs from its retirement medical benefits account. This covers new employees in Indiana’s executive, legislative, and judicial branches and certain state officials. The exclusion would apply to people who start covered jobs after December 31, 2026.

The budget agency could put less of a designated cigarette tax share into retiree health trusts and send the rest to the general fund. This applies to the listed 1.67% share of cigarette tax and related collections. If the budget agency sets the trust deposit below 1.67% of the covered collections, the remainder must go to the general fund. From July 1, 2026, through June 30, 2027, the trusts would receive 1.67% or an amount set by the budget agency. After June 30, 2027, the 1.67% share would go to the general fund.