(a) Notwithstanding any law to the contrary, any governmental entity as defined in subsection (b) may elect to become a participating employer in any deferred compensation program established on behalf of state employees under this part or under part 3 of this chapter; provided, that such participation shall be subject to the approval of the chair of the Tennessee consolidated retirement system and in conformity with such terms and conditions as may be prescribed by the chair. If such approval is given, then all employees of the respective entity shall be eligible to participate in any such deferred compensation program, except for the employer matching as provided for in § 8-25-303.

(b) For purposes of this section, “governmental entity” means any Tennessee local governmental entity, including, but not limited to, any municipality, metropolitan government, county, utility district, school district, public building authority, and development district created and existing pursuant to the laws of this state, or any instrumentality of government created by any one (1) or more of the named local governmental entities or by an act of the general assembly. Notwithstanding any provision of this section to the contrary, no entity shall be eligible to participate in any such deferred compensation program if the chair of the Tennessee consolidated retirement system determines, in the chair's sole discretion, that the entity's participation could have a potential adverse effect on the program's status as a qualified plan under the Internal Revenue Code (U.S.C. title 26), and regulations. In making such determination, the chair may rely on the advice of a nationally recognized counsel in the area of governmental employee benefit plans.

(c) Any entity described in subsection (a) that elects to become a participating employer under part 3 of this chapter shall have the option of providing for employer matching of contributions in any amount for which the entity is willing to contribute; provided, that the amount of employer matching shall not exceed the maximum allowed under the Internal Revenue Code, and shall conform to all applicable laws, rules and regulations of the internal revenue service governing profit sharing and/or salary reduction plans.

(d) It is the legislative intent that the state shall realize no increased cost as a result of such entities' participation in any such deferred compensation program. All costs associated with such participation, including administrative costs, shall be the responsibility of such entities and/or the entities' participating employees.

(e) A local board of education may elect to participate in the plan separately from the political subdivision with which it is associated. A political subdivision may elect to participate in the plan without extending coverage to the employees of the local board of education that is associated with the participating political subdivision. In the event that a political subdivision withdraws its participation in the deferred compensation plan, the local board of education, which is a part of the political subdivision, may continue its participation in the plan separately.