N.M. Stat. § 10-7-8
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.
NMS § 10-7-8