• EQUALITY, From Page 8 plained that the “125 cafeteria plans” included in the IRS ruling are those benefit plans that allow employees to contribute to savings accounts that can then be used to pay for certain specified expenses, such as David Henderson health care or child care. He said they are called “cafeteria plans” because plan members have “a whole buffet of benefit options to choose from.” The cafeteria plans, like the 401(a), 401(k) and 457 plan contriRafael McDonnell butions, are “pretax” dollars, which means that those funds are not subject to federal taxes. And like the retirement plans, the cafeteria plans almost must recognize employees’ legal same-sex spouses. Although the retirement plans in question are, technically, supposed to be in compliance with the IRS ruling in practice already, there is a grace period. According to Internal Revenue Bulletin 201417: “The deadline to adopt a plan amendment pursuant to this notice is the later of the otherwise applicable deadline under section 5.05 of Rev. Proc. 2007–44, or its successor, or Dec. 31, 2014. Moreover, in the case of a governmental plan, any amendment made pursuant to this notice need not be adopted before the close of the first regular legislative session of the legislative body with the authority to amend the plan that ends after Dec. 31, 2014.”
That means the Texas Legislature apparently must bring these plans fully into compliance by the end of the 2015 legislative session. McDonnell noted that corporate defined contribution retirement plans are also required to comply with the IRS ruling on same-sex spouses. Given the political victories by ultra-conservatives in last month’s election, McDonnell and Henderson said it will be “interesting to see” what happens in terms of the Legislature updating these retirement plans. But what happens if to those plans that fail to comply? Those plans are disqualified and “the plan’s trust loses its tax-exempt status and becomes a nonexempt trust.” That means, in essence, that all contributions to these funds that had, in the past, been tax-deferred will now be taxed. “Does the state of Texas really want to do that? To essentially send its retirement system into chaos?” McDonnell said. “It would be catastrophic.” Both McDonnell and Henderson criticized the state and other governmental agencies that may already be in what they called “closet compliance” with the new IRS ruling. “It’s one thing to make a plan change functionally. But if you don’t tell anybody about it, are you really making a change?” McDonnell said. “The state is trying to tell the IRS, see, we are complying. But they are walking a fine line, saying we’re not going to comply with your language. We’re going to comply, but not tell people about it and not use the language the IRS says to use,” Henderson said. “The state is talking out of both sides of its mouth. No, actually, the state is talking out one side of its mouth and keeping the other side clamped shut, just drooling and dribbling with conflicting language,” he said. McDonnell added, “This is not a huge thing when it comes to Texas recognizing same-sex marriage. It only applies to certain people in certain circumstances. For those certain people, it is a big thing. Overall, it’s a small thing, but it is something. It’s a baby step that’s being compelled by the IRS.” •
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REMEMBERING THE NAMES
Resource Center’s Youth First participated in the World AIDS Day observances held Dec. 1 in by C.U.R.E. held in Plano. Youth First volunteer Cristina Hayes, program manager Mike Cruz, and one of the Youth First members presented a quilt panel that Youth First attendees made for the NAMES Project AIDS Memorial quilt. 12.05.14
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