WASHINGTON - The Human Rights Campaign Foundation's Workplace Project today released a new set of resources for employers to make their qualified retirement plans - such as a 401(k) - more inclusive for employees with same-sex partners or spouses, as provided by the Pension Protection Act of 2006. It also released a sample proposal for organizations to use when advocating for "grossing up," a method by which an employer can increase employees' wages to offset the additional tax burden of enrolling a domestic partner for health insurance. The new resources were unveiled in a virtual town hall held this afternoon with HRC Workplace Project Director Daryl Herrschaft, financial planner and columnist Joe Kapp, James Delaplane, Jr. of Davis & Harman LLP and HRC Business Council member Diego Sanchez. More than 150 employees participated from companies across the nation.
"These tools will help employers turn the protections in the Pension Protection Act that HRC worked so hard to pass in 2006 into reality," said Human Rights Campaign Foundation President Joe Solmonese. "Every gay, lesbian, bisexual and transgender worker at a company that provides a retirement plan should make sure they've designated their partner as the beneficiary, print out these resources and take them to their HR department to make sure their retirement plans take advantage of the new tax benefits."
The release of these resources follows the Monday launch of HRC's "7 Days to a Better Financial You," an educational campaign highlighting the unique legal inequalities and hurdles facing the GLBT community with regard to financial, tax and estate planning issues. Prior to the Pension Protection Act of 2006, domestic partners or other non-spouses did not have an option to roll inherited retirement savings into an IRA, causing them to incur substantial tax penalties. Under the PPA, an employer may grant the beneficiary the opportunity to roll funds over into an inherited IRA. The Pension Protection Act of 2006 also provides that employees may take distributions for hardships associated with the designated beneficiary. Previously, such hardship distributions were only available for qualifying events related to spouses. The new HRC resources demonstrate how an employer can easily make the tax-saving options available today, and then update their retirement plan language by the end of 2009, as required by the new law.
The HRC Foundation also released a first-of-its-kind sample proposal for "grossing up" the wages of employees who enroll a domestic partner on their health insurance plan. Under current federal tax law, the value of health coverage provided to an employee's non-dependent domestic partner is included in the employee's taxable income and wages for income and payroll tax purposes, and in reportable wages for the employer's payroll taxes. This results in higher income and payroll taxes for these employees than for employees with spousal coverage. These higher tax levels can lead employees to decline the domestic partner coverage and contribute to the problem of the uninsured. The sample proposal includes an explanation of the issue, the business rationale for "grossing up" and a formula that employers can use to adjust wages.
Information about how employers can implement the rollover option is available at:
Information about how employers can implement the hardship withdrawal option is available at:
The sample "grossing up" proposal is available at:
For additional online resources and daily updates visit the HRC blog, http://www.hrcbackstory.org/.
The Human Rights Campaign is America's largest civil rights organization working to achieve gay, lesbian, bisexual and transgender equality. By inspiring and engaging all Americans, HRC strives to end discrimination against GLBT citizens and realize a nation that achieves fundamental fairness and equality for all.
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