Texas Administrative Code
Title 34 - PUBLIC FINANCE
Part 3 - TEACHER RETIREMENT SYSTEM OF TEXAS
Chapter 25 - MEMBERSHIP CREDIT
Subchapter B - COMPENSATION
Section 25.22 - Contributions to Cafeteria Plans and Deferred Compensation

Universal Citation: 34 TX Admin Code ยง 25.22

Current through Reg. 49, No. 38; September 20, 2024

(a) In this section:

(1) "deferred compensation plan" means a plan qualifying under the United States Internal Revenue Code, §§401(k), 403(b), or 457; and

(2) "cafeteria plan" means a compensation plan in which employees are given a choice of cash or fringe benefits in a manner that qualifies under the United States Internal Revenue Code, §125.

(b) The contributions to a deferred compensation plan or cafeteria plan that are withheld from the salary and wages of an employee will be included in annual compensation if:

(1) the contributions were originally included in the employee's salary;

(2) the contributions are withheld from the employee's salary under a voluntary written salary reduction agreement;

(3) the benefit plan and each option in the plan, if options are offered, are available to all Teacher Retirement System (TRS) members employed; and

(4) with respect to contributions to a cafeteria plan, the benefit options in the plan are limited to one or more of the following:
(A) group health insurance;

(B) disability payments;

(C) health care reimbursements;

(D) group term life insurance;

(E) dependent care assistance;

(F) group legal services;

(G) a deferred compensation arrangement qualifying under §401(k).

(c) The following contributions to deferred compensation or cafeteria plans are not includable in annual compensation:

(1) contributions obtained from mandatory deductions or withholdings from employee salaries;

(2) direct employer contributions as described in subsection (f) of this section;

(3) any contributions to a cafeteria plan if the plan contains options (other than cash) in addition to those listed in subsection (b)(4) of this section;

(4) any contribution to a deferred compensation or cafeteria plan if the plan or any options within the plan are not available to all TRS members employed by the employer;

(5) any contributions to a cafeteria plan if the plan offers employees not desiring benefits to receive cash in lieu of the employer's direct contributions to the plan as described in subsection (f) of this section;

(6) any contributions to a retirement plan in which the contributions are picked up by an employer;

(7) any employee contributions made by salary reduction to a fringe benefit or deferred compensation plan that does not qualify under the United States Internal Revenue Code, §§125, 401(k), 403(b), or 457; or

(8) any contribution made as active employee health coverage or compensation supplementation under Article 3.50-8, Insurance Code, regardless of whether the employee uses it for payment of health care coverage or for any other option available by law. Payment of the compensation supplementation is not includable in annual compensation.

(d) To be considered an acceptable voluntary salary reduction agreement for the purposes of subsection (b)(2) of this section, the agreement must be in writing and each employee must have a bona fide option whether or not to sign it.

(e) A contribution as used in this section is either a direct contribution to a benefit program made by an employer or a contribution to a benefit program that is made by an employee through a voluntary salary reduction agreement. Nothing in this section should be interpreted to exclude amounts from annual compensation that are simply deductions from an employee's normal salary (without a salary reduction agreement) for payment to a benefit program, such as group insurance.

(f) Direct employer contributions are the payments made by the employer to an employee benefit program that were not obtained as a result of an employee's voluntary salary reduction agreement. The existence of direct employer contributions to deferred compensation or cafeteria plans does not in itself disqualify employee contributions to the same plan from being considered as annual compensation. However, direct employer contributions are not in themselves ever to be included in annual compensation. Further, if employees are given the option in a cafeteria plan of taking the direct employer contribution as cash, then no employee contributions to the plan are includable in annual compensation.

(g) Contributions from voluntary salary reduction agreements to deferred compensation plans that qualify under the United States Internal Revenue Code, §401(k), and to cafeteria plans are includable in annual compensation beginning September 1, 1985. Employee contributions to tax sheltered annuities qualifying under the United States Internal Revenue Code, §403(b), and to the state deferred compensation program have always been includable in annual compensation.

Disclaimer: These regulations may not be the most recent version. Texas may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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