How The Windsor Decision Applies To Retirement Plans


The Internal Revenue Service recently furnished employers with welcome guidance concerning coverage of same-sex spouses in qualified plans.

In a new Notice, the Service discusses how qualified arrangements such as 401(k) plans must be administered after the U.S. Supreme Court’s U.S. v. Windsor decision held that federal law prohibiting the recognition of same-sex marriage was unconstitutional.  

Windsor And Qualified Plans

Shortly after the landmark Windsor decision was issued, the IRS announced that for qualified plan purposes, the terms “spouse,” “husband and wife,” “husband,” and “wife” include individuals who are validly married to same-sex partners under state law (or under international law), and that the term “marriage” includes married members of the same sex. These rulings apply for all purposes under federal tax law, including retirement plan qualification. Significantly, IRS pointed out that these rules apply even if the married same-sex couple lives in a state that does not recognize same-sex marriage.

IRS has now expanded its prior advice and has filled in a number of significant holes for plan sponsors:

  • Qualified plans must implement the Windsor holding as of June 26, 2013, the date the Windsor decision was handed down;
  • If a qualified plan must be amended to comply with Windsor, the amendment must be made by the later of 1) the end of the plan’s normal remedial amendment period; or 2) December 31, 2014, and be effective no later than June 26, 2013; and
  • Qualified plans that do not need an amendment to comply with Windsor must be administered to comply with Windsor no later than June 26, 2013.

Even if a plan amendment is not necessary to comply with Windsor, the IRS suggests that plan sponsors enact a “clarifying” amendment memorializing compliance.

The IRS also advises that plans can be amended retroactively to a date prior to June 26, 2013, but warns that this could cause administrative difficulties. In addition, the Service reiterates that same-sex individuals who have entered into state-sanctioned civil unions, domestic partnerships, or similar arrangements are not covered by the Windsor ruling. Finally, the IRS states that additional guidance will be issued concerning application of Windsor to health plans and other fringe benefits.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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