On April 4, 2014, the Internal Revenue Service (the “Service”) published Notice 2014-19, in which it describes amendments required to be made to retirement plans qualified under Section 401(a) of the Internal Revenue Code of 1986 (the “Code”) to reflect the application of the decision in United States v. Windsor and the subsequent holdings of Revenue Ruling 2013-17. Recall, prior to the Windsor decision, the term “spouse” (or similar terms) for Federal tax purposes referred only to a person of the opposite sex. As a result, same-sex spouses were not recognized for purposes of the Code – including, for purposes of qualified retirement plans. Following the Windsor decision and subsequent IRS guidance, however, the term “spouse” (or similar terms) includes same-sex individuals who have validly entered into a marriage in a state that recognizes such marriage even if the married couple is domiciled in a state that does not recognize such marriage (e.g. such as Texas).
In Notice 2014-19, the IRS reiterated the requirement explained in Revenue Ruling 2013-17 that qualified retirement plans recognize same-sex marriage as of June 26, 2013; however, the sponsor is permitted to limit this application until September 16, 2013 to married same-sex couples who reside in a state that recognizes the marriage. As of September 16, 2013, all qualified retirement plans must recognize same-sex spouses, even if the couple resides in a state that does not recognize the marriage. The Service indicated that sponsors are permitted to recognize same-sex marriage for any or all purposes prior to June 26, 2013, but cautions that such an amendment to a single employer defined benefit plan could affect the sponsor’s funding obligations under the plan.
Notwithstanding the required application of the Windsor decision in 2013, the Service has provided an extended deadline to amend plan documents to reflect this operation. Specifically, sponsors have until the later of the otherwise applicable deadline for required amendments (i.e. tax return filing deadline for the sponsor) or December 31, 2014. For governmental plans, this deadline is further extended to the close of the first regular legislative session of the legislative body with the authority to amend the plan that ends after December 31, 2014.
Note, however, an amendment may not be required in all cases. For example, if the plan document refers generally to the term “spouse” as defined under the Code, no amendment would be necessary. On the other hand, if the plan document defined “spouse” as an individual of the opposite sex (or with respect to similar restrictions) or if the sponsor has recognized same-sex marriages for any period prior to June 26, 2013, a plan amendment is required to be adopted by the applicable deadline. This is a good time to review your plan documents to determine if an amendment is, in fact, required to be adopted this year.