Since the U.S. Supreme Court struck down Section 3 of the Defense of Marriage Act (“DOMA”) June 26, 2013 (U.S. v. Windsor), there have been many questions regarding the recognition of same-sex spouses for qualified retirement plan purposes. While the IRS had issued some subsequent guidance, many questions remained regarding operational requirements, retroactivity, and plan amendments. To address these questions, the IRS released Notice 2014-19 April 4, 2013.
As discussed in Client Alert 2013-198, the U.S. Supreme Court issued a landmark decision regarding same-sex marriage June 26, 2013 (Windsor), striking down Section 3 of the DOMA as unconstitutional because it violates the principles of equal protection. Section 3 of DOMA previously preempted state law and defined “marriage” for purposes of all federal statutes, regulations, rulings, and interpretations “as a legal union between one man and one woman as husband and wife,” and “spouse” as “a person of the opposite sex who is a husband or a wife.” However, Windsor did not address important practical issues regarding how same-sex marriages would be recognized at the federal level or for employee benefit purposes.
On August 29, 2013, the IRS issued Revenue Ruling 2013-17 (“Rev. Rul. 2013-17”), which, as discussed in Client Alert 2013-243, provides that same-sex couples who enter into marriages in jurisdictions that recognize such marriages will be treated as married for federal tax and employee benefit purposes, regardless of whether the couple lives in a jurisdiction that recognizes same-sex marriages.
Notice 2014-19 clarifies that, as of June 26, 2013, qualified retirement plans were required to recognize operationally the same-sex spouse of a participant as a spouse if the participant was domiciled in a state that recognized same-sex marriages. However, as of September 16, 2013, qualified retirement plans were required to recognize operationally the same-sex spouse of a participant as a spouse if the participant entered into a same-sex marriage in a jurisdiction that permits such marriages, even if the participant lives in a state that does not recognize same-sex marriages.
If a qualified retirement plan’s terms are not inconsistent with Windsor or the new guidance, then no amendment may be required. However, under the new guidance, employers have the option to amend their qualified retirement plans to reflect the outcome of Windsor and/or Rev. Rul. 2013-17 for some or all purposes as of a date prior to the effective dates discussed above.
To the extent that a qualified retirement plan’s terms define a marital relationship by reference to Section 3 of DOMA, or otherwise are inconsistent with Windsor or the new guidance, then an amendment to the plan is required. Generally, with respect to calendar year plans, employers must adopt an amendment to reflect the outcome of Windsor, and the guidance in Rev. Rul. 2013-17 and Notice 2014-19 on or before December 31, 2014.
What To Do
Employers should review their qualified retirement plans and identify which provisions are affected and need to be updated. Summary plan descriptions and election forms should be amended, where needed, and plan administration will have to be adjusted accordingly. Additional communications may need to be sent to employees and former employees (and to their same-sex surviving spouses) informing them of the changes to their benefit rights.