Tax-qualified US retirement plans may need to be amended by December 31, 2014 in order to comply with requirements imposed by the Internal Revenue Service (IRS) regarding the treatment of individuals in same-sex marriages following the US Supreme Court’s decision in United States v. Windsor.
In Windsor, the Supreme Court held that Section 3 of the 1996 Defense of Marriage Act (DOMA), which barred same-sex married couples from being recognized as “spouses” for purposes of federal law, was unconstitutional. Following the Windsor decision, the IRS issued guidance on the recognition of same-sex married couples under federal tax law. The IRS guidance required tax-qualified retirement plans to comply in operation with Windsor by recognizing the validity of same-sex marriages beginning June 26, 2013, the date of the Windsor decision.
Amendments generally must be adopted no later than December 31, 2014 to reflect a tax-qualified retirement plan’s compliance with the IRS’s Windsor guidance, although a later deadline may apply in certain limited circumstances. Plans that were previously amended to comply with the requirements of early IRS Windsor guidance may need to be amended again in light of additional IRS guidance that was issued earlier this year.
An amendment generally is not required if the applicable language in the plan, including the definition of spouse, is already consistent with current IRS Windsor guidance, and has been consistent since June 26, 2013. Even in this case, however, it may be necessary to amend the plan if it was operated in accordance with special rules established by the IRS for periods prior to June 26, 2013, or for the period beginning June 26, 2013 and ending September 15, 2013.
Under those special rules, prior to June 26, 2013, a plan could (but was not required to) treat same-sex married couples as married for only limited purposes under the plan. For the period beginning June 26, 2013 and ending September 15, 2013, a plan could determine the validity of a marriage based on the domicile of the couple; on and after September 16, 2013, all plans must recognize a same-sex marriage if it was entered into in a state whose laws authorize same-sex marriages.
Although IRS guidance is less clear with respect to plans other than tax-qualified retirement plans, it may also be necessary to amend some cafeteria plans and flexible spending account plans by December 31, 2014, depending on the terms of those plans. In any case, it is advisable to review all of your employee benefit plans, including welfare plans and nonqualified plans, to determine whether amendments are needed.