Saturday, April 05, 2014

Treatment of Marriages of Same-Sex Couples for Retirement Plan Purposes


Treatment of Marriages of Same-Sex Couples for Retirement Plan Purposes

The IRS has issued Notice 2014-19, which provides guidance on how qualified retirement plans should treat the marriages of same-sex couples following the Supreme Court’s decision in United States v. Windsor. The Windsor decision invalidated Section 3 of the 1996 Defense of Marriage Act (DOMA) that barred married same-sex couples from being treated as married under federal law.

The notice:
  • gives examples of Code requirements under which the marital status of the participants is relevant to the payment of benefits,
  • provides guidance on how to satisfy those requirements in light of Windsor and Revenue Ruling 2013-17, and
  • describes when retirement plans must be amended to comply with Windsor, Revenue Ruling 2013-17, and Notice 2014-19
Recognition of marriages of same-sex couples for tax purposes

Following the Windsor decision, the IRS issued Revenue Ruling 2013-17, which holds that married same-sex couples are now treated as married for all federal tax purposes where marriage is a factor, if the couple is lawfully married under the laws of one of the 50 states, the District of Columbia, a U.S. territory or a foreign jurisdiction. Notice 2014-19 gives additional guidance on how qualified retirement plans should treat the marriages of same-sex couples.

Plan amendments required with respect to plan provisions inconsistent with Windsor
  • If its terms are inconsistent with Windsor or Revenue Ruling 2013-17, a retirement plan must be amended to comply with Windsor and Revenue Ruling 2013-17. For example, a plan must be amended if it defines “spouse” by reference to section 3 of DOMA, or only as a person of the opposite sex.
  • Not all plans need to be amended in order to be in compliance. An amendment generally is not required if a plan’s terms are not inconsistent with Windsor or with Revenue Ruling 2013-17.
  • Required amendments must be adopted by the later of December 31, 2014, or the applicable date under the IRS’ general amendment guidance for qualified retirement plans, Revenue Procedure 2007-44.
Optional amendments
  • Plan sponsors may also, but are not required to, reflect the outcome of Windsor for periods prior to the date Windsor was decided.
  • In such a case, a plan amendment is required.
  • Such optional amendment must be adopted by the later of December 31, 2014, or the applicable date under Revenue Procedure 2007-44.
FAQs for more information
See the FAQs on the treatment of same-sex marriages for additional guidance, including:
  • beneficiary designations in profit-sharing plans after Windsor,
  • amendments that reflect the outcome of Windsor for periods before the decision was issued, and
  • application of the outcome of Windsor to 403(b) plans.
Additional resources

Handbooks focusing on State and Municipal Public Personnel Law continue to be available for purchase via the links provided below:

The Discipline Book at http://thedisciplinebook.blogspot.com/

Challenging Adverse Personnel Decisions at http://nypplarchives.blogspot.com

The Disability Benefits E-book: at http://section207.blogspot.com/

Layoff, Preferred Lists at http://nylayoff.blogspot.com/

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