NEWS
2013-09-13 :: ERISA Alert
Treatment of Same-Sex Spouses in Retirement Plans
This is an important piece for Plan sponsors to be aware of. Please read carefully. If you have any questions or concerns , please do not hesitate to call me at 203-210-7814
ERISA Alert
September 2013
Treatment of Same-Sex Spouses in Retirement Plans
In response to the U.S. Supreme Court decision in United States v. Windsor,1 the Internal Revenue Service has recently issued Revenue Ruling 2013-17 which clarifies the tax treatment of same-sex marriages for federal tax purposes. In Windsor, the Supreme Court determined that Section 3 of the Defense of Marriage Act ("DOMA"), which prohibited same-sex couples from being recognized as "spouses," was unconstitutional.
Revenue Ruling 2013-17
In Revenue Ruling 2013-17, the IRS concluded that:
o Same-sex spouses are lawfully married for federal tax purposes when the couple is married in a state or foreign jurisdiction whose law authorizes the marriage of two individuals of the same sex (even if the couple currently resides in a state that does not recognize the validity of same-sex marriages).
o Individuals who are in a registered domestic partnership, civil union or other similar arrangement that is not a marriage under state law are not considered spouses for federal tax purposes.
The IRS stated that the holdings of Revenue Ruling 2013-17 will be applied prospectively as of September 16, 2013.
What does this mean for tax-qualified retirement plans?
In order to comply with Revenue Ruling 2013-17, the following matters regarding the administration of tax-qualified retirement plans, such as pension plans, profit sharing plans and 401(k) plans, need to be addressed:
o Plans that are subject to the rules governing qualified joint and survivor annuities and qualified preretirement survivor annuities must provide these benefits to same-sex spouses.
o The consent of a participant's same-sex spouse will be needed for a participant to elect an optional form of benefit or designate a non-spouse beneficiary.
o In the event of a divorce, same sex spouses will be entitled to the benefits under a qualified domestic relations order.
o Minimum required distributions for participants with same-sex spouses will be determined under the rules that apply to married individuals.
What to do now?
In connection with the administration of tax-qualified retirement plans, commencing September 16, 2013, same-sex marriages need to be treated the same as marriages between a man and a woman, to the extent required by Revenue Ruling 2013-17. In this regard, sponsors and administrators of such retirement plans should establish procedures for insuring compliance with the Revenue Ruling, including, but not limited to, making sure that participants who have same-sex spouses are being identified. In addition, while it is expected that future guidance to be issued by the IRS will help clarify what amendments may need to be adopted to comply with Revenue Ruling 2013-17, sponsors and administrators of qualified retirement plans should review their plan documents to determine any amendments that may be needed in order to operate and administer the plans in accordance with the requirements of the Revenue Ruling.
________________________________________1 133 S. Ct. 2675 (2013).
Copyright © 2013 Herrick, Feinstein LLP. Corporate Alert is published by Herrick, Feinstein LLP for information purposes only. Nothing contained herein is intended to serve as legal advice or counsel or as an opinion of the firm.
This alert is one in a series on the topic of ERISA and employee benefits. To read past alerts, please click here.
For more information on this alert or other ERISA matters, please contact:
Fred R. Green at +1 212 592 5910 or fgreen@herrick.com
Irwin A. Kishner at +1 212 592 1435 or ikishner@herrick.com
