IRS Issues Additional Assistance With Treating Same-Sex Spouses For Retirement Plan Purposes
IRS Notice 2014-19 provides lengthy-anticipated assistance with the use of the choice in U . s . States v. Windsor to retirement plans qualified under Internal Revenue Code (“IRC”) Section 401(a). For tax-qualification purposes, plans must generally recognize the Windsor decision by the date from the decision.
Before the decision from the Top Court in Windsor thought it was unconstitutional, section three of the Defense of Marriage Act (“DOMA”) prohibited very good of same-sex spouses for purpose of Federal tax law. The Windsor decision, from the final Court on June 26, 2013, held that section 3 of DOMA is unconstitutional since it violates Fifth Amendment concepts.
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IRS ISSUES ADDITIONAL GUIDANCE ON THE TREATMENT OF
SAME-SEX SPOUSES FOR RETIREMENT PLAN PURPOSES
by Eric W. Gregory
IRS Notice 2014-19 provides long-awaited guidance on the application
of the decision in United States v. Windsor to retirement plans
qualified under Internal Revenue Code (“IRC”) Section 401(a). For tax-
qualification purposes, plans must generally recognize the Windsor
decision as of the date of the decision.
Until the decision of the Supreme Court in Windsor found it
unconstitutional, section 3 of the Defense of Marriage Act (“DOMA”)
prohibited the recognition of same-sex spouses for purposes of
Federal tax law. The Windsor decision, issued by the Supreme Court on
June 26, 2013, held that section 3 of DOMA is unconstitutional because
it violates Fifth Amendment principles.
In Revenue Ruling 2013-17 issued in August 2013, the IRS ruled that for
Federal tax purposes the terms “spouse,” “husband and wife,” “husband,”
and “wife” include an individual married to a person of the same sex if
the individuals are lawfully married in a jurisdiction that permits same-
sex marriages to be performed.
Plan Amendments May be Necessary
In Notice 2014-19, the IRS ruled that all qualified retirement plans
must be operated in accordance with Windsor as of June 26, 2013.
Depending on the terms of the plan, an amendment may need
to be adopted. For most plans, the deadline to adopt a necessary
amendment is December 31, 2014.
• Plans that define a marital relationship by reference to section 3 of
DOMA or contain terms that are otherwise inconsistent with the
terms of Windsor must be amended.
• Plans that employ the use of the terms “spouse,” “legally married
spouse” or “spouse under Federal law,” without distinction
between a same-sex spouse and an opposite-sex spouse do
not need to be amended. Notice 2014-19 suggests, however,
that a clarifying amendment may be useful for purposes of plan
• Plans that do not contain a definition of “spouse” do not need to
be amended, although it may be useful for such plans to add a
definition of spouse to avoid any ambiguity and to aid in plan
Scope of Application
Numerous tax code sections provide special rules with respect to
married participants in qualified plans, including, but not limited to:
• In all qualified retirement plans, a spouse is automatically the
participant’s beneficiary unless the spouse permissibly waives
• Under Section 401(a)(11), certain retirement plans must provide
a qualified joint and survivor annuity (“QJSA”) upon retirement
to married participants, and generally must provide a qualified
preretirement survivor annuity (“QPSA”) to the surviving spouse
of a married participant who dies before retirement.
• Under the required minimum distribution rules of Section 401(a)
(9) and the rollover rules of Section 402(c), additional alternatives
are provided for surviving spouses that are not available to non-
• Under tax code Section 401(a)(13)(B), a spouse may have a right
to receive all or a portion of the benefits payable to a participant
under a qualified domestic relations order (“QDRO”).
• Under numerous tax code provisions, spouses are treated as
owning shares of stock owned by the other spouse for various
purposes. For instance, ownership is attributed in determining
highly compensated employees, key employees and whether
corporations are members of a controlled group.
Application Prior to June 26, 2013
While the IRS ruling does not require retroactive application of the
Windsor decision prior to June 26, 2013, plan sponsors may choose to
apply the rules in a manner that reflects the outcome of Windsor for a
period prior to that date. If a plan chooses to do so, it must adopt an
amendment prior to the required date as discussed above.
Recognizing same-sex spouses for all purposes under a plan prior to
June 26, 2013 may trigger requirements that are difficult to implement
and may create unintended consequences. For instance, stock may
be attributed between same-sex spouses causing the composition of
highly compensated employees to change. Additionally, a plan may
have already paid a benefit to a different person or in a different form.
As such, it is advisable that plan sponsors carefully consider the effects
of implementing these rules prior to June 26, 2013 before taking
action. For instance, it is possible for a plan sponsor to amend the
plan to reflect the Windsor ruling only with respect to the QJSA and
QPSA requirements, and, for those purposes, solely with respect to
participants with annuity starting dates or dates of death on or after
This guidance from the IRS relates only to the qualified status of
retirement plans. It remains to be seen whether courts will permit
additional claims for benefits under ERISA. For example, it is not clear
if a surviving same-sex spouse of an employee who died prior to June
26, 2013 is entitled to surviving spouse benefits.
page 1 of 2April 8, 2014
CLIENT ALERT page 1 of 2April 8, 2014
Dickinson Wright’s employee benefits practice team will continue to
follow developments in this area. Please contact the author of this
Alert, any member of the employee benefits practice team or your
regular Dickinson Wright attorney for guidance.
This client alert is published by Dickinson Wright PLLC to inform our clients
and friends of important developments in the field of employee benefits law.
The content is informational only and does not constitute legal or professional
advice. We encourage you to consult a Dickinson Wright attorney if you have
specific questions or concerns relating to any of the topics covered in here.
FOR MORE INFORMATION CONTACT:
Eric W. Gregory practices in the area of employee benefits
and is an Associate in Dickinson Wright’s Ann Arbor
office. He can be reached at 734.623.1946 or fgregory@
Cynthia A. Moore practices in the area of employee
benefits and is a member and practice department
manager in Dickinson Wright’s Troy office. She can be
reached at 248.433.7295 or firstname.lastname@example.org.
Deborah L. Grace practices in the area of employee
benefits and is a member in Dickinson Wright’s Troy
office. She can be reached at 248.433.7217 or dgrace@
Jordan Schreier practices in the area of employee
benefits and is a member in Dickinson Wright’s Ann Arbor
office. He can be reached at 734.623.1945 or jschreier@
Roberta P. Granadier practices in the area of employee
benefits and is Of Counsel in Dickinson Wright’s Troy
office. She can be reached at 248.433.7552 or rgranadier@
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