In April, 2014, the Internal Revenue Service (“IRS”) issued Notice 2014-19, which provided additional guidance addressing the impact on tax-qualified retirement plans of the Supreme Court’s decision in United States v. Windsor, 133 S. Ct. 2675 (2013). In the Windsor decision, the Supreme Court struck down as unconstitutional Section 3 of the Defense of Marriage Act (“DOMA”), which had defined marriage for federal law purposes as a legal union between one man and one woman. Before the Windsor decision, the term “spouse” did not include a same-sex spouse under federal employee benefit laws. After Windsor, same-sex marriages that are recognized under state or foreign law generally must be recognized for federal law purposes.
In Revenue Ruling 2013-17, the IRS ruled that the determination of who is a spouse would be determined by whether the marriage was valid in the state or foreign jurisdiction where that marriage was celebrated without regard to where the individual was domiciled (this standard often is referred to as the place of celebration rule). The Department of Labor also issued guidance adopting this place of celebration rule for ERISA purposes.
Among other things, Notice 2014-19 dealt with the need for tax-qualified retirement plans to adopt plan amendments to conform to the new Windsor standard (the Notice also covered various operational issues that are beyond the scope of this article). Whether or not a tax-qualified retirement plan needs to be amended to conform to Windsor depends on plan design. Any plans that have provisions that are inconsistent with Windsor (e.g., if the term “spouse” is defined under a retirement plan by citing to the old DOMA standard or by referring to the laws of the state of domicile) will have to be amended. On the other hand, plans that currently have provisions that are consistent with the new Windsor standards (e.g., the term “spouse” means the legal spouse of the participant and the plan refers to federal law as the guiding law in that context) do not need to be amended. It seems likely that some plan sponsors will opt to make conforming amendments if there is any uncertainty (e.g., if a “spouse” is defined by reference to a marriage under state law but the plan has in the past been interpreted to follow DOMA). Of course, a retirement plan may refer to a spouse but not specifically define the term. In that case, a plan amendment might not be necessary.
Under the Notice, an amendment to conform a tax-qualified retirement plan to Windsor must be adopted by the latest of (i) the last day of the plan year in which the amendment is first effective; (ii) the due date of the employer’s tax return for the tax year that includes the date that the amendment is first effective; or (iii) December 31, 2014. For calendar year plans, the deadline will be December 31, 2014—not too far down the road. Please note that for 403(b) plans, amendments must be adopted not later than the general amendment deadline specified in IRS Revenue Procedure 2013-22, which has not yet been announced.