The employee benefits community continues to wait with baited breath on IRS guidance regarding the amendments necessary to qualified retirement plans in the wake of last Summer’s Windsor decision determining that Section 3 of the Defense of Marriage Act is unconstitutional. (Recall that Section 3 of DOMA defines “spouse” and “marriage” to exclude same sex spouses and marriages.) The IRS 2013-2014 Priority Guidance Plan for the period running through June 2014 includes issuance of this guidance as a top priority. In December 2013, a Treasury Department official said that guidance was expected “fairly imminently.” In February, such guidance seemed very imminent. Yet, here we sit in the second quarter of 2014 with no guidance yet issued….
Notwithstanding the absence of guidance, to administer retirement plans in operational compliance with the Windsor decision, employers must currently treat same sex spouses as spouses for purpose of determining rights and benefits thereunder. Such operational compliance is necessary to avoid exposure both under the Internal Revenue Code and in the courts. Courts have been acknowledging the decision in Windsor and awarding same sex spouses “surviving spouse” status under qualified plans since last summer. See, e.g., Cozen O’Connor, P.C. v. Tobits, CIV.A. 11-0045, 2013 WL 3878688 (E.D. Pa. July 29, 2013).
Although employers must operate retirement plans in compliance with Windsor at this time, we generally recommend that they postpone amendment of any qualified plan pending issuance of additional guidance from the Service regarding amendment timing, any necessary corrections relating to plan operations for periods before future guidance is issued and the retroactive effect of Windsor for federal tax purposes.
In the meantime, employers should gather the information necessary to bring the plan into compliance upon issuance of the guidance. Specifically, employers should determine who is married and to whom, update and review beneficiary designations forms, and review plan administration documents and processes to ensure compliance with these new rules. Documents such as HR manuals, policies, procedures, and payroll systems should also be earmarked where a change to reflect similar treatment of both opposite-sex and same-sex married couples may be necessary.