In the vernacular of the season, the IRS finally took the ball that the Supreme Court handed them on June 26, 2013 in their decision in United States v. Windsor [click here to view the case] and ran with it. Very simply, for Federal tax purposes, Revenue Ruling 2013-17 provides that qualified retirement plans and Section 125 pre-tax premiums account plans for healthcare coverage are to treat a same-sex spouse as a spouse as long as the marriage was validly entered into in a domestic or foreign jurisdiction whose laws authorize the marriage, even if the married couple lives in a domestic or foreign jurisdiction that does not recognize the validity of same-sex marriages.
Qualified retirement plans are required to comply with this new ruling prospectively as of September 16, 2013. The IRS has not yet provided guidance on the application of the new rules to periods before September 16. We do expect to see some type of “model” plan amendment language and would expect that plan sponsors will be given a reasonable time in which to adopt such amendment. In the meantime, operational compliance will be the play of the day.
Practical Tips: What to do with HIPAA Privacy Notices and HIPAA Policy and Procedure updates due for all group health plans by September 23, 2013? We suggest adding a proviso in each indicating that for purposes of applying the group health plan’s HIPAA policies, a person will be a “spouse” if the marriage is valid in the jurisdiction in which it was entered, regardless of State of residency of either spouse. This language also needs to carry through to the description of eligible dependent categories in the October 1st “exchange notices” which employers must provide to their employees regarding health coverage for 2014 along with updated SBCs for open enrollment. In addition to modifying their qualified retirement plans, employers will also need to work through each plan’s spousal consent rules, death benefits, QDRO procedures, hardship procedures in 401(k) plans, etc.