The U.S. Supreme Court earlier this year struck down a key part of the Defense of Marriage Act, or DOMA, which had defined “marriage” as a legal union between members of the opposite sex and “spouse” as an individual of the opposite sex for purposes of all federal laws. On Aug. 29, 2013, the IRS issued its first set of guidance implementing the Supreme Court’s decision. In a set of frequently asked questions released simultaneously with Revenue Ruling 2013-17, the IRS clarified that, effective Sept. 16, 2013, same-sex couples must be recognized as married for federal tax purposes if the marriage was valid in the state in which it was entered into, regardless of where the married couple resides. Accordingly, a qualified retirement plan must treat a same-sex spouse as a spouse for purposes of receiving retirement benefits to maintain its qualified status, even if the same-sex couple resides in a jurisdiction that has not legalized or does not recognize the validity of same-sex marriages.
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The IRS is expected to issue future guidance addressing plan amendment requirements, including the timing of such amendments (e.g., whether the amendment must have a retroactive effect and, if so, to what date), as well as any necessary corrections for plan operations prior to the date such future guidance is issued.
Plan sponsors should consult their SRZ attorney to review their plan documents, policies, procedures and participant communications for potential changes after the Supreme Court’s decision and the IRS’s guidance. For example, many plan documents will require amendments clarifying that same-sex spouses are considered spouses under the terms of the plan, and plan sponsors will need to change certain administrative procedures. Plan sponsors of qualified defined benefit plans must now recognize same-sex spouses as automatic beneficiaries eligible to receive benefits under the plans’ qualified joint and survivor option and pre-retirement survivor annuities, and plan sponsors of qualified defined contribution plans must now require spousal consent from same-sex spouses for hardship distributions and loan requests.