Last summer, the Supreme Court determined that the Defense of Marriage Act (“DOMA”) was unconstitutional. The Supreme Court’s ruling in United States v. Windsor had the effect of extending many employee benefits to same-sex spouses. Employee benefit plans were significantly impacted by the ruling, and, as a result, the IRS and the Department of Labor released guidance explaining the treatment of same-sex spouses for federal tax purposes after Windsor, including the impact on employee benefit plans. Importantly, the guidance provides that the term “marriage” includes a marriage between individuals of the same sex if that marriage was validly performed in a jurisdiction that allows same-sex marriage. This is known as the “state of celebration” standard.
The guidance published by the federal agencies was effective September 16, 2013 on a prospective basis, but it does not address questions that the Windsor decision raises if the opinion has retroactive effect. For example, are previously denied qualified domestic relations orders (“QDROs”) now valid or should employees with a same-sex spouse who were not offered a qualified joint and survivor annuity (“QJSA”) be offered another opportunity to make such election. The agencies have indicated that they intend to issue further guidance on qualified plans in the very near future. We are keeping an eye out for this guidance and plan to report on it as soon as it is released.
For more information on the application of the Windsor decision, please see the following links:
- IRS Revenue Ruling 2013-17, DOL Technical Release 2013-04, our September 9, 2013 Legal Alert, Agencies Issue Guidance on Same-Sex Marriage Impacting Employee Benefits for more information on the “state of celebration” standard.
- IRS Notice 2013-61 for information on payroll taxes and procedures for employers to make adjustments or claims for refund or credit.
- IRS Notice 2014-1 for information on cafeteria plans, flexible spending arrangements and health savings accounts.
- DOL Fact Sheet #28F was updated to include same-sex spouse in the definition of spouse for purposes of the Family & Medical Leave Act, but note that the current FMLA guidance uses a “state of residence” standard. The DOL has informally indicated that it will be revising regulations to use a “state of celebration” standard.