How are same-sex marriages treated for retirement plan purposes?

The IRS has issued Notice 2014-19 to provide guidance on how qualified retirement plans should treat the marriages of same-sex couples following the Supreme Court’s decision in United States v. Windsor. The Windsor decision invalidated Section 3 of the 1996 Defense of Marriage Act (DOMA) that barred married same-sex couples from being treated as married under federal law.

The notice now provides the following:

  • examples of Code requirements under which the marital status of the participants is relevant to the payment of benefits,
  • guidance on how to satisfy those requirements in light of Windsor and Revenue Ruling 2013-17, and
  • description of when retirement plans must be amended to comply with Windsor, Revenue Ruling 2013-17, and Notice 2014-19

Recognition of marriages of same-sex couples for tax purposes

Following the Windsor decision, the IRS issued Revenue Ruling 2013-17, which holds that married same-sex couples are now treated as married for all federal tax purposes where marriage is a factor, if the couple is lawfully married under the laws of one of the 50 states, the District of Columbia, a U.S. territory or a foreign jurisdiction. Notice 2014-19 gives additional guidance on how qualified retirement plans should treat the marriages of same-sex couples.

Plan amendments required with respect to plan provisions inconsistent with Windsor

  • If its terms are inconsistent with Windsor or Revenue Ruling 2013-17, a retirement plan must be amended to comply with Windsor and Revenue Ruling 2013-17. For example, a plan must be amended if it defines “spouse” by reference to section 3 of DOMA, or only as a person of the opposite sex.
  • Not all plans need to be amended in order to be in compliance. An amendment generally is not required if a plan’s terms are not inconsistent with Windsor or with Revenue Ruling 2013-17.
  • Required amendments must be adopted by the later of December 31, 2014, or the applicable date under the IRS’ general amendment guidance for qualified retirement plans, Revenue Procedure 2007-44.

Optional amendments

  • Plan sponsors may also, but are not required to, reflect the outcome of Windsor for periods prior to the date Windsor was decided.
  • In such a case, a plan amendment is required.
  • Such optional amendment must be adopted by the later of December 31, 2014, or the applicable date under Revenue Procedure 2007-44.

FAQs for more information

See the FAQs provided by the IRS on the treatment of same-sex marriages for additional guidance, including:

  • beneficiary designations in profit-sharing plans after Windsor,
  • amendments that reflect the outcome of Windsor for periods before the decision was issued, and
  • application of the outcome of Windsor to 403(b) plans.

Additional resources from the IRS on treatment of same-sex couples for federal tax purposes:

DISCLAIMER: This information is extracted with permission from IRS releases.  We are not responsible for the application of this general information to the specific circumstances of a reader unless we have been engaged as the reader’s accounting firm.

WEBSITE             BLOG            RESOURCES            CONTACTS

Roy & Associates, PC serves clients in western Pennsylvania located predominantly in Westmoreland County, Allegheny County, and Fayette County.

Advertisements