In United States v. Windsor, the U.S. Supreme Court set aside as unconstitutional the section of the Defense of Marriage Act (DOMA) that defined marriage as between one man and one woman. As a result, same-sex couples who are lawfully married under the laws of one of the 50 states, the District of Columbia, a U.S. territory or a foreign jurisdiction that recognizes their marriages will be treated as married for federal tax purposes. The DOL adopted the same position in Technical Release 2013-04 (Sept. 18, 2013).

The Internal Revenue Service issued a ruling(2013-17), effective September 16, 2013, that guides plan sponsors on how the Supreme Court decision applies to employee benefit programs such as retirement plans. In April 2014, the Internal Revenue Service issued a notice (2014-19) to provide additional guidance on the impact of United States v. Windsor for qualified plans, including addressing whether a plan amendment is required. In general, this guidance avoids imposing substantial burdens on plan sponsors, while leaving open some choices to make. We summarize the guidance below.

For qualified retirement plans, the ruling means that a same-sex spouse:

  • Will be treated as a spouse for the purpose of satisfying federal tax laws related to retirement plans
  • Is considered a spouse for purposes of rollover and hardship withdrawal
  • Will be treated as a spouse for purposes of spousal consent such as when spousal consent is required to waive a certain form of plan payment, to approve a withdrawal request or loan, and spousal consent to name someone other than the spouse as primary beneficiary
  • Has the same rights as a surviving spouse with respect to distributions, such as required minimum distributions

Items to check if you were unaware of this rule:

  • Do you need to solicit new beneficiary designations?
  • Do you need to update any employees’ marital status to “married” in plan records?

This ruling does not extend additional rights to registered domestic partnerships, civil unions or other similar relationships that are not recognized under state law as a marriage.

 

This publication is provided for educational and informational purposes only and does not contain legal or tax advice. Accordingly, you should not act on any information provided without first consulting legal counsel and/or a tax advisor.

 


 

Appendix A. Plan Requirements Potentially Impacted

QJSA/QPSA (Code § 401(a)(11)).

“Profit-Sharing Exception” Plans (Code § 401(a)(11)(B)(iii)).

Required Minimum Distributions (Code § 401(a)(9)) and Rollover Rules (Code § 402(c)).

QDROs (Code § 401(a)(13)(B

Controlled Groups (Code § 414(b)).

Top-Heavy Provisions (Code § 416).

ESOPs (Code § 409(n), (p)).

Plan Amendments

The plan document may need to be amended to reflect the holding in Windsor, depending on the

existing plan language. Specifically, if a plan’s terms (1) define “spouse” as limited to a person of the

opposite sex), (2) are otherwise inconsistent with the outcome of Windsor, Revenue Ruling 2013-17 or

Notice 2014-19, then a plan amendment is required. Otherwise, a plan amendment is not required. For

example, if the term “spouse,” “legally married spouse” or “spouse under Federal law” are used in the

plan without any distinction between a same sex spouse and an opposite-sex spouse, no amendment is

needed.

This publication is provided for educational and informational purposes only and does not contain legal or tax advice. Accordingly, you should

not act on any information provided without first consulting legal counsel and/or a Tax advisor.

Appendix B. Application of the Windsor Decision and Rev. Rul. 2013-17 to

Qualified Retirement Plans

Notice 2014-19

I. PURPOSE

The purpose of this notice is to provide guidance on the application (including the

retroactive application) of the decision in United States v. Windsor, 570 U.S. ___, 133 S.

Ct. 2675 (2013), and the holdings of Rev. Rul. 2013-17, 2013-38 I.R.B. 201 (Sept. 16,

2013), to retirement plans qualified under section 401(a) of the Internal Revenue Code

(Code).

II. BACKGROUND

01. Qualified Retirement Plan Rules Relating to Married Participants

Several Code sections provide special rules with respect to married participants in

qualified retirement plans, including, but not limited to, the following:

• Under section 401(a)(11), certain qualified retirement plans must provide a

qualified joint and survivor annuity (QJSA) upon retirement to married

participants (and generally must provide a qualified preretirement survivor

annuity (QPSA) to the surviving spouse of a married participant who dies before

retirement). If a plan is subject to these rules, the QJSA (or QPSA) may be

waived by a married participant only with spousal consent pursuant to

section 417. If such a plan permits loans to participants, then section 417(a)(4)

requires a plan to obtain the consent of the spouse of a married participant

before making a loan to the participant.

• Under section 401(a)(11)(B)(iii), certain qualified defined contribution retirement

plans are exempt from the QJSA and QPSA requirements provided that a

married participant’s benefit is payable in full, on the death of the participant, to

the participant’s surviving spouse, unless the surviving spouse consents to the

designation of a different beneficiary.

• Under the required minimum distribution rules of section 401(a)(9) and the

rollover rules of section 402(c), additional alternatives are provided for surviving

spouses that are not available to non-spousal beneficiaries.

This publication is provided for educational and informational purposes only and does not contain legal or tax advice. Accordingly, you should

not act on any information provided without first consulting legal counsel and/or a Tax advisor.

• Under section 1563(e)(5), generally a spouse is treated as owning shares owned

by the other spouse for purposes of determining whether corporations are

members of a controlled group under section 414(b).

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• Under section 318(a)(1), generally a spouse is treated as owning shares owned

by the other spouse for purposes of determining whether an employee is a key

employee under section 416(i)(1), including whether an employee is considered

a 5% owner.

• Under section 409(n), an employee stock ownership plan (ESOP) that acquires

certain employer securities generally must prohibit the allocation or accrual of

those securities for the benefit of certain individuals, including the spouse of the

seller and the spouse of any individual who owns 25% or more of the securities.

• Under section 409(p), no portion of the assets of an ESOP attributable to

employer securities consisting of S corporation stock may accrue during a

nonallocation year for the benefit of any disqualified person or certain family

members of the disqualified person (including the spouse) in certain

circumstances.

• Under section 401(a)(13)(B), the anti-alienation rules do not apply to the creation,

assignment, or recognition of an alternate payee’s right to receive all or a portion

of the benefits payable to a participant under a plan pursuant to a qualified

domestic relations order (QDRO) described in section 414(p), and, under section

402(e)(1), an alternate payee who is a spouse or former spouse of the participant

is treated as the distributee of a distribution under a QDRO.

02. Defense of Marriage Act

Until the decision of the Supreme Court in Windsor found it unconstitutional, section 3 of

the Defense of Marriage Act (DOMA) prohibited the recognition of same-sex spouses

for purposes of Federal tax law. Specifically, section 3 of DOMA provided that:

In determining the meaning of any Act of Congress, or of any ruling, regulation,

or interpretation of the various administrative bureaus and agencies of the United

This publication is provided for educational and informational purposes only and does not contain legal or tax advice. Accordingly, you should

not act on any information provided without first consulting legal counsel and/or a Tax advisor.

States, the word ‘marriage’ means only a legal union between one man and one

woman as husband and wife, and the word ‘spouse’ refers only to a person of the

opposite sex who is a husband or a wife.

1 U.S.C. § 7. As a result, same-sex spouses were not recognized for purposes of the

Code with respect to qualified retirement plans.

03. Effect of the Windsor Decision and Rev. Rul. 2013-17

In the Windsor decision, the Supreme Court held on June 26, 2013 that section 3 of

DOMA is unconstitutional because it violates Fifth Amendment principles. Subsequent

to the Windsor decision, Rev. Rul. 2013-17 held the following:

(1) For Federal tax purposes, the terms “spouse,” “husband and wife,” “husband,”

and “wife” include an individual married to a person of the same sex if the individuals

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are lawfully married under state law, and the term “marriage” includes such a marriage

between individuals of the same sex.

(2) For Federal tax purposes, the Internal Revenue Service (Service) adopts a

general rule recognizing a marriage of same-sex individuals that was validly entered

into in a state whose laws authorize the marriage of two individuals of the same sex

even if the married couple is domiciled in a state that does not recognize the validity of

same-sex marriages.

(3) For Federal tax purposes, the terms “spouse,” “husband and wife,” “husband,”

and “wife” do not include individuals (whether of the opposite sex or the same sex) who

have entered into a registered domestic partnership, civil union, or other similar formal

relationship recognized under state law that is not denominated as a marriage under the

laws of that state, and the term “marriage” does not include such formal relationships.

The holdings of Rev. Rul. 2013-17 apply for all Federal tax purposes, including for

purposes of the Federal tax rules that apply to qualified retirement plans under

section 401(a). The ruling provides that the holdings will be applied prospectively as of

September 16, 2013. The ruling also provides that taxpayers may rely on the holdings

retroactively with respect to any employee benefit plan or arrangement (or any benefit

provided thereunder) for limited purposes with respect to certain employer-provided

health coverage and fringe benefits that are specified in the ruling. The ruling further

This publication is provided for educational and informational purposes only and does not contain legal or tax advice. Accordingly, you should

not act on any information provided without first consulting legal counsel and/or a Tax advisor.

states that:

The Service intends to issue further guidance on the retroactive application of the

Supreme Court’s opinion in Windsor to other employee benefits and employee

benefit plans and arrangements. Such guidance will take into account the

potential consequences of retroactive application to all taxpayers involved,

including the plan sponsor, the plan or arrangement, employers, affected

employees and beneficiaries. The Service anticipates that the future guidance

will provide sufficient time for plan amendments and any necessary corrections

so that the plan and benefits will retain favorable tax treatment for which they

otherwise qualify.

04. Authority under Section 7805(b)(8)

Under section 7805(b)(8), the Commissioner is authorized to prescribe the extent, if

any, to which any judicial decision, or any administrative determination other than by

regulation, relating to the internal revenue laws is to be applied without retroactive

effect.

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05. Remedial Amendment Period under Section 401(b)

Section 401(b) provides a period during which a plan may be amended retroactively to

comply with the Code’s qualification requirements. The deadline for amending a plan is

generally the time prescribed by law for filing the return of the employer for its taxable

year in which the amendment was adopted or such later time as the Secretary may

designate.

Rev. Proc. 2007-44, 2007-28 I.R.B. 54, provides rules regarding the timing of

amendments made to qualified retirement plans. Section 5.05 of Rev. Proc. 2007-44

provides that when there are changes to the plan qualification requirements that affect

provisions of the written plan document, the adoption of an interim amendment

generally is required by the later of the end of the plan year in which the change is first

effective or the due date of the employer’s tax return for the tax year that includes the

date the change is first effective.

III. QUESTIONS AND ANSWERS

This publication is provided for educational and informational purposes only and does not contain legal or tax advice. Accordingly, you should

not act on any information provided without first consulting legal counsel and/or a Tax advisor.

GENERAL RULES

Q-1. How does the Windsor decision affect the application of the Federal tax rules to

qualified retirement plans?

A-1. In the Windsor decision, the Supreme Court held that section 3 of DOMA (which

applied for purposes of determining an individual’s marital status under Federal law) is

unconstitutional. In the absence of section 3 of DOMA, any retirement plan qualification

rule that applies because a participant is married must be applied with respect to a

participant who is married to an individual of the same sex. For example, a participant

in a plan subject to the rules of section 401(a)(11) who is married to a same-sex spouse

cannot waive a QJSA without obtaining spousal consent pursuant to section 417.

Q-2. As of what date are qualified retirement plans required to be operated in a manner

that reflects the outcome of Windsor and the guidance in Rev. Rul. 2013-17?

A-2. Qualified retirement plan operations must reflect the outcome of Windsor as of

June 26, 2013. A retirement plan will not be treated as failing to meet the requirements

of section 401(a) merely because it did not recognize the same-sex spouse of a

participant as a spouse before June 26, 2013. For Federal tax purposes, effective as of

September 16, 2013, Rev. Rul. 2013-17 (i) adopts a general rule recognizing a marriage

of same-sex individuals that is validly entered into in a state whose laws authorize the

marriage of two individuals of the same sex, even if the individuals are domiciled in a

state that does not recognize the validity of same-sex marriages, and (ii) provides that

individuals (whether part of an opposite-sex or same-sex couple) who have entered into

a registered domestic partnership, civil union, or other similar formal relationship

recognized under state law that is not denominated as a marriage under the laws of that

state are not treated as married. Accordingly, a retirement plan will not be treated as

failing to meet the requirements of section 401(a) merely because the plan, prior to

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September 16, 2013, recognized the same-sex spouse of a participant only if the

participant was domiciled in a state that recognized same-sex marriages. See Q&A-8

for the deadline to adopt plan amendments pursuant to this notice.

Q-3. May a qualified retirement plan be amended to reflect the outcome of Windsor as

of a date earlier than June 26, 2013, and, if so, may the amendment reflect the outcome

This publication is provided for educational and informational purposes only and does not contain legal or tax advice. Accordingly, you should

not act on any information provided without first consulting legal counsel and/or a Tax advisor.

of Windsor for only certain purposes?

A-3. A qualified retirement plan will not lose its qualified status due to an amendment to

reflect the outcome of Windsor for some or all purposes as of a date prior to June 26,

2013, if the amendment complies with applicable qualification requirements (such as

section 401(a)(4)). Recognizing same-sex spouses for all purposes under a plan prior

to June 26, 2013, however, may trigger requirements that are difficult to implement

retroactively (such as the ownership attribution rules) and may create unintended

consequences. Provided that applicable qualification requirements are otherwise

satisfied, a plan sponsor’s choice of a date before June 26, 2013, and the purposes for

which the plan amendments recognize same-sex spouses before June 26, 2013, do not

affect the qualified status of the plan. For example, for the period before June 26, 2013,

a plan sponsor may choose to amend its plan to reflect the outcome of Windsor solely

with respect to the QJSA and QPSA requirements of section 401(a)(11) and, for those

purposes, solely with respect to participants with annuity starting dates or dates of death

on or after a specified date.

PLAN AMENDMENTS

Q-4. For purposes of satisfying the Federal tax rules relating to qualified retirement

plans, must a qualified retirement plan be amended to reflect the outcome of Windsor

and the guidance in Rev. Rul. 2013-17 and this notice?

A-4. Whether a plan must be amended to reflect the outcome of Windsor and the

guidance in Rev. Rul. 2013-17 and this notice depends on the terms of the specific plan,

as described in Q&A-5 through Q&A-7 of this notice.

Q-5. Must a plan sponsor amend a qualified retirement plan if its terms with respect to

the requirements of section 401(a) define a marital relationship by reference to section 3

of DOMA or if the plan’s terms are otherwise inconsistent with the outcome of Windsor

or the guidance in Rev. Rul. 2013-17 or this notice?

A-5. If a plan’s terms with respect to the requirements of section 401(a) define a marital

relationship by reference to section 3 of DOMA or are otherwise inconsistent with the

outcome of Windsor or the guidance in Rev. Rul. 2013-17 or this notice, then an

amendment to the plan that reflects the outcome of Windsor and the guidance in Rev.

Rul. 2013-17 and this notice is required by the date specified in Q&A-8 of this notice.

This publication is provided for educational and informational purposes only and does not contain legal or tax advice. Accordingly, you should

not act on any information provided without first consulting legal counsel and/or a Tax advisor.

Q-6. If a qualified retirement plan’s terms are not inconsistent with the outcome of

Windsor and the guidance in Rev. Rul. 2013-17 and this notice (for example, the term

6

“spouse,” “legally married spouse” or “spouse under Federal law” is used in the plan

without any distinction between a same-sex spouse and an opposite-sex spouse), must

the plan be amended to reflect the change in meaning or interpretation of those terms to

include same-sex spouses?

A-6. If a plan’s terms are not inconsistent with the outcome of Windsor and the

guidance in Rev. Rul. 2013-17 and this notice, an amendment generally would not be

required. If no amendment to such a plan is made, the plan nonetheless must be

operated in accordance with the provisions of Q&A-2 of this notice. (Though not

required, a clarifying amendment may be useful for purposes of plan administration.)

Q-7. If a plan sponsor chooses to apply the rules with respect to married participants in

qualified retirement plans in a manner that reflects the outcome of Windsor for a period

before June 26, 2013, is an amendment to the plan required?

A-7. Yes, if a plan sponsor chooses to apply the rules in a manner that reflects the

outcome of Windsor for a period before June 26, 2013, an amendment to the plan that

specifies the date as of which, and the purposes for which, the rules are applied in this

manner is required. The deadline for this amendment is the date specified in Q&A-8 of

this notice.

Q-8. What is the deadline to adopt a plan amendment pursuant to this notice?

A-8. The deadline to adopt a plan amendment pursuant to this notice is the later of (i)

the otherwise applicable deadline under section 5.05 of Rev. Proc. 2007-44, or its

successor, or (ii) December 31, 2014. Moreover, in the case of a governmental plan,

any amendment made pursuant to this notice need not be adopted before the close of

the first regular legislative session of the legislative body with the authority to amend the

plan that ends after December 31, 2014.

Q-9. Is an amendment to a single-employer defined benefit plan that implements the

outcome of Windsor and the guidance in Rev. Rul. 2013-17 and this notice subject to

This publication is provided for educational and informational purposes only and does not contain legal or tax advice. Accordingly, you should

not act on any information provided without first consulting legal counsel and/or a Tax advisor.

the requirements of section 436(c)?

A-9. In general, under section 436(c), an amendment to a single-employer defined

benefit plan that increases the liabilities of the plan cannot take effect unless the plan’s

adjusted funding target attainment percentage is sufficient or the employer makes the

additional contribution specified under section 436(c)(2). However, this notice provides

a special rule pursuant to § 1.436-1(c)(4)(iii). Under this special rule, a plan amendment

that is described in Q&A-5 of this notice and that takes effect on June 26, 2013, is not

treated as an amendment to which section 436(c) applies. In contrast, a plan

amendment that is described in Q&A-7 of this notice is an amendment to which section

436(c) applies.

IV. EFFECT ON OTHER DOCUMENTS

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Rev. Rul. 2013-17 is amplified by providing further guidance on the effect of the

Windsor decision with respect to qualified retirement plans under section 401(a).

V. DRAFTING INFORMATION

The principal authors of this notice are Angelique Carrington of the Employee Plans,

Tax Exempt and Government Entities Division, and Jeremy Lamb of the Office of

Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities). For

further information regarding this notice, contact Ms. Carrington at

RetirementPlanQuestions@irs.gov or Mr. Lamb at (202) 317-6700 (not a toll-free call).