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Posted by Diane Caron on Mon, Jun 16, 2014 @ 04:53 PM

RulingThe Internal Revenue Service (IRS) recently issued additional guidance regarding the impact of the Windsor decision on qualified retirement plans. On June 26, 2013, the United States Supreme Court, in United States v. Windsor, ruled that Section 3 of the 1996 Defense of Marriage Act (DOMA) is unconstitutional. Section 3 of DOMA defines marriage as the “legal union of one man and one woman.

As stated in previous alerts, plans must now treat same-sex spouses as spouses for all plan purposes such as:

  • Beneficiary designations
  • Benefits
  • Rollover rights
  • Hardship rules
  • Required minimum distribution calculations
  • Stock attribution (applies to for-profit entities when determining highly compensated employees, key employees, and controlled groups)

What’s New?

The additional guidance provides that plan sponsors may elect to recognize same-sex marriages as of June 26, 2013 for only those participants with a same-sex spouse that reside in a jurisdiction (state, District of Columbia, U.S. territory, or foreign country) that recognizes same-sex marriage. All plans must recognize legal same-sex marriages effective September 16, 2013 regardless of a participant’s state of residence.

A plan amendment is not required due to the Windsor decision unless the plan’s terms conflict with the law. For instance, if the plan defines the term “spouse” by reference to DOMA, the plan would need to be amended. If the plan does not distinguish between same-sex spouse and opposite-sex spouse and the plan contains no other language in conflict with the decision, no amendment is necessary.

If an amendment is necessary or the plan sponsor chooses to amend the plan to clarify the change in operation, the amendment must be adopted by the latest of:

  • December 31, 2014;
  • The last day of the plan year in which the amendment is effective; or
  • The due date of the sponsor’s tax return for the year in which the amendment is effective.

The plan may choose to recognize same-sex spouses as of a date prior to July 26, 2013, however caution should be exercised when making such a decision as there may be unintended consequences.

CBIZ Tofias will keep you informed of further developments in this area. For assistance or questions related to DOMA and the effect it may have on your company’s retirement plan, contact us here.

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CaronDiane Caron is a Director in the Retirement Plan Services Group at CBIZ Tofias. She can be reached at 617.761.0539 or DCaron@cbiztofias.com.  

 

 

 

 

 

Tags: Diane Caron, DOMA, Qualified Retirement Plans

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