This article originally ran on June 10, 2014.
By Ellie Lowder, TGPC, Consultant
The U.S. Supreme Court issued its Windsor decision — in which it said that retirement plans must treat a same-sex spouse just they would any other spouse for purposes of benefits under the retirement plan — one year ago, on June 26, 2013. That makes this an opportune time to review some of the latest guidance that implements the Court’s ruling and with which you must comply.
IRS Notice 2014-19 and related FAQs provide some clarity on plan amendments and retroactive application of the ruling. The ruling calls for action on the part of plan sponsors, including the following:
- Reviewing plan document language to be sure that any definition of spouse complies with the Windsor decision. We have noted that many plan documents do not define spouse, simply, instead, using the term “spouse.” There would, therefore, be no need to amend plan document language unless, in the unlikely event the plan sponsor intends to apply the rule to a date before the Windsor decision. If a plan amendment is required, it must be done by Dec. 31, 2014 (exception for 403(b) plans which do not yet have a specific deadline, and won’t have such a deadline until the IRS plan document approval program has resulted in IRS approved documents (maybe 2015?).
- Establishment of administrative procedures using a timeline that demonstrates how your plan handled same-sex spouses before and after the Windsor decision. For example, you should alert your employees to check beneficiary designations to be sure they reflect the participant’s wishes, and comply with DOMA-Windsor decision. In addition, your communication to employees should explain that a spouse, whether same- or opposite-sex, is automatically considered to be the rightful beneficiary. If a non-spouse beneficiary is named, the participant will likely need to obtain spousal consent.
Readers are reminded that the Windsor decision applies to same-sex marriages that took place in a lawful jurisdiction (that is, took place in a jurisdiction where same-sex marriage is legal), and, on and after Sept. 16, 2013, federal retirement plans are subject to the new requirements regardless of where the same-sex couple resides.