IRS Employee Plans Division (EP) Rulings & Agreements Director Karen Truss on March 1 issued a memo to EP determinations employees that sets forth interim guidelines they are to use in processing 403(b) pre-approved plan applications for opinion and advisory letters regarding spousal benefit provisions.
If the definition of spouse in the 403(b) plan document specifically excludes a same-sex spouse, EP determinations agents and specialists should verify whether that definition is controlling regarding plan provisions describing spousal rollover rights under Internal Revenue Code Section 402(c)(9) and required minimum distributions RMDs) under Section 401(a)(9).
If it is in conformity with standard practice, EP determinations employees should request necessary changes to the plan document. If the taxpayer declines the requested changes, EP determinations employees are not to issue an opinion or advisory letter.
If that exclusive definition does not control those relevant provisions, or if the plan sponsor amends the definition of spouse with regarding Sections 402(c)(9) and 401(a)(9) to comply with Revenue Ruling (Rev. Rul.) 2013-17, then EP determinations employees are to issue an opinion or advisory letter, assuming satisfaction of all other applicable requirements.
The memo provides two examples:
Example 1. If the plan’s definition of spouse excludes a same-sex spouse and applies to all provisions in the plan including spousal rollover rights under Section 402(c)(9) and RMDs under Section 401(a)(9), the provision violates Rev. Rul. 2013-17.
Example 2. If the plan definition excludes a same-sex spouse but does not apply to spousal rollover rights under Section 402(c)(9) and required minimum distributions under RMDs under Section 401(a)(9), (or the provisions regarding RMDs are incorporated by reference), the provisions required under federal tax law do not violate Rev. Rul. 2013-17. If the 403(b) plan document provides for a joint and survivor annuity for a surviving spouse pursuant to Title I of ERISA, EP determinations employees are not responsible for determining whether the plan complies with ERISA since the tax provisions of Title II of ERISA do not apply to a 403(b) plan.
The memo is effective through Feb. 28, 2018.
If the definition of spouse in the 403(b) plan document specifically excludes a same-sex spouse, EP determinations agents and specialists should verify whether that definition is controlling regarding plan provisions describing spousal rollover rights under Internal Revenue Code Section 402(c)(9) and required minimum distributions RMDs) under Section 401(a)(9).
If it is in conformity with standard practice, EP determinations employees should request necessary changes to the plan document. If the taxpayer declines the requested changes, EP determinations employees are not to issue an opinion or advisory letter.
If that exclusive definition does not control those relevant provisions, or if the plan sponsor amends the definition of spouse with regarding Sections 402(c)(9) and 401(a)(9) to comply with Revenue Ruling (Rev. Rul.) 2013-17, then EP determinations employees are to issue an opinion or advisory letter, assuming satisfaction of all other applicable requirements.
The memo provides two examples:
Example 1. If the plan’s definition of spouse excludes a same-sex spouse and applies to all provisions in the plan including spousal rollover rights under Section 402(c)(9) and RMDs under Section 401(a)(9), the provision violates Rev. Rul. 2013-17.
Example 2. If the plan definition excludes a same-sex spouse but does not apply to spousal rollover rights under Section 402(c)(9) and required minimum distributions under RMDs under Section 401(a)(9), (or the provisions regarding RMDs are incorporated by reference), the provisions required under federal tax law do not violate Rev. Rul. 2013-17. If the 403(b) plan document provides for a joint and survivor annuity for a surviving spouse pursuant to Title I of ERISA, EP determinations employees are not responsible for determining whether the plan complies with ERISA since the tax provisions of Title II of ERISA do not apply to a 403(b) plan.
The memo is effective through Feb. 28, 2018.
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