Retirement Plans May Need to be Amended to Comply With 2013 Supreme Court Ruling Regarding Same-Sex Marriages

April 10, 2014

Prior to the U.S. Supreme Court’s 2013 ruling in United States v. Windsor, the Defense of Marriage Act (“DOMA”) limited the definition of “marriage” (as well as the definition of “spouse”) to opposite-sex couples for federal purposes, including §401(a) retirement plan qualification rules. In United States v. Windsor, the U.S. Supreme Court ruled that DOMA violated the U.S. Constitution and same-sex marriages legally entered into in any state that recognizes same-sex marriages must be recognized as legal marriages for federal tax purposes.

On April 4, 2014, the IRS released Notice 2014-19, which provides guidance on amending qualified retirement plans to address the inclusion of same-sex marriages in the definition of “marriage” for federal tax purposes, including §401(a) retirement plan qualification rules. Notice 2014-19, as well as the Q&As published on the IRS’s website, states qualified retirement plans are required to be amended retroactively to June 26, 2013, if the plans’ terms are inconsistent with the Windsor decision. The terms “marriage” or “spouse” are inconsistent with the Windsor decision if the definitions of the terms reference DOMA, reference a state definition of marriage that limits marriages to opposite-sex marriages, or if the definitions expressly define marriage as between one woman and one man. Retroactive amendments to correct the inconsistencies must be adopted by December 31, 2014. Examples of plan provisions that may be impacted by the Windsor decision include:

  • Qualified Joint and Survivor Annuities (“QJSAs”);
  • Qualified Pre-Retirement Survivor Annuities (“QPSAs”);
  • Spousal consent rights;
  • Plan loans;
  • Default beneficiary designations;
  • Minimum required distributions;
  • Hardship distributions; and
  • Qualified Domestic Relations Orders (“QDROs”).

If you have any questions about the impact of the Windsor decision or Notice 2014-19 on your company’s qualified retirement plan(s), or would like assistance amending your company’s qualified retirement plan(s), please call Andrew T. Frost at (414) 270-2522 or any of the other attorneys on Weiss  Berzowski Brady LLP’s labor and employment team. Weiss Berzowski Brady LLP’s labor and employment team provides the experienced, creative and cost-effective legal support employers need to meet their operational, legal compliance and litigation needs, including but not limited to: employment litigation, wage and hour issues, disability and leave issues, labor union management, employee benefits, non-competes, confidentiality agreements and protection against unfair competition. Please call any of the below attorneys to learn more about how Weiss Berzowski Brady LLP’s labor and employment team can assist your business.

 

Michael M. Berzowski             (414) 270-2502

Andrew T. Frost                      (414) 270-2522

Neal S. Krokosky                    (414) 270-2530

Anna M. Pepelnjak                  (414) 270-2518