Post-Windsor guidance for qualified retirement plans in pipeline, Treasury official predicts

More guidance for qualified plans on same-sex marriage post-Windsor, is in the pipeline, a senior Treasury official told tax professionals at the 38th Annual Tax Law Conference of the Federal Bar Association in Washington, D.C., on February 28, 2014. Robert Neis, deputy benefits counsel, Office of Benefits Tax Counsel, Treasury Department, indicated that this guidance is expected to be issued shortly.

IRS guidance

Section 3 of the Defense of Marriage Act (DOMA) defined “marriage” as only a legal union between one man and one woman as husband and wife and defined “spouse” as referring only to a person of the opposite sex who is a husband or a wife. Because of Section 3, the IRS did not recognize same-sex marriage for federal tax purposes. The U.S. Supreme Court struck down Section 3 of DOMA in June 2013.

Immediately after the Supreme Court struck down Section 3, Neis explained that President Obama instructed all federal agencies, including the IRS, to review their rules and regulations and revise them to reflect the Windsor decision. The IRS issued the first guidance, Rev. Rul. 2013-17, in August 2013. In Rev. Rul. 2013-17, the IRS announced that it would take a place-of-celebration approach, rather than a place-of-residence approach, to recognition of same-sex marriage. “Adoption of a state-of-celebration approach was an important choice,” Neis said. It would have been very difficult to administer a rule that looked just at place of residence, he noted. The IRS took the same place-of-celebration approach to common-law marriage (Rev. Rul. 58-66, 1958-1 CB 60), he added. The IRS followed up with Notice 2013-61, I.R.B. 2013-44, 432, and Notice 2014-1, I.R.B. 2014-2, 270.

Qualified retirement plans

Beneficiaries under qualified retirement plans, including spouses, are covered by many rules, some administered by the IRS and others by the Department of Labor. Before Windsor, same-sex spouses were not treated the same as opposite-sex spouses for purposes of the qualified plan spousal rules. In Rev. Rul. 2013-17, the IRS instructed qualified retirement plans to comply with Windsor and its place-of-celebration approach to same-sex marriage as of September 16, 2013. In December 2013, the IRS indicated on its website that it intended to issue guidance on how qualified retirement plans and other tax-favored retirement arrangements must comply with Windsor.

Future guidance, the IRS reported, is expected to address plan amendment requirements, including the timing of plan amendments. This guidance is expected “very soon,” Neis noted.

State laws

Since the Windsor decision, a number of state laws similar to DOMA have been struck down by federal courts, a practitioner noted at the conference. The law on same-sex marriage continues to evolve and the practitioner predicted that more questions will be raised. In Windsor, the Supreme Court only addressed Section 3 of DOMA. The Supreme Court did not rule on Section 2, which provides that no state is required to recognize a same-sex marriage valid under the laws of another state.

Source: the 38th Annual Tax Law Conference of the Federal Bar Association in Washington, D.C., on February 28, 2014.

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