PSCA urges Treasury to apply same sex marriage rules prospectively

The Plan Sponsor Council of America (PSCA), along with several other employer and business groups, is urging the Treasury Department to apply retirement plan guidance on same sex marriage on a prospective-only basis.

The PSCA joined several other associations on a letter, dated December 9, 2013, regarding the impact on retirement plans of the Supreme Court’s decision in United States v. Windsor. In that case, the Supreme Court struck down Section 3 of the Defense of Marriage Act of 1993 (DOMA). The IRS issued the first round of guidance in Rev. Rul. 2013-17 and mandated a prospective (as of September 16, 2013) “state of celebration” approach for determining spouse status for federal tax purposes, including qualified retirement plans. In that ruling, the IRS promised further guidance for employee benefit plans, taking into account “the potential consequences of retroactive application to all taxpayers involved, including the plan sponsor, the plan arrangement, employers, affected employees and beneficiaries.”

Retroactive recognition of same sex spouses will result in “severe and complex compliance issues and costs, particularly when benefits have already been paid,” according to the PSCA letter. In addition to distribution issues, problems could arise regarding required minimum distributions, rollovers, hardship distributions, loans, and nondiscrimination testing, the PSCA contends. Accordingly, the letter urges that such guidance be issued on a prospective-only basis.

Source: PSCA news release.

Visit our News Library to read more news stories.