Windsor Decision & Rev. Ruling 2013-17

[Belgarath]

The following excerpt from the RR indicates further guidance will be forthcoming. As far as I know, there hasn't been additional official guidance, and I just wondered if I had missed anything? Although I find it almost inconceivable that the IRS would require retroactive effect for things like contributions, benefits, nondicrimination testing, controlled group attribution, Key/HC employee status, etc., etc., I'd feel a lot better if I saw it in writing...

The Service intends to issue further guidance on the retroactive application of the Supreme Court’s opinion in Windsor to other employee benefits and employee benefit plans and arrangements. Such guidance will take into account the potential consequences of retroactive application to all taxpayers involved, including the plan sponsor, the plan or arrangement, employers, affected employees and beneficiaries. The Service anticipates that the future guidance will provide sufficient time for plan amendments and any necessary corrections so that the plan and benefits will retain favorable tax treatment for which they otherwise qualify.

[masteff]

http://www.irs.gov/uac/Answers-to-Frequently-Asked-Questions-for-Same-Sex-Married-Couples

Q 18 &19 here say basically the same

[My 2 cents]

There is a session concerning DOMA/Windsor scheduled for this year's Enrolled Actuaries Meeting at the end of March. Perhaps the IRS will be striving to get something out by then. Certainly, to the extent that any retroactive actions will be required (there will probably be some), the sooner the better.

It seems unlikely that plans' qualification statuses will be jeopardized, especially considering the fact that until a half year ago, most of the actions that will now be mandatory were explicitly proscribed.

Short answer - you do not appear to have missed anything. Structuring appropriate corrective action is not that straightforward.

[jpod]

My Two Cents: Wondering if I am missing something. What was explicitly procscribed that is now required?

[masteff]

My Two Cents: Wondering if I am missing something. What was explicitly procscribed that is now required?

Off the cuff: recognition as a surviving spouse, such as for a preretirement survivors benefit.

[jpod]

Prior to Windsor, a plan could treat the same-sex spouse as a spouse (as long as there wasn't simultaneously an opposite sex spouse). There may have been a couple of things which you couldn't do, such as give a same-sex spouse veto rights over the participant's election of a single life annuity, or treat the same-sex spouse as a spouse for purposes of the 401(a)(9) MRD rules, but save for these and perhaps a couple of other exceptions there was nothing to prohibit a plan from being drafted to treat the same sex spouse as a spouse.

[My 2 cents]

Prior to Windsor, a plan could provide a pre-retirement death benefit (NOT a QPSA!) to a non-spouse beneficiary, although it would not have been required to do so. Prior to Windsor, a plan could be drafted to provide nearly identical benefits in situations where the participant and his or her spouse were of the same gender. There was no requirement that plans be drafted that way, and prior to Windsor, a plan could not treat a same-sex spouse as a spouse, since DOMA clearly stated that for purposes of all federal laws, the term "spouse" would not apply to same-sex couples. So among the things the IRS needs to determine is how far back do plans need to go to reverse "no death benefit payable" decisions involving surviving same-sex spouses of participants who died prior to benefit commencement? My guess is that the IRS has more leeway in situations where nothing was paid to anybody but had DOMA not been there, a same-sex spouse would have received a pre-retirement death benefit.

There are plans that allow the election of a joint form of payment only if the joint annuitant was the participant's spouse (which is and was perfectly legal). It would have been a violation of DOMA to have permitted the election of such a form of payment when the participant and spouse were of the same sex. How far back should plans be required to go in offering current retirees with same-sex spouses the opportunity to change their elections (presumably on a prospective basis)? Should it require spousal consent for the annuity form NOT to be changed to a QJSA? Should there have to be any corrective action with respect to retirees who were not allowed to retire under anything other than a straight life annuity (because they were in a legal same-sex marriage) where the retiree has since died? If so, how far back should plans be required to go in identifying people affected?

These are the sorts of questions that must be resolved by the IRS before they can squarely address any issues involving retroactivity.