Amendments Required by End of Year to Reflect Windsor Same-Sex Marriage Case

I gave a presentation last week at the Western Pension & Benefits Conference Phoenix Chapter Spring Conference entitled “Ding Dong DOMA’s Dead – The Supreme Court’s Same-Sex Marriage Ruling and Its Impact on Employee Benefit Plans.”  Upon finishing my presentation, I realized my last few slides are a good checklist.

On April 4^th, the IRS issued one of the last key pieces of guidance we expect to get about the impact of the Supreme Court’s decision in Windsor.  That guidance makes it clear that most qualified plans will have to adopt amendments conforming to Windsor by December 31, 2014, with an effective date of June 26, 2013.

Now is a good time to:

• Consider to what extent to provide benefits to same-sex spouses.  Employers must extend all “mandated” benefits to same-sex spouses, but have some wiggle room for “non‑mandated” benefits.  Most employers will probably decide to extend all benefits to same-sex spouses except where they cannot.  For example, in many states, employers may still have to impute income on same-sex spouse benefits at the state level.
• Amend plans to get rid of DOMA opposite-sex spouse definitions.

–> Most qualified plans will have to be amended by December 31, 2014.

–> Many cafeteria plans will have to be amended by December 31, 2014 as well.

–> Health, welfare, equity compensation, and nonqualified deferred compensation plans may also need to be amended.

• Make sure your insurance policies cover same-sex spouses, if that is your intention.
• Amend payroll and accounting systems to reflect new federal tax rules for same-sex spouse benefits.  Consider state tax rules, many of which are still unclear.
• Send a general employee communication on same-sex spouse benefits to all employees highlighting key issues, such as the need for spousal consent for 401(k) plan beneficiary designations.
• Update SPDs, COBRA notices, QDRO procedures, employee handbooks, and other procedures.
• Now that it is easier for same-sex couples to get married and those marriages are recognized under federal law, reconsider if domestic partner benefits are still needed.

For more information on the application of the Windsor decision, please see the following links:

• IRS Revenue  Ruling 2013-17, DOL Technical Release 2013-04, and our September 9, 2013 Legal Alert,  Agencies Issue Guidance on Same-Sex Marriage Impacting Employee Benefits for more information  on the “state of celebration” standard.
• IRS Notice 2013-61 for information on payroll taxes and procedures for employers to make adjustments or claims for refund or credit.
• IRS Notice 2014-1 for information on cafeteria plans, flexible spending arrangements and health savings accounts.
• DOL Fact Sheet #28F was updated to include same-sex spouse in the definition of spouse for purposes of the Family & Medical Leave Act, but note that the current FMLA guidance uses a “state of residence” standard. The DOL has informally indicated that it will be revising regulations to use a “state of celebration” standard.
• IRS Notice 2014-19 on qualified plan amendments.