NECA/IBEW EMPLOYEE
BENEFITS CONFERENCE
JANUARY 31, 2014 | NAPLES, FLORIDA
SHANE N. KRAMER
POTTS-DUPRE, HAWKINS & KRAMER, CHTD.
LEGAL UPDATE
IMPACT OF
UNITED STATES V. WINDSOR
1.
BACKGROUND
2.
FEDERAL AGENCY GUIDANCE
3. IMPACT ON RETIREMENT & WELFARE
PLANS
4.
ACTION POINTS
Thea Spyer and Edith Windsor
THE DEFENSE OF MARRIAGE ACT
§3
For all Federal laws:
marriage
=
1 man + 1 woman
spouse =
a person of the opposite sex
who is a husband or a wife
WINDSOR HOLDING
§3 of DOMA struck down as a deprivation of equal liberty of
persons protected by the 5th Amendment
§2 left untouched, which permits states to disregard same-sex
marriages performed in other states
- various challenges to state bans pending
Timeline of Same-Sex Marriage Bans and Legalizations by Effective Date of Laws
Timeline of Same-Sex Marriage Bans and Legalizations by
Effective Date of Laws
http://gaymarriage.procon.org/files/1-gay-marriage-images/gay-marriage-17-states-legal-33-states-banned.jpg
http://gaymarriage.procon.org/files/1-gay-marriage-images/gay-marriage-17-states-legal-33-states-banned.jpg
TAKEAWAYS
• It is up to the States to determine whether same-sex
marriages are valid
• Same-sex married couples are entitled to Federal
marriage benefits and burdens
• But, questions remain
AGENCY GUIDANCE
• IRS Revenue Ruling
• IRS Same-Sex Marriage FAQs
• IRS Notices
• DOL Technical Release
IRS REVENUE RULING 2013-17
1.
Gender-neutral interpretation of terms
For Federal tax purposes, the terms “spouse,” “husband and
wife,” “husband,” and “wife” include an individual married to a
person of the same sex if the individuals are lawfully married
under state law, and the term “marriage” includes such a
marriage between individuals of the same sex
IRS REVENUE RULING 2013-17
2.
State of Celebration Rule
For Federal tax purposes, the IRS adopts a general rule
recognizing a marriage of same-sex individuals that was validly
entered into in a state whose laws authorize the marriage of two
individuals of the same sex even if the married couple is
domiciled in a state that does not recognize the validity of
same-sex marriages
IRS REVENUE RULING 2013-17
3.
Domestic partnerships, civil unions, etc. are not included
For Federal tax purposes, the terms “spouse,” “husband and wife,”
“husband,” and “wife” do not include individuals (whether of the opposite
sex or same sex) who have entered into a registered domestic partnership,
civil union, or other similar formal relationship recognized under state law
that is not denominated as a marriage under the laws of that state, and the
term “marriage” does not include such formal relationships
IRS REVENUE RULING 2013-17
• Effective date:
September 16, 2013
• Retroactive effect is a mixed bag
• May rely on terms for “open” years for amended returns, refund
claims, etc.
• Wait for guidance on employee plans, including plan
amendments and corrections (it’s “fairly imminent”)
BENEFITS RELATED IRS FAQS
• FAQ-10:
Employee may claim refund for open years
(’10, ’11, ‘12) for income taxes paid on
health
coverage of same-sex spouse
• FAQ-11:
Employee may claim refund for taxes on
after-tax contributions to cafeteria plans
• FAQ-12:
Employer may claim refund on payroll taxes
(not income tax) paid on health coverage of
samesex spouse coverage
•
multiemployer health plan as “ deemed employer”
BENEFITS RELATED IRS FAQS
• FAQ-16:
1.
Qualified plan must treat same-sex
spouse as spouse to meet 401(a)
requirements
2.
Spouse determination based on state of
celebration rule
3.
Person in a registered partnership / civil
union is not a spouse
• FAQ-17:
Examples
ADDITIONAL IRS GUIDANCE
•
IRS Notice 2013-61
•
•
Special administrative procedures for employers to make
adjustments or claims for refund or credit
IRS Notice 2014-1
•
Cafeteria Plans, FSAs, and HSAs – elections and reimbursements for
same-sex spouses
DOL TECHNICAL RELEASE
NO. 2013-04
• Coordination with IRS, Treasury, and HHS
• Same interpretation of “spouse” and “marriage”
• Same state of celebration rule for ease of administration
• Same carve out for domestic partnerships and civil unions
• Additional guidance expected
PENSION PLANS
•
QJSA & QPSA Annuity Protection
• Same-sex spouse now entitled to 50% survivor annuity
•
QDRO
• Divorced same-sex spouse can be an alternate payee without violating antiassignment rule
•
Loans (money purchase plans, not 401(k))
• consent of same-sex spouse required
401(K) / PROFIT SHARING PLANS
•
Designated beneficiaries
•
•
same-sex spouse now entitled to 100% of account balance;
beneficiary designations without spousal consent invalidated
Hardship Distributions
•
same-sex spouse considered a primary beneficiary for medical,
tuition, and funeral expenses
401(K) / PROFIT SHARING PLANS
•
Rollovers
•
•
Same-sex surviving spouse may roll to another qualified plan or IRA
owned by spouse
Required Minimum Distributions
•
•
Same-sex surviving spouse may delay commencement until
participant would have reached age 70 ½
Incidental benefit rule
WELFARE PLANS
•
No imputed income on value of same-sex coverage
•
Pre-tax benefits now available in HRA, HSA, and FSA / cafeteria
plans
•
COBRA – full rights on qualifying event
•
HIPAA – special enrollment rights apply – immediate coverage
•
Dependent care assistance – same-sex spouse now a qualifying
relative
HEALTH PLAN CONSIDERATIONS
• Self-Insured Plans
• Same-sex coverage is not mandated
• But, if exclude same-sex spouses, domestic partners, civil unions,
etc., may expose plan to discrimination claims
• Insured Plans
• State insurance law coverage requirements?
ACTION STEPS
•
Retirement plans
•
•
•
•
•
Review documents (plan text/SPDs/application forms) and procedures
How is “spouse” defined?
Are spousal protections being honored?
Uniform proof of marriage requirements?
Is a communication piece necessary?
• clean up of beneficiary designations
•
•
Be on the lookout for IRS guidance regarding retroactivity
Health & Welfare Plans
•
•
•
•
•
Review documents and procedures
How is “spouse” defined?
If plan definition exclusionary, should it change?
Still imputing income for same-sex coverage?
Can you file for payroll tax refund?
MATERIALS
• IRS Revenue Ruling 2013-17
http://www.irs.gov/pub/irs-drop/rr-13-17.pdf
• IRS Same-Sex Marriage FAQs
http://www.irs.gov/uac/Answers-to-Frequently-AskedQuestions-for-Same-Sex-Married-Couples
• IRS Notice 2013-61
http://www.irs.gov/pub/irs-drop/n-13-61.pdf
• IRS Notice 2014-1
http://www.irs.gov/pub/irs-drop/n-14-01.pdf
• DOL Technical Release No. 2013-04
http://www.dol.gov/ebsa/newsroom/tr13-04.html
QUESTIONS?
Shane N. Kramer
Potts-Dupre, Hawkins & Kramer, Chartered
900 7th Street, N.W., Suite 1020
Washington, DC 20001
(202) 223-0888
[email protected]