On August 29, 2013, the Internal Revenue Service (IRS) ruled that for federal tax purposes, spouse includes an individual who is legally married to a same-sex individual under state law. This Revenue Ruling 2013-17 has a significant impact, among other items, on 401(k) plans and defined benefit pension plans. Effective September 16, 2013, sponsors of these qualified retirement plans must recognize same-sex married couples. What if an employee has identified him/herself as “unmarried” on the plan enrollment form or beneficiary form? It does not matter. If the employee is legally married to a same-sex individual, then, effective as of September 16, 2013, the employee must be treated with a marital status just as an employee married to an opposite-sex individual. It means that, with respect to a defined benefit pension plan, such employee’s same-sex spouse might be entitled to a default joint and survivor annuity form of retirement payment. It also means that such employee’s same-sex spouse might be the default beneficiary in many other instances.
Employers! It is time to gather additional information from employees who are currently characterized as “unmarried,” but who, in fact, are “married.” It also is time for employers to review their employee benefits plan documents to determine whether the terms of “spouse,” “husband,” and “wife” are appropriately defined to comply with the new laws. The IRS intends to issue further guidance on plan amendment requirements (including the timing of any required amendments).