United States

IRS issues guidance on same-sex marriages and employee benefit plans

Employee benefit plan implications of Obergefell decision


In Notice 2015-86, the IRS issued guidance that confirmed that most employee benefit plan sponsors will not need to amend their plans or change plan operations in response to the Supreme Court’s historic same-sex marriage decision in Obergefell v. Hodges.


In Obergefell, the Supreme Court held that a state’s civil marriage laws must apply to same-sex couples on the same terms and conditions as opposite-sex couples and that a state cannot refuse to recognize a lawful same-sex marriage performed in another state because of its same-sex character.

Previously, in United States v. Windsor, the Supreme Court held that same-sex spouses that were validly married under the laws of any state must be considered as a married couple for federal tax law purposes. In response to the Windsor decision the IRS issued guidance that confirmed that for employee benefit plan purposes same-sex spouses had the same rights that an employee benefit plan granted to opposite-sex spouses. That guidance required that employee benefit plans recognize same-sex marriages as of June 26, 2013 (the date of the Windsor decision) and that in general plan sponsors had until Dec. 31, 2014, to amend their retirement plans if necessary to conform to the decision in Windsor.

Notice 2015-86

With respect to tax-qualified retirement plans, the IRS confirmed that sponsors that timely amended their plans with respect to the Windsor decision need not take any further action to comply with the Obergefell decision. However, the IRS did remind plan sponsors that to the extent that the plan sponsor wants to retroactively acknowledge same-sex marriages earlier than June 26, 2013, they are free to do so provided that any such amendment comply with the nondiscrimination in benefits and contributions rules of the Internal Revenue Code (Code), as well as the limitations on increases in benefits for under-funded defined benefit plans.

Regarding health and welfare plans the IRS reiterated its position that the Code does not require any specific benefits be offered to spouses, but that if spouse benefits are provided those benefits must be provided to same-sex spouses as well as opposite sex couples.

The IRS also addressed how Obergefell would affect section 125 cafeteria plans. With respect to those plans, IRS guidance limits mid-year changes in an employee’s benefit election to certain specified events (e.g., marriage of the employee, birth of a child, etc.). The IRS guidance on this issue allows a plan to consider the availability of coverage for a same-sex spouse as an event that permits a plan to allow a mid-year benefit election change. However, the notice does point out that some plans may need to be amended to accommodate this and that such amendments can be adopted retroactively within time limits set forth in the notice.



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