Last week, the Sixth Circuit upheld same-sex marriage bans in four states within the circuit, including Tennessee. After four circuit courts had struck down such bans in other areas of the country, including in Virginia, there is now an expectation that the Supreme Court will address laws banning same-sex marriage.
These opinions impact employers regarding application of workplace policies and handling of benefits. Under the Supreme Court’s 2013 Windsor opinion, same-sex spouses are married for federal tax purposes, provided they were married in a state that allows same-sex marriage. Currently for employers, this impacts qualified retirement plans.
The Sixth Circuit opinion is a 2-1 ruling with a 42-page opinion and a 21 page dissent. Most commentators expect the Supreme Court to take up the issue now that there is a split in the circuit courts. We will monitor upcoming opinions for their effect 0n workplace policies and management of employees.
Earlier this month, the IRS issued Notice 2014-19, which discusses recognition of same-sex spouses in qualified retirement plans. The notice comes after the Supreme Court opinion of U.S. v. Windsor (June 26, 2013) and states that plans are not forced to apply the requirements of the opinion retroactively. However, plans with terms inconsistent with Windsor must be amended by December 31, 2014.
This month’s Notice follows Rev. Rul. 2013-17 (Sept. 16, 2013), which provided in the federal tax context, that the terms “spouse,” “husband and wife,” “husband,” and “wife” include an individual married to a same-sex person if the individual is lawfully married. Numerous IRS statutes and treasury regulations include one or more of those terms.
IRS Notice 2014-19 only applies to qualified retirement plans. However, non-qualified plans, severance agreements, incentive plans, and other agreements often include the same terminology. Thus, employers should take care to consider other uses of these terms.