United States: Treasury Department Guidance On Same-Sex Spousal Status Requires Employers To Take Immediate Action On Employee Benefit Plans

Last Updated: September 16 2013
Article by John W. Boyd

Earlier this summer, following the Supreme Court's issuance of the landmark case, United States v. Windsor, which held Section 3 of the Defense of Marriage Act (DOMA) to be unconstitutional, we published an  Executive Alert identifying some of the ways in which the Court's decision would impact employers' benefit plans and policies. We noted that the Internal Revenue Service (IRS) was expected to provide guidance with regard to same-sex couples, reflecting the demise of the federal ban on the recognition of same-sex marriages. On August 29, 2013, the IRS issued its initial guidance in the form of Revenue Ruling 2013-17 and posted a series of Frequently Asked Questions and Answers (FAQs) on its website. This guidance answers a number of the questions facing employers with regard to their employee benefit plans but leaves some important issues yet to be decided. The ruling and the FAQs also highlight the need for employers and plan administrators to take certain actions now with regard to benefit plan administration.


The Revenue Ruling and the FAQs address a broad range of issues relating to the tax status of same-sex married couples. However, with regard to spousal rights under the employee benefit plans, and the tax treatment of employer-provided benefits for same-sex spouses, here are some key points:

  • A same-sex couple's marital status is to be determined based upon the law of the state in which the marriage ceremony was performed, regardless of the taxpayer's state of residence or the place of employment. If the marriage ceremony is performed in a state or foreign country that recognizes same-sex marriages, the couple will be considered to be married for federal tax purposes, even if the couple resides in a state that does not recognize the validity of same-sex marriages.
  • This determination is applicable for all federal tax purposes. While the issue before the Supreme Court in the Windsor case involved the marital deduction under the federal estate tax, the IRS has indicated that the recognition of same-sex marriages mandated by the Court's decision is applicable for all federal tax purposes. This will include an individual's tax return filing status, the tax treatment of employer-provided health and welfare benefits provided to same-sex spouses and spousal rights under tax-qualified retirement plans.
  • The IRS will begin applying this standard effective September 16, 2013.
    • No retroactive application for retirement plans -- for now! For qualified retirement plans, the IRS position is not applicable to periods before September 16, 2013. However, the IRS has indicated that it will address in future guidance how the Windsor decision and the rules set forth in Revenue Ruling 2013-17 should be applied to qualified retirement plans for periods before September 16.
    • Individuals may apply for refunds retroactively. Individuals may apply the IRS's standard retroactively to claim refunds for the overpayment of income tax resulting from imputed income on health plan coverage, certain employer-paid lodging and meals, qualified tuition reductions, dependent care assistance or fringe benefits provided to a same-sex spouse. Individuals can recoup excess tax payments by filing an amended tax return (Form 1040-X).
    • After-tax premium payments may be treated as pre-tax. Individuals who paid for same-sex spousal coverage with after-tax dollars under a 125 cafeteria plan may also retroactively treat those payments as having been made on a pre-tax basis if employee coverage was paid for on a pre-tax basis.
  • Recouping Employer's Overpayment of FICA and Medicare Tax. Employers will be able to recoup any Social Security and Medicare tax overpayments resulting from the imputed income on benefits provided to same-sex spouses. The IRS has indicated that it anticipates establishing an expedited program for the filing of Form 941-X for this purpose.


The IRS intends to issue further guidance on the retroactive application of the Windsor decision to other employee benefits and employee benefit plans. The FAQs indicate that this future guidance will provide sufficient time for plan amendments and to make any necessary operational corrections to plans for periods prior to the issuance of that guidance. Among the unanswered questions which may be addressed in that future guidance may be:

  • What, if any, survivor annuity rights must be provided to the same-sex spouse of a retired employee who commenced pension benefits prior to the September 16, 2013, effective date?
  • What, if any, pre-retirement survivor annuity benefits must be provided to a same-sex surviving spouse where the employee spouse died prior to the September 16, 2013, effective date?
  • What, if anything, must a defined contribution plan do if death benefits have been paid to a non-spousal beneficiary without the same-sex spouse's consent?
  • Although not directly controlling with regard to private employer pensions, the Office of Personnel Management announced earlier in August that retirees under the federal government's Civil Service Retirement System who are in legal same-sex marriages will have a two-year window through June 26, 2015, during which they may elect to convert their current retirement benefits into an actuarially reduced benefit providing a surviving spouse benefit. Might this serve as a roadmap for retroactive obligations to be imposed on defined benefit pension plans?
  • Church Plans: Revenue Ruling 2013-17 indicates that the IRS's recognition of same-sex marriages will be applicable for all federal tax purposes. What about church plans which are exempt from the Employee Retirement Income Security Act (ERISA)? Presumably, those retirement plans that have been structured to fall within the scope of Internal Revenue Code Sections 401(a), 403(b) or 457 will be required to extend any spousal protections thereunder to same-sex spouses. For health benefit plans (such as medical, dental and vision care plans), clearly any coverage made available to same-sex spouses will now be afforded the same federal tax treatment as spousal coverage generally. However, the IRS's position would not appear to otherwise compel church plans to make same-sex spousal rights or coverage available in the absence of an applicable state law mandate.
  • State Government Plans: How will plans maintained by state governments or their instrumentalities be impacted by the positions outlined in Revenue Ruling 2013-17? As we have previously noted, the Supreme Court did not address or strike down Section 2 of DOMA, which provides that no state shall be required to give effect to any public act, record or judicial proceeding of any other state respecting a relationship between persons of the same sex that is treated as a marriage under the laws of that other state. Can the IRS's establishment of a uniform standard for same-sex marriage be reconciled with this reservation of power to the individual states?


Many employers have been reluctant to move forward with benefit plan design and administrative changes to reflect the Supreme Court's decision in Windsor until guidance has been issued. With the issuance of Revenue Ruling 2013-17, now is the time to act. With the September 16, 2013, effective date quickly approaching, here are steps that every employer should begin to take, if they have not begun so already:

  • Review qualified plan administrative procedures and policies and be prepared to implement spousal rights for same-sex spouses prospectively as of September 16, 2013. These will include spousal consent to the designation of alternative death beneficiaries, spousal joint and survivor annuity rights under defined benefit plans and spousal rollover rights and favorable minimum required distribution calculations for surviving spouse benefits under retirement plans.
  • Implement payroll changes for the imputed value of health benefit coverage. Many employers have already begun to implement changes to payroll to eliminate imputed federal taxable income for same-sex couples' benefits for their employees who reside in states which recognize the validity of same-sex marriages. Employers will now need to make these changes for all federally recognized same-sex married couples, regardless of the state of residence. For state income tax purposes, employers will still need to assess on a state-by-state case whether the value of any such coverage must be imputed in state taxable income.
  • Review desirability of filing for refund on FICA/Medicare Tax overpayments. Employers who have made same-sex spousal medical coverage available in the past should assess the economic benefit of filing for refunds on the employer portion of FICA and Medicare tax payments on the imputed value of that coverage.
  • Review medical plan documents and insurance policies for definitions of key terms. Employers who have not provided same-sex spousal coverage will need to review their plan documents to assess whether plan document or policy contract amendments are necessary. Language which defines an employee's "spouse" with reference to federal tax laws, and which prior to Revenue Ruling 2013-17 would have been interpreted as excluding same-sex spouses, will need to be revisited if a plan's current design is to be maintained.

Last week's publication of Revenue Ruling 2013-17 and the FAQs serve as a clarification and guidance of the IRS's position regarding the impact of the Windsor decision on a broad range of tax matters, including the administration of tax-qualified retirement plans and the tax reporting and withholding obligations for tax-favored employee benefits.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.