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Midyear retirement plan amendments allowed under court decision


The IRS in Notice 2014-37 is allowing certain 401(k) and 403(m) retirement plans, including 403(b) plans, to make midyear amendments to reflect the U.S. Supreme Court’s Windsor decision.

The Supreme Court struck down Section 3 of the Defense of Marriage Act in U.S. v. Windsor, et al. (Sup Ct 2013) as an unconstitutional deprivation of equal protection. Section 3 had defined marriage for purposes of administering federal law as the “legal union between one man and one woman as husband and wife.” As a result, same-sex spouses were not recognized for purposes of qualified retirement plans.

Following the court’s decision, the IRS issued Revenue Ruling 2013-17 stating that same-sex couples who were legally married in jurisdictions that recognize their marriage will be treated as married for federal tax purposes, regardless of whether their state of residence recognizes same-sex marriage.

In Notice 2014-19, the IRS provided guidance on the effect of the Windsor decision on qualified retirement plans and plan amendments. To be considered a qualified plan, a cash or deferred arrangement (CODA), such as a 401(k) plan, must meet certain nondiscrimination tests. A CODA that meets safe-harbor provisions described in regulations generally must have those provisions in place before the beginning of the plan year and be maintained throughout a full 12-month plan year.

The IRS has now said that a plan will not fail to satisfy the requirements to be a Code Section 401(k) or 401(m) safe-harbor plan merely because the plan sponsor adopts a midyear amendment pursuant to Notice 2014-19, Q&A 8. ■

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