Authored by Jamie M. Westbrook
Oct 25, 2013
Employer retirement plan sponsors must be aware of the year-end notice, filing, operational compliance and amendment deadlines to ensure continued tax qualification and legal compliance for qualified retirement plans. Noncompliance will result in penalties and taxes and could, ultimately, affect the tax-qualified status of your plans. The following items need to be considered prior to year end to ensure qualified retirement plan compliance Checklist.
I. PARTICIPANT NOTICES
Plan sponsors must ensure the following required notices are provided to participants at least 30 days and no more than 90 days prior to the beginning of the plan year (on or before Dec. 1 for calendar year plans). These notices can be combined into a single notice if more than one of the following is required for a single plan.
II. REQUIRED AMENDMENTS AND FILINGS
The following amendments, restatements and filings need to be considered prior to year end:
III. EFFECT OF WINDSOR DECISION ON QUALIFIED RETIREMENT PLANS
Qualified retirement plans must ensure they treat a same-sex spouse as a “spouse” for purposes of satisfying federal tax laws related to qualified retirement plans and ERISA. Plans must be in operational compliance for federal tax law purposes effective September 16, 2013.
In the Windsor decision, the U.S. Supreme Court held that Section 3 of DOMA (which required that, for federal law purposes, a marriage be treated as only a marriage between a man and a woman) was unconstitutional. In Rev. Rul. 2013-17, the IRS took the position that for all federal tax purposes, a couple in a valid same-sex marriage entered into in a state recognizing such marriage, would be treated as “married.” The Department of Labor (DOL) announced on Sept. 18, 2013 that it would take a similar approach to issue for purposes of ERISA.
However, the IRS and DOL have also stated that further guidance on compliance will be issued, including guidance on plan amendment requirements and the timing requirements of those amendments. Plan sponsors should wait until further guidance is issued to amend plans, but should consider operational compliance for federal tax purposes now. Items to consider for operational compliance include, but are not limited to: hardship distributions, required minimum distributions, qualified joint and survivor and preretirement annuity requirements, direct rollovers and qualified domestic relations orders.
Employers should start to make these changes now to ensure qualified retirement plans remain compliant by the end of 2013. If you have any questions or concerns regarding qualified retirement plan notices, amendments, determination letter applications or other employee benefits issues, please contact Dannae Delano at firstname.lastname@example.org or Jamie Westbrook at email@example.com.