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Complying with the Windsor Decision: Mid-Year Amendment for Safe-Harbor 401(k) Plans

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Previously, the IRS issued guidance on what employers need to do in order to comply with the United States v. Windsor decision. The guidance insturcts employers on how and when to amend a qualified retirement plan if its current terms regarding marriage and the definition of spouse are inconsistent with Windsor.  In short, the employer must adopt an amendment by December 31, 2014 that is consistent with the Windsor decision.  Please see IRS Notice 2014-19, Anne Meyer’s blog post, and Nancy Campbell’s blog post for more information on the Windsor decision and the required amendment.

One question that was left unanswered by the IRS’s prior guidance on Windsor was whether a Section 401(k) or 401(m) safe-harbor plan could adopt a mid-year amendment without risking its safe-harbor status.  The IRS answered this question by releasing Notice 2014-37, which provides that, while a safe-harbor plan is generally not permitted to adopt mid-year amendments, it can adopt a mid-year amendment to comply with Windsor without jeopardizing its safe-harbor status.  Please note that the mid-year amendment must be adopted in accordance with the guidance provided in Notice 2014-19.