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By Joy Sellstrom, Esq., and Jennifer A. Kraft,
Seyfarth Shaw LLP, Chicago, IL
As year-end approaches, the Internal Revenue Service (IRS) has
now taken another step in implementing the Supreme Court's decision
in Windsor v. United States by issuing Notice 2014-1
regarding pre-tax elections.
In Windsor, the Supreme Court struck down the provision
of the Defense of Marriage Act (DOMA) that prohibited the
recognition of same-gender couples as married for purposes of
federal law. Notice 2014-1 provides additional guidance on the
impact of this ruling on pre-tax elections under cafeteria plans,
flexible spending accounts (FSA) and health savings accounts
When the Windsor decision was issued, it was not clear
how the decision would impact employee benefit plans, particularly
retroactively. This guidance confirms that certain mid-year changes
to pre-tax elections under a §125 cafeteria plan are permissible
and provides the following specific guidance:
Mid-Year Election Changes: Participants with Same-Gender
Plan participants who were married to a same-gender spouse on
Mid-Year Election Changes: Marriage After Windsor
Plans may permit a participant who married a same-gender spouse
FSAs may permit reimbursement of covered expenses incurred by a
Dependent Care FSA Limits
The annual $5,000 limit for a married couple's contribution to a
The guidance confirmed that same-gender couples are subject to
Plan Amendment Deadline Extended. The IRS
has provided that any amendments needed to employer plans to
reflect this guidance may be adopted as late as the last day of the
first plan year beginning on or after December 16, 2013
(December 31, 2014 for calendar year plans) and
may be retroactive back to the first day of the plan year including
December 16, 2013 (January 1, 2013, for calendar year plans).
Although it arrives somewhat late for calendar year plans,
employers who have allowed participants to make election changes
consistent with the Windsor decision will welcome this
For more information, in the Tax Management Portfolios, see
Raish, 397 T.M., Cafeteria Plans, and in Tax
Practice Series, see ¶5940, Cafeteria Plans.
Copyright © 2014 Seyfarth Shaw LLP.
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