Benefit Plan Impact Following DOMA Decision


NEW YORK—On June 26, 2013 the Supreme Court held in United States v. Windsor that Section 3 of the Defense of Marriage Act of 1996 (DOMA) unconstitutionally encroached on states’ rights to regulate marriage. Section 3 of DOMA prohibited for purposes of federal law the recognition of same-sex marriages.

Prior to the Windsor ruling, DOMA provided a uniform definition of “spouse” and “marriage” for federal law purposes (e.g., ERISA, Internal Revenue Code, COBRA, FMLA, etc.), allowing employers to treat same-sex couples (spouses and domestic partners) the same throughout the country. Now that the Court has struck down Section 3 of DOMA, employers must navigate a patchwork of state laws as they work to expand federally protected rights and benefits to treat same-sex spouses equally. The Windsor holding effective July 21, 2013. As such, employers should promptly act to address some aspects of this decision with respect to their benefit plans.

Benefit Plan Impact Tax-Qualified Retirement Plans

Qualified Pre-Retirement Survivor Annuity A same-sex spouse is now eligible for a qualified pre-retirement survivor annuity under a defined benefit pension plan if his or her employee spouse dies prior to retirement.
Qualified Joint and Survivor Annuity A same-sex spouse is now eligible for a qualified joint and survivor annuity, and must consent to his or her spouse’s election of an alternative form of payment.
Default Beneficiary A same-sex spouse is now the default beneficiary under defined benefit and defined contribution retirement plans, and must consent to the designation of an alternative beneficiary.
Qualified Domestic Relations Order Same-sex spouses can now obtain qualified domestic relations orders.
Hardship Distributions A same-sex spouse’s medical and educational costs can now serve as the basis for a hardship distribution.
Required Minimum Distributions Same-sex spouses may now defer required minimum distributions until April 1 of the year in which their spouse would have turned 70½.

Hedley Lawson, Contributing Editor
Managing Partner
Aligned Growth Partners, LLC