California Supreme Court's Decision on Domestic Partnerships May Raise Some Plan Document Issues discusses how last month's California Supreme Court Ruling (In re Marriage Cases, No. S147999 (May 15, 2008)) could create some plan document issues.
When considering these issues, it is important to consider the impact of the Defense of Marriage Act (DOMA) definition of marriage:
SEC. 3. DEFINITION OF MARRIAGE.
(a) In General.--Chapter 1 of title 1, United States Code, is amended by adding at the end the following:
``Sec. 7. Definition of `marriage' and `spouse'
``In determining the meaning of any Act of Congress, or of any ruling, regulation, or interpretation of the various administrative bureaus and agencies of the United States, the word `marriage' means only a legal union between one man and one woman as husband and wife, and the word `spouse' refers only to a person of the opposite sex who is a husband or a wife.''
The Impact of Same-Sex Marriage on Employee Benefit Plan puts the DOMA definition in context:
Congress adopted DOMA in 1996 in response to a ruling by the Hawaii Supreme Court that cast serious doubt on the constitutionality of a state law that limited marriage to couples of the opposite sex. One of DOMA's two principal provisions, and the one relevant here, reads as follows:
In determining the meaning of any Act of Congress, or of any ruling, regulation, or interpretation of the various administrative bureaus and agencies of the United States, the word 'marriage' means only a legal union between one man and one woman as husband and wife, and the word 'spouse' refers only to a person of the opposite sex who is a husband or a wife (1 U.S.C. § 7).
All provisions of the Employee Retirement Income Security Act of 1974 ("ERISA") and the Internal Revenue Code ("Code"), and any regulations promulgated under those laws, which reference a person's marital status must be read in a manner consistent with DOMA's definition of marriage. Our initial assessment is that in the two states actually recognizing same-sex marriages, DOMA's biggest impact is on qualified plans under section 401(a) of the Code pension plans in particular with only minimal impact on health and welfare and deferred compensation plans.
The article proceeds to address the qualified plan provisions that DOMA governs:
- Qualified Joint and Survivor Annuities and Spousal Consent
- Optional Joint and Survivor Annuities
- Qualified Pre-Retirement Survivor Annuities
- Qualified Domestic Relations Orders
- Incidental Death Benefit and Minimum Required Distribution Rules
- Rollover Rules
- Preference Beneficiary Rules
Definition of Spouse also discusses the impact of the DOMA definition on plan administration.
As we said, the DOMA definition of spouse is applicable to all Federal laws, agencies, and regulations. And although our written plan document is unaffected by DOMA, in practice, the parties to a same-sex marriage are not recognized as spouses for retirement plan purposes. Thus, there are no spousal rights. What does this mean administratively?
Since the DOMA definition of spouse is not met, the Federal laws involving the word spouse do not apply. Therefore:
- No spousal consent is needed to name someone other than the spouse as beneficiary
- No qualified joint and survivor annuity (QJSA) requirements or protections are provided.
- No qualified pre-retirement survivor annuity (QPSA) requirements or protections apply.
- No spousal consent is needed for distributions, loans or hardship withdrawals.
- The joint life tables for required minimum distributions cannot be used if the same-sex spouse is more than 10 years younger.
- No spousal rollover of the deceased participant spouse's plan assets is permitted.
- In certain defined benefit plan designs, if the participant dies before the earliest retirement age under the plan, no benefits will be paid from the plan on that participant's behalf because the qualified pre-retirement annuity would not be enabled.
The article also addresses the following:
- What is a spouse?
- Who is a spouse?
- Who is a spouse under federal law?
- What is a marriage?
- When is one considered married according to IRC Section 417(d)?
- Impact of DOMA on retirement plan administration
- QDRO Quandary
- So, what is a marriage?
UPDATE 7/19/08: See State Laws on Marriage: Implications for Employee Benefit Plans