On September 18, 2013, the United States Department of Labor (“DOL”) issued guidance to employee benefit plans concerning changes to the definition of “spouse” and “marriage” as a result of the United States Supreme Court decision in United States v. Windsor. This guidance applies to DOL rulings, regulations, and opinions issued concerning Title I of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and the Internal Revenue Code of 1986, as amended (“IRC”).
On June 26, 2013, the Supreme Court held that Section 3 of the federal Defense of Marriage Act (“DOMA”) was unconstitutional. Section 3 stated that the term “marriage” only referred to a legal union between a man and a woman. Section 3 also defined “spouse” as only a person of the opposite sex. Additional analysis of the Windsor decision is available here. Because Section 3 has been declared unconstitutional, plan sponsors, plan fiduciaries, plan participants, and plan beneficiaries are in need of guidance concerning how to interpret the terms “spouse” and “marriage” as used in employee health and welfare and pension plans.
In order to create a uniform rule and provide certainty to interested parties, the DOL has stated that the terms “spouse” and “marriage” will include same-sex couples who are legally married in any state or foreign jurisdiction which recognizes such marriages, regardless of the couple’s current place of residence. Thus, as long as the marriage was valid where celebrated, the marriage will be considered valid for the purposes of ERISA. However, the terms “marriage” and “spouse” will not refer to individuals in other legally recognized relationships, such as domestic partnerships or civil unions, even if the recognized relationships provide the individuals with the same rights and responsibilities as married individuals. The non-recognition of domestic partnerships and civil unions as “marriages” applies to both same-sex and opposite-sex couples.
The DOL guidance is consistent with earlier guidance issued by the IRS which provided that for federal tax purposes, the terms “marriage” and “spouse” will include valid same-sex marriages entered into in a state recognizing same-sex marriage even if the individuals’ current state of domicile does not recognize such marriages. The IRS guidance also stated that individuals in domestic partnerships or civil unions, regardless of sex, will not be recognized as married or as spouses. Additional information on the IRS guidance is available here.
The guidance issued by the DOL may impact employee benefit plans in numerous ways. Health care benefits extended to same-sex spouses will no longer result in imputed income on the federal level. Also, COBRA benefits, beneficiary and spousal consent rules, and required distributions may be affected by the expanded definitions of “marriage” and “spouse.”
Employers, plan sponsors, and plan fiduciaries should review their employee health care and pension plans to determine whether action is needed to comply with the DOL and IRS guidance. Plan documents and employee handbooks and policies may need to be amended in order to comply with this guidance.
Fraser Stryker is a leader in employee benefits and tax law. Attorneys in the Firm’s Employee Benefits Practice Group advise businesses, governments, and nonprofit/tax-exempt organizations on a wide variety of tax and employee benefits matters, transactions, and litigation. Fraser Stryker helps employers implement and maintain innovative and cost-effective employee benefit plans that attract and retain top talent. For more information, or if you would like to discuss the Windsor decision and the IRS and DOL guidance, please contact Nicole R. Konen, Emily Wischnowski, or Kevin Tracy.
Formed in 1898, Fraser Stryker has grown to become a nationally recognized law firm that represents local, national, and multinational clients in complex business transactions and litigation matters. Fraser Stryker attorneys participate actively in a wide array of community organizations. Visit our home page for more information about us.
This article is provided by Fraser Stryker for general informational purposes and is not intended to be and should not be construed as legal advice on any specific facts or circumstances.
Circular 230 Disclosure: To ensure compliance with requirements imposed by the IRS, we inform you that any U.S. tax advice contained in this communication (including any attachments) is not intended or written to be used, and cannot be used, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any matters addressed herein.