Retirement Plans Required to Recognize Same Sex Marriages

Posted on April 22, 2014

In a historic decision last June, the Supreme Court struck down section 3 of the Federal Defense of Marriage Act (DOMA) as a violation of the U.S. Constitution. Section 3 of DOMA defines “marriage” as “only a legal union between one man and one woman as husband and wife” for all federal purposes.

The IRS recently issued guidance on how the invalidation of section 3 of DOMA affects qualified retirement plans. Essentially in administering these plans, same sex marriages (but not civil unions) must be recognized on and after June 26, 2013. The IRS now requires that the same sex marriage be recognized if the employee and spouse were married in a state where such marriages are legal. A plan may treat same sex couples as married for plan events before June 26, and may use a different rule between June 26 and September 15, 2013, to determine if the marriage should be recognized, but, for simplicity,  we recommend only using the rule set forth above.

Clients are responsible for recognizing and applying these new rules when approving loans, plan distribution requests, beneficiary designations or any other form requiring spousal information or consent. We also suggest you document your decision regarding the recognition of same sex marriages for plan purposes in a memo or plan committee meeting minutes in the event an issue arises as to the treatment of same sex spouses during the period June 26-September 15, 2013.  If there are any questions on the rules on how they should be applied, please contact your Plan Account Manager.

If your plan document was supplied by BCG, no amendment is necessary due to this change. If our document provider determines any changes should be made to accommodate this rule we will advise you when that amendment needs to be adopted.

Clients using plan documents not provided by BCG should have those documents reviewed to determine if any amendments are necessary to comply with the Supreme Court decision. If an amendment is required, it must be adopted no later than December 31, 2014.

Although the IRS guidance did not pertain to non-qualified plans, similar rules should apply to those plans.