Retirement Plans and the Rejection of DOMA

With the Supreme Court’s recent ruling that found the Defense of Marriage Act (DOMA) unconstitutional, questions quickly arose as to the impact this would have on qualified retirement plans. DOMA originally provided that only persons of the opposite sex could be recognized as “spouses” and “marriage” could only be between opposite-sex partners. As a result, retirement plans only provided spousal benefits to opposite-sex couples. With the Supreme Court’s ruling, qualified retirement plans must now treat same-sex couples as “spouses” and their relationship as a “marriage.” Failure to do so may cause a plan to lose its tax-qualified status.  One of the unanswered questions resulting from the DOMA decision is whether plans will have to treat participants as ‘married’ who were married in a state recognizing same-sex marriages, but who now reside and work in a state not recognizing same-sex marriages.  The answer to this question will have to come from the Internal Revenue Service and U.S. Department of Labor.

Prior to the issuance of guidance from IRS and DOL, plan sponsors should consider taking the following initial steps:

  1. Obtain same-sex marriage information from participants/beneficiaries. Start to develop a process to gather same-sex marriage information, if one does not currently exist.
  2. Review the plan document and summary plan description. Many qualified plans were required to include DOMA language in the plan as part of an IRS determination letter process. This language will need to be eliminated, and the remainder of the plan should be reviewed for the term “spouse” and “domestic partner” to see if any of the provisions need to be modified to comply with post-DOMA rules. 
  3. All nonqualified plans should also be reviewed for compliance with post-DOMA rules.

Click here to read EisnerAmper’s full alert on the repeal of DOMA and its impact on qualified retirement plans.

Peter Alwardt is a Tax Partner specializing in employee benefits, tax and ERISA issues for domestic and international clients. He is a member of the American Institute of Certified Public Accountants and NY State Society of CPAs.

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