On June 26, the US Supreme Court ruled in United States v. Windsor that Section 3 of the federal Defense of Marriage Act (DOMA) is unconstitutional. The Supreme Court ruled that DOMA’s federal exclusion of state-recognized same-sex marriages was unconstitutional under the Constitution’s Equal Protection Clause. As a result of the Supreme Court’s ruling, many questions remain unanswered.
One of the items that is clear after the ruling is that in states that recognize same-sex marriages, qualified joint and survivor annuity and qualified pre-retirement survivor annuity rights under traditional defined benefit plans will be extended to same-sex spouses. In addition, under all qualified retirement plans, spousal notification and consent requirements, qualified domestic relations orders and minimum required distributions will apply to same-sex spouses in the same way that such rules previously applied to opposite sex spouses.
Among the many questions that remain unanswered by the Court’s ruling is what happens to an individual who was married in a state that recognizes same-sex marriage, but moves to a state that does not recognize same-sex marriage? Also unanswered is whether the decision has any retroactive effect and how related tax issues will be resolved.
In light of the decision, it is imperative for employers and plan administrators to review the terms of their plan documents and policies to make sure that the plan or policy is properly administered post Windsor. Plans that provide benefits to a participant’s “spouse” will now automatically provide such benefits to a participant’s same-sex spouse in states where same-sex marriage is recognized. For employers in states that recognize same-sex marriage that already provide health benefits to same-sex spouses, the additional income tax that the employers were previously required to impute to the employee no longer must be imputed—the benefit can be provided in the same manner as it is provided to employees with opposite-sex spouses.
Over the coming weeks and months, further guidance may be issued with respect to the issues highlighted above, as well as the many issues that are bound to arise as a result of the decision.
A copy of the decision is available here.