July 10, 2013

The Supreme Court Defense of Marriage Act decision — how are ERISA plans affected?

The Supreme Court decided on June 26 that Section 3 of the federal Defense of Marriage Act (DOMA) was unconstitutional. Section 3 of DOMA defined marriage for federal law purposes to mean opposite-sex marriage. The 5-4 majority decision held that Section 3 violated the Fifth Amendment’s right to equal protection. “By seeking to displace this protection and treating those persons as living in marriages less respected than others, the federal statute is in violation of the Fifth Amendment,” said Justice Anthony Kennedy in reading the Court’s opinion.

How will this decision impact ERISA retirement plans? There is an immediate impact in those states in which same-sex marriage is recognized: California, Connecticut, Delaware, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Rhode Island, Vermont, Washington, and the District of Columbia.

Previously, although these states upheld same-sex marriages, federal law via DOMA did not recognize same-sex spouses, meaning they were not able to receive the same benefits as opposite-sex spouses in ERISA plans. Now, retirement plans in these states will need to afford same-sex spouses the same benefits as opposite-sex spouses. This will impact, for instance, circumstances such as the following:

  • Plans are required to provide a qualified joint and survivor annuity (QJSA) to spouses, now including same-sex spouses.
  • Qualified domestic relations orders (QDROs) are now applicable for same-sex spouses.
  • Spouses, including same-sex spouses, are able to defer death benefits until the year after the participant would have turned age 70 ½.
  • Same-sex spouses are now considered spouses for the purpose of calculating a required minimum distribution.

However, because the Supreme Court’s decision did not address Section 2 of DOMA, which allows states to refuse to recognize same-sex marriage performed under the laws of other states, it is unclear at this point what impact the decision will have on same-sex spouses in states that do not recognize same-sex marriages, such as cases where an employee marries a same-sex spouse in a state that recognizes same-sex marriage but subsequently relocates to a state that does not. The federal government will likely issue guidance on this issue, and several other related issues, in the near future.

“Court DOMA Decision Rules Federal Same-Sex Marriage Ban Unconstitutional” by Ryan J. Reilly and Sabrina Siddiqui, The Huffington Post; June 26, 2013

“Gay marriage ruling: Supreme Court finds DOMA unconstitutional” by David G. Savage, The Los Angeles Times; June 26, 2013

“Potential Impact of Defense of Marriage Act Decision on ERISA Plans,” Retirement Insights Special bulletin: Legislative and Regulatory Update, J.P. Morgan Asset Management