On June 26, 2013, the U.S. Supreme Court issued its decision in United States v. Windsor, invalidating Section 3 of the Defense of Marriage Act (DOMA). In the year following the decision, its implications for employee benefit programs are becoming more clear. Fraser Trebilcock attorney Brian Gallagher recently spoke about these implications as the employee benefits panelist for a Thompson Reuters webcast on the current state of the law.
Both the IRS (in Rev. Rul. 2013-17) and the U.S. Department of Labor (in Technical Release 2013-04) have made clear that, for all tax code and ERISA purposes, a same-sex spouse will be considered a spouse, regardless of the couples’ state of residency (adopting the so-called “state of celebration rule”). More recently, the IRS issued Notice 2014-19, which essentially explains that qualified retirement plans will be required to comply with Windsor retroactively, to the date of the decision (June 26, 2013). Plans will not need to be amended unless their current terms violate Windsor or any subsequent guidance, but will be required to comply in operation. This may necessitate corrective action pursuant to the Employee Plans Compliance Resolution System (EPCRS). For those rare plans that need to be amended, the deadline is generally December 31, 2014.
There are numerous cases pending that could further complicate plan administration. For example, the plaintiff in Passaro v. Bayer (filed May 12, 2014, in the U.S. District Court for the District of Connecticut) filed suit for survivor benefits under ERISA, arguing that, when a law is held unconstitutional, it is generally void retroactive to its date of adoption. Under this logic, the Windsor decision would invalidate Section 3 of DOMA retroactive to September 21, 1996. This would result in nearly 20 additional years of necessary corrections, as compared to the IRS’s qualification requirement of retro-activity to the June 26, 2013 date of the Supreme Court’s decision.
IRS and DOL officials have informally indicated that neither agency anticipates the issuance of further guidance. If you have any questions about how your company’s benefit plans must comply with this guidance, please contact Fraser Trebilcock Employee Benefits attorney, Brian Gallagher at 517.377.0886 or bgallagher@fraserlawfirm.com.