Plan Sponsors May Face New Challenges With Same-Sex Marriage Definition, Attorneys Say


Sponsors of retirement and welfare benefit plans governed by federal law face substantial challenges in navigating the quickly changing legal waters surrounding treatment of same-sex married couples after the U.S. Supreme Court's decision in United States v. Windsor, 133 S. Ct. 2675, (U.S. 2013) invalidating a section of the Defense of Marriage Act, according to a panel of experts in a webcast.
According to the panel Jan. 28, the fact that federal law no longer has a controlling definition of marriage and that the Supreme Court has recently decided to consider four cases that challenge state prohibitions on same-sex marriage both provides plan sponsors with an opportunity to amend their plans to include same-sex couples and raises concerns that failure to properly treat those spouses could result in increased exposure to liability.
The webcast was sponsored by American Law Institute Continuing Legal Education and featured a panel consisting of Jordan Backman, senior counsel for benefits and compensation at Sony Corp. of America in New York, Steve Flores, an associate at Winston & Strawn in Chicago, and Todd Solomon, a partner in McDermott Will & Emery in Chicago.
Effects on Retirement Plans
The panelists said that, after the Windsor opinion was announced, decisions by the Internal Revenue Service and the Department of Labor (182 PBD, 9/19/13) to apply a “place of celebration” rule instead of a “place of residence” rule when determining whether a same-sex couple was legally married created obligations for many plan sponsors to include those newly legal spouses in their employee benefit plans.
“It's interesting that it wasn't really a case about employee benefits, but that, as a result of that case, we really do have a lot of impact on the employee benefits world,” Backman said, noting that the case actually involved a demand by a same-sex spouse for relief from federal estate tax.
According to Solomon, whether a retirement plan is a defined contribution or a defined benefit plan has a large impact on what the effect of the recognition of same-sex marriages will be for a plan sponsor.

Excerpted from a story that ran in Pension & Benefits Daily (01/29/2015).     

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