Retirement plans must recognize same-sex spouses

Retirement plans must recognize same-sex spouses

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Benefit Bulletins
Following the U.S. Supreme Court’s ruling against the Defense of Marriage Act (DOMA) in 2013, under federal law employers must treat same-sex couples as married for all federal tax and ERISA Title 1 purposes.

Employers who sponsor qualified retirement plans, such as a 401(k), must recognize a legally valid same-sex marriage, even if the couple resides in a state that doesn’t recognize same-sex marriage.

In Notice 2014-19, the IRS gave employers a deadline of December 31, 2014, to update plan documents. “Many plans don’t clearly define ‘spouse,’ so the language may not need to change,” said Kim Sheek, Bukaty Financial Services plan administration specialist.

Year-end is also a good time to remind employees to update their beneficiary information. By law, a spouse is the employee’s default retirement plan beneficiary. Sheek recommends employers ask all employees to notify them if they’ve had a change of status, including marriage or divorce.

“Often employees forget to notify their employer, and gay employees might be hesitant to announce a marriage, especially if they live in a state that bans same-sex marriage,” she said.

However, employers may face a lawsuit if the employee names someone else, such as a child, as the beneficiary and the spouse has not agreed and signed consent.

For questions, please contact Bukaty Financial Services, 913.338.5300.