If you’re like me, your email inbox is flooded with Newsletters, Briefings, Updates, etc. from service providers and law firms on recent benefit developments.
One hot topic among these is the recent Supreme Court decision, U.S. v. Windsor, referred to as the Defense of Marriage Act decision which recognizes same-sex marriages for federal tax purposes.
Maybe your clients get these same emails. At the very least, they receive coverage through the media.
Some of your clients may have asked you, as some have asked me: “So, what do you know about this same-sex marriage case?” I had this question posed to me in a conference call with a client last Friday.
We’re not attorneys to provide a legal response, but what follows are my talking points which you may find helpful.
Supreme Court Ruling: The Supreme Court decision on June 26, 2013 invalidated Section 3 of DOMA which barred recognition of same-sex marriages for purposes of any federal law or regulation subject to federal law. This includes the Internal Revenue Code (“Code”) and the Employee Retirement Income Security Act of 1974 (ERISA) which is the major law governing both retirement and health and welfare plans.
Immediate Impact: The decision has the immediate effect of granting same-sex couples who are married under state law the same federal rights, protections, and responsibilities as are afforded to married opposite-sex couples under ERISA and the Code.
Issues Not Addressed by the Supreme Court: Windsor did not address two significant issues: 1) Whether a state-sanctioned marriage between a same-sex couple residing in a state that does not recognize that relationship will be recognized under federal law; and 2) Whether the ruling applies retroactively.
Some Uncertainly Removed by Internal Revenue Service and Department of Labor: Both the Internal Revenue Service and the Department of Labor recently provided clarity to the first issue. Same-sex couples legally married in a state or foreign jurisdiction authorizing the marriage will be treated as married for all federal tax purposes, even if they reside in a state that does not recognize the marriage.
Uncertainly Remaining: The IRS and DOL rulings did not, however, address the issue as to whether the Windsor decision is retroactive. We will provide you additional information as additional IRS and DOL guidance becomes available.
Notice I said “Talking Points” and not to be considered legal advice. But you should be pro-active with your service providers so that clients get the guidance they need … and continue to demonstrate the value you add to their benefit plans.
I hope this helps.
Jerry Kalish is an EBA Advisory Board member and President of National Benefit Services, Inc., a Chicago-based third party administrator. He is a Guest Lecturer at John Marshall School of Law LLM Program in Employee Benefits and serves on the Great Lakes IRS Advisory Council for Tax Exempt and Government Entity Plans. Jerry has been publishing The Retirement Plan Blog since 2006. He can be reached via email at firstname.lastname@example.org and followed on Twitter.
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