Understanding retirement plans for same-sex couples - WCAX.COM Local Vermont News, Weather and Sports-

Understanding retirement plans for same-sex couples

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The United States Supreme Court made history back in June with its ruling on same-sex marriage.

The high court struck down key parts of the Defense of Marriage Act known as DOMA. The new ruling means that in states where same-sex marriage is legal married couples are able to get  the same benefits as heterosexual couples. Social security, insurance and taxes are some of those benefits.

Vermont is one of those states.

Manager of Retirement Plan Services Wayne Braun of People's United Bank explains what those same-sex couples are entitled to and what they have to do for their retirement plans.

Q.  The Defense of Marriage Act (DOMA) barred the federal government from recognizing same-gender marriages. On June 26, 2013, the United States Supreme Court ruled that the Defense of Marriage Act (DOMA) was unconstitutional.  What does this change concerning DOMA mean for retirement plans?

A.  The Internal Revenue Service and the Department of Labor have published guidance for retirement plans that state a same-gender spouse is considered a legal spouse if the marriage took place in a state, territory or foreign jurisdiction where the marriage is legally recognized, regardless of where the parties currently reside.  The ruling also states that other formal relationships, such as civil unions or domestic partnerships, are not considered marriages under federal law.

Q.  How does this impact participants and employers with retirement plans?

A.  It will impact three main aspects of retirement plans – beneficiary designations, spousal consent on distributions and spousal death benefits.  For participants who have a same-gender spouse the legal spouse is generally the participant's automatic beneficiary.  Spousal consent will be required if the participant chooses a different beneficiary, such as a child.  For distributions, written spousal consent for same-gender couples may now be required to receive a distribution under certain plans.  Finally, if the participant's death occurs, the same-gender spouse will now be able to rollover the death benefit to a Spousal IRA or another qualified plan, continuing to defer taxation.

Q.  Is there action that participants or employers should be taking?

A.  Participants with a same-gender spouse should contact their human resource department to complete a new beneficiary designation to make sure it complies with the new regulations.  Employers should request that all participants complete a new beneficiary form as not many participants may be aware of the impact to their retirement plan.  Employers may also need to amend their plan document to reflect the change in regulations.

Q.  When is this effective?

A.  Retirement plans must have recognized the new rules effective September 16, 2013.

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