Q&A with Brandon Long
New IRS guidance on employee benefits for same-sex spouses
Q: When the U.S. Supreme Court struck down a major section of the Defense of Marriage Act as being unconstitutional, many were left wondering what implications the ruling would have on employee benefit plans since the definition of a spouse is no longer limited to a husband or wife of the opposite sex under federal law. What's the latest?
A: The IRS recently issued new guidance that answered some of the questions left open after the ruling. The new guidance is effective Sept. 16.
Q: What is the main takeaway from the IRS guidance for Oklahoma employers who offer qualified retirement plans to their employees?
A: Qualified retirement plans such as 401(k), 403(b) and pension plans are subject to federal law. Under the new guidance, a plan must recognize a valid same-sex marriage from another jurisdiction — even if the married couple live in a state (such as Oklahoma) that does not recognize same-sex marriage — in order to maintain federal tax compliance. Currently, same-sex marriage is legal in 13 states and the District of Columbia.
Here's an example of how that might play out in the workplace: Let's say a company's 401(k) plan provides that a plan participant's spouse is the default beneficiary unless the spouse has consented to a different beneficiary. Beginning Sept. 16, an employee's same-sex spouse would be the default beneficiary unless he/she previously consented to a different beneficiary.
Q: Does the new guidance impact how federal taxes are assessed on individual employee benefits?