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New Rules on the Definition of Marriage - Effective September 16, 2013

Currently the states of California, Connecticut, Delaware, Iowa, Maine, Maryland, Massachusetts, Minnesota, New Hampshire, New York, Rhode Island, Vermont, Washington and the District of Columbia allow for same-sex marriages.

The June 26, 2013 ruling by the Supreme Court striking down the Defense of Marriage Act (DOMA), essentially left it up to State Law to determine whether someone is married.

The Supreme Court decision is relevant to all employers for many purposes and in connection with many federally conferred benefits and rights, such as family and medical leave, healthcare benefits, etc. 

Qualified Retirement Plans must comply with the following rules pursuant to Rev. Rul. 2013-17:

·       A qualified retirement plan must treat a same-sex spouse as a spouse for purposes of satisfying the federal laws relating to qualified retirement plans.

·       For purposes of satisfying the federal  tax laws, a qualified retirement plan must recognize a same-sex marriage that was validly entered into in a jurisdiction whose laws authorize the marriage, even if the married couple lives in a domestic or foreign jurisdiction that does not recognize the validity of same-sex marriages.

·       A person who is in a registered domestic partnership or civil union is not considered to be a spouse for purposes of applying the federal tax law requirements relating to qualified retirement plans, regardless of whether that person’s partner is of the opposite or same sex.

With regard to your 401k plan, spouses in legal same-sex marriages must be given the right to:

·       Roll over death benefits to an IRA or another employer-sponsored plan

·       Postpone death benefit distributions until they reach age 70 ½

·       Receive the 100% spousal benefit (unless their spouse chooses to waive it in writing)

·       Provide consent in plans where spousal consent is required for distributions, loans, etc.

·       Have their need for payment of “hardship” withdrawals considered when satisfying the hardship events test

·       Be treated as a spouse for purposes of a Qualified Domestic Relations Order (QDRO) Rules, including a right to receive a portion of a participant’s benefits as well as the special tax rules that apply to spouses.

Your Plan should review the current beneficiary elections of all plan participants at this time.  The spouse (including same-sex spouse) of a participant must be the beneficiary of any death benefits distributed from the Plan, unless the spouse agrees in writing to an alternate beneficiary.

Please contact your investment advisor or your administrator at The Michigan Pension Group with questions or to obtain Beneficiary Election Forms if you cannot locate such form on your Sponsor Website.