On June 26, 2013, in U.S. v. Windsor the United States Supreme Court overturned Section 3 of the Defense of Marriage Act ("DOMA"), which limited marriage for federal law purposes to opposite-sex couples. As a result, any federal law that refers to a "marriage" or "spouse" now applies equally to legally married same-sex couples. The Supreme Court did not rule on Section 2 of DOMA, which provides that no state is required to recognize a same-sex relationship that is considered a legal marriage in another state. The implication is that legally married same-sex couples who reside in a state where same-sex marriage is recognized are clearly entitled to and protected by all federal benefits of marriage. Until further guidance is released, however, it is unclear how legally married same-sex couples who reside in a state where same-sex marriage is not recognized will be treated for federal law purposes. In addition, Windsor left several other questions unanswered with respect to how the decision affects employee benefit plans, including:
 
To what extent is the decision retroactive? When a statute is determined to be unconstitutional, the decision typically is retroactive so that the law is considered as never having been valid. Whether, and to what extent, the Supreme Court's decision is retroactive will have critical ramifications for employee benefit plans. The government is expected to provide guidance on the retroactive effect of the decision in the near future.

• For qualified plans, a retroactive effective date could have a significant effect on prior benefit payment elections and beneficiary designations, which generally require spousal consent.
• For health and welfare plans, it is unclear whether the IRS will require employers that imputed income for the value of same-sex spousal coverage issue to amended Forms W-2 for all open years and allow them to seek FICA refunds.

Does the decision affect legally married same-sex couples who live in states where same-sex marriage is not recognized? Until further guidance is released, it is unclear how legally married same-sex couples who live in a state where same-sex marriage is not recognized will be treated for federal law purposes. It also is unclear whether an employer with locations in several states may use a single standard for same-sex spouses.
 
Employers can take steps now to begin compliance with the DOMA decision. For example:

• Review the definition of "spouse" in all plan documents -- both retirement and health and welfare -- to determine whether a plan amendment is necessary or desirable.
• Review summary plan descriptions, other employee communications, and plan administrative forms and procedures to determine whether changes and clarifications should be made.

Some Implications for Retirement Plans:

• Same-sex spouses are entitled to both pre- and post-retirement benefits, including qualified joint and survivor annuities and qualified pre-retirement survivor annuities and must consent to a participant's payment election or beneficiary designation.
• A same-sex spouse or former spouse may obtain a QDRO without demonstrating that he or she is a dependent of the participant.
• A same-sex spouse may roll over plan distributions to his or her own IRA or another employer plan and may delay receipt of death benefits until the April 1 after reaching age 70½.
• If a plan offers loans and requires spousal consent, a same-sex spouse must consent to a participant's loan request.
• To the extent a plan permits hardship withdrawals, a participant may receive a hardship withdrawals for IRS-recognized expenses related to the participant's same-sex spouse.

Some Implications for Health and Welfare Plans

• A same-sex spouse may be covered under health insurance on a nontaxable basis. The value of employer-provided coverage no longer is required to be imputed as income to the employee, and the employee may make pre-tax contributions for coverage of a same-sex spouse.
• An employee may change benefits under a cafeteria plan for changes in status involving a same-sex spouse.
• Same-sex spouses are entitled to the following rights and benefits: HIPAA special enrollment rights, COBRA continuation coverage, and FMLA leave.
• An employee may use dependent care assistance benefits to pay for the care of a same-sex spouse.