IRS Provides Guidance Regarding Tax Implications of Obergefell on Cafeteria and Qualified Retirement Plans
On December 9, 2015, the IRS released Notice 2015-86, which contains guidance regarding the application of federal tax law to certain employee benefit plans following the U.S. Supreme Court?ÇÖs decision in Obergefell v. Hodges, which recognized the constitutional right of same-sex marriage. ?áWith respect to cafeteria plans, the Notice addresses the circumstances under which a mid-year election change would be permitted following a change in the terms or operation of a covered benefit (e.g., a health plan) to permit coverage for same-sex spouses. ?áFor tax qualified retirement plans, the IRS confirmed that the Obergefell decision should not require any mandatory plan design changes because any such changes should already have been implemented as required under previous IRS guidance issued in response to the Supreme Court?ÇÖs 2013 decision in United States v. Windsor, which invalidated Section 3 of the federal Defense of Marriage Act. ?áThe IRS clarified, however, that in light… Continue Reading
The U.S. Supreme Court held last week, in Obergefell v. Hodges, that the U.S. Constitution requires all states to perform same-sex marriages and recognize same-sex marriages lawfully performed in another state. We recommend employers review their employee benefit plans to determine whether they offer coverage to all legally married couples. Additionally, employers may want to consider whether to continue offering domestic partner benefits. Obergefell v. Hodges, No. 14-556, ___ U.S. ___ (June 26, 2015) can be found?áhere.
On February 26th, a federal district court in Texas found the state?ÇÖs ban on same-sex marriage unconstitutional.?á However, the court delayed implementation of its order pending appeal.?á As a result, employers and employee benefit plan sponsors do not need to take any actions at this time as a result of this decision.?á Employers and plan sponsors should, however, continue to monitor the rapidly changing legal landscape regarding recognition of same-sex marriage in the United States and consult their legal and benefit plan advisors for additional guidance.?á Leon v. Perry, SA-13-CA-00982-OLG (W.D. Tex. Feb. 26, 2014).
A federal district court in California recently held that the Defense of Marriage Act (?Ç£DOMA?Ç¥) unconstitutionally discriminates against same-sex married couples. In the case, the plaintiff, who was employed by the U.S. Court of Appeals for the 9th Circuit, challenged the denial of health insurance coverage for her same-sex spouse. The same-sex couple had married on August 21, 2008 during the period that same-sex marriage was permitted under California law. The district court granted summary judgment to the plaintiff on her claim that Section 3 of DOMA violated her 5th Amendment right to equal protection of the law. In its decision, the court determined that a previous 9th Circuit decision was no longer binding precedent and instead ruled that discrimination based on sexual orientation is considered a suspect or quasi-suspect class which is entitled to a heightened scrutiny standard of judicial review. The court?ÇÖs decision found that DOMA does not… Continue Reading