The ERISA consultants at the Columbia Management Retirement Learning Center Resource Desk regularly receive calls from financial advisors on a broad array of technical topics related to IRAs and qualified retirement plans. A recent call with a financial advisor in Minnesota is representative of a common scenario involving the question of who is a spouse in states that have enacted same-sex marriage laws, and the impact such laws have on 401(k) plan participants. The advisor asked:
“Minnesota recently became the 12th U.S. state to legalize same-sex marriage. When my client marries his partner, will his same-sex spouse be considered a spouse for purposes of the 401(k) plan in which he participates?”
Highlights of Discussion
At this point, no. A state’s same-sex marriage law has no impact on the federal laws governing spousal and beneficiary rights in qualified retirement plans. Consequently, a same-sex spouse would not be considered a spouse for purposes of the 401(k) plan.
Minnesota joins Connecticut, Delaware, Iowa, Maine, Maryland, Massachusetts, New Hampshire, New York, Rhode Island, Vermont, Washington and Washington, D.C. in legalizing same-sex marriage at the state level. 401(k) plans are governed by ERISA, which pre-empts state law.
Under ERISA, the spouse is automatically considered the primary beneficiary of the participant’s account balance, unless the participant obtains his or her spouse’s written consent to name someone else as primary beneficiary. For federal law purposes, a spouse is defined under the Defense of Marriage Act (DOMA) as a person of the opposite sex.
Conclusion
Under current federal law, state same-sex marriage laws are essentially ignored for purposes of determining the legal spouse under qualified retirement plans. Financial advisors who can demonstrate their knowledge of the impact of same-sex marriages on retirement benefits set themselves apart from the average advisor and are better positioned to support their clients.
The Columbia Management Retirement Learning Center Resource Desk is staffed by the Retirement Learning Center, LLC, a third-party industry consultant that is not affiliated with Columbia Management. For informational purposes only. Please consult a tax advisor or attorney for specific tax or legal needs. © 2013 Columbia Management Investment Advisers, LLC. Used with permission.
