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5500 Preparer's Manual for 2012 Plan Years
The premier resource in the field of Form 5500 preparation, 5500 Preparer's Manual will help you handle the required annual Form 5500 filings for both pension benefits and welfare benefit plans.
The legalization of same-sex marriages in some states, such as occurred in Massachusetts in 2004, will not enable same-sex partners to receive spousal retirement benefits under private pension plans, Federal employee pension plans or Social Security, according to a study by the Congressional Research Service (CRS). The Defense of Marriage Act (DOMA) effectively restricts spousal benefits to persons in traditional marriages.
The CRS study initially noted that private pensions are governed by ERISA, which preempts all state laws relating to employee benefits, and the Internal Revenue Code. Under the Code, defined benefit plans must provide married participants with qualified pre-retirement survivor annuities (QPSAs) prior to retirement and qualified joint and survivor annuities (QJSA) at retirement. A spouse’s consent is required to waive a QPSA or QJSA or use the pension benefit as security for a loan. Defined contribution plans make a participant’s spouse the automatic beneficiary upon a participant’s death, unless another beneficiary has been designated. In either case, then, the definition of “spouse” is important.
The study notes that IRS policy has been to defer to state law to determine whether a common-law relationship, or any other relationship, qualifies as a “marriage.” However, the IRS has never recognized same-sex marriage for income tax purposes, and DOMA explicitly supersedes any state law which would require an employer to recognize a same-sex partner as a spouse for purposes of retirement plans, according to the CRS.
DOMA requires that, in interpreting any federal law or regulation, a spouse can only be a person of the opposite sex who is a husband or wife. Consequently, a pension plan cannot be required to recognize a same-sex spouse even if same-sex marriages are permitted under state law, the CRS states. This means that, for example, a plan cannot require a participant with a same-sex partner to take a QJSA as the normal form of benefit, even if state law recognizes the same-sex partner as a spouse. In the view of the CRS, even if ERISA preemption of state employee benefit law was not a factor, DOMA alone prohibits the recognition of same-sex spouses in the interpretation and application of federal law.
Federal employees are eligible for retirement and disability benefits under either the Civil Service Retirement System (CSRS) or the Federal Employees Retirement System (FERS). Although federal law governing federal employee benefits refers to the terms “spouse” and “marriage” without reference to gender, federal employee benefits are required to use DOMA’s interpretation of those terms in determining eligibility for survivor or dependant benefits, according to the CRS. Thus for purposes of these benefits, the word “spouse” refers only to a person of the opposite sex who is a husband or a wife.
Neither CSRS or FERS permit an employee to name a domestic partner as a surviving beneficiary for retirement benefits, but they may name a domestic partner as beneficiary for a lump-sum refund of retirement contributions, unless a spouse or dependent child is entitled to receive survivor annuity benefits by law. The CRS notes that a retiring Federal employee can elect an Insurable Interest Annuity (IIA) naming as beneficiary someone who is financially dependant on the retiring employee.
Under the Social Security Act, benefits are payable to the spouse of a retired, disabled, or deceased worker insured. The benefit is equal to 50% of a the retired or disabled worker’s benefit or 100% of a deceased worker’s benefit. Generally, the Act defers the determination as to whether a marriage is valid to the state. However, the Social Security Act uses gender-specific pronouns in defining “wife” or “husband.” Accordingly, the Social Security Administration (SSA) has determined that Congress did not intend that same-sex spouses should be eligible for Social Security benefits. Regardless of the SSA’s interpretation, DOMA specifies that when determining the meaning of any Act of Congress or any ruling, regulation, or interpretation by Federal agencies, “marriage” can only be defined as a legal union between members of the opposite sex. Thus, the SSA is required to use the federal definition of “marriage” when interpreting the Social Security Act. Accordingly, the CRS concluded, the legalization of same-sex marriage at the state level has no effect in determining the validity of marriage for Social Security purposes.
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