The U.S. Supreme Court’s repeal of the Defense of Marriage Act has many plan sponsors worried about how to treat same-sex couples within retirement plans.
That’s why the SPARK Institute has now asked the Department of Labor and the Department of Treasury for guidance about how plan sponsors should determine the status of same-sex couples. Some states allow marriage and others only allow civil unions. Some states prohibit same-sex unions.
SPARK said that its members are concerned that if they follow the “state of domicile” rule instead of the “state of celebration” (where the marriage took place) rule, participants will be confused.
Larry Goldbrum, general counsel for The SPARK Institute, said in his letter to the two government agencies that eligibility should be based on where the couple was married, not where they live, and that plan sponsors shouldn’t have to grant rights retroactively to same-sex couples whose marriages were not recognized at the time they received benefits.
The letter requests that the Treasury and DOL consider the numerous implications related to plan administration and allow plan sponsors to limit, when appropriate, the retroactive effect of the high court’s decision regarding DOMA to the effective date of the decision.
SPARK has also asked the agencies to adopt a lenient enforcement approach that takes into account the complexity of the issues and challenges faced by plan sponsors and service providers as they await guidance.
“A plan sponsor that makes a good faith effort to administer its plan post-DOMA should not be unreasonably faced with enforcement actions on issues that could not have been anticipated with respect to which there is little or no guidance or precedent,” Goldbrum said.
The SPARK Institute represents the interests of a cross-section of retirement plan service providers and investment managers, including banks, mutual fund companies, insurance companies, third-party administrators, trade clearing firms and benefits consultants.