Court Rules in Agreement with DOMA Under a California Law Case Regarding a Retirement Account

On May 16, 2019 the Ninth Circut ruled in favor of the domestic partner in a case where the administrator of a retirement plan denied payment of retirement benefits to  the surviving domestic partner.

Under California law, registered domestic partners are given the same rights as spouses, and the same protections and benefits.

The plaintiff filed a claim with the plan administrator for spousal benefits, and the claim was denied based on the plan administrator’s interpretation of the term “spouse” in the plan, in a manner that excluded domestic partners.

The Ninth Circuit found that neither ERISA nor the Internal Revenue Code contained a binding interpretation of “spouse” after the Supreme Court found the Defense of Marriage Act (“DOMA”) to be unconstitutional.

The Court found that because California law gave registered domestic partners the same rights as spouses and that was not inconsistent with ERISA or the Internal Revenue Code (again ignoring DOMA), the plan administrator should have interpreted the term “spouse” to include registered domestic partners.

Recognition of marriages of same-sex couples for tax purposes

Following the Windsor decision, the IRS issued Revenue Ruling 2013-17, which holds that married same-sex couples are now treated as married for all federal tax purposes where marriage is a factor, if the couple is lawfully married under the laws of one of the 50 states, the District of Columbia, a U.S. territory or a foreign jurisdiction. Notice 2014-19 gives additional guidance on how qualified retirement plans should treat the marriages of same-sex couples.

DOL Issue Final Regulations

In September 2016 the DOL issued final regulations basically saying the terms are gender-neutral:

“spouse,” “husband,” and “wife” mean an individual lawfully married to another individual, and the combined term husband-and-wife means two individuals lawfully married to one another.

Closing Comments

When processing solo 401k plan beneficiary claims, make sure to review the signed beneficiary election form to determine if the spouse (regardless of gender) is the named beneficiary before processing the solo 401k plan death claim, as the beneficiary distribution rules are more favorable to spouse beneficiaries than non-spouse beneficiaries.

About Mark Nolan

Each day I speak with energetic entrepreneurs looking to take the plunge into a new venture and small business owners eager to take control of their retirement savings. I am passionate about helping others find their financial independence. Having worked for over 20 years with some of the top retirement account custodian and insurance companies I have a deep and extensive knowledge of the complexities of self-directed 401ks and IRAs as well as retirement plan regulations. Learn more about Mark Nolan and My Solo 401k Financial >>

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