“I noticed that the response was directed to Employee Retirement Income Security Act (ERISA) plan sponsors. We maintain a church plan that is not subject to ERISA. How does the ruling affect same-sex spouses in our plan?”
Michael A. Webb, Vice President, Retirement Plan Services, Cammack LaRhette Consulting, answers:
As with ERISA plans, we will need to await future guidance as to the precise impacts on plans that are not subject to ERISA, including what happens when same-sex spouses move to a state where same-sex marriage is not recognized.
What the Experts know at present is the significant changes that impact non-ERISA 403(b) plans are ones that relate to the Internal Revenue Code and related regulations, which govern ERISA and non-ERISA plans. Specifically, plans that are not subject to ERISA will be impacted by the following changes outlined in our recent Q&A:
1. Rollovers: as is the case with an opposite-sex spouse, an applicable same-sex spouse will now be able to roll over a distribution to his/her own IRA/qualified plan rather than an inherited IRA.
2. Hardships: an applicable same-sex spouse is no longer required to be a “primary beneficiary” of the participant in order for the participant to request a hardship distribution for medical, tuition, or funeral expenses of the same-sex spouse
3. Minimum Required Distributions: there is much more flexibility for applicable same sex-spouses in this area since they will now be able to defer beneficiary-related distributions until the participant would have turned 70 ½ and need not be concerned about their age relative to their spouse in the calculation of these distributions. These favorable rules already exist for opposite-sex spouses, and they are a significant improvement over the non-spouse rules, which require commencement of payment within one year of death, as well as other restrictions.
The other impacts listed our previous column (see “Ask the Experts – The Impact of the DOMA Ruling”), such as those dealing with spousal consent rules, would generally only apply to plans that are subject to ERISA.
NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.