United States: Supreme Court Rules DOMA Unconstitutional – Employee Benefit Plan Implications

Yesterday, the U.S. Supreme Court, in U.S. v. Windsor, ruled that Section 3 of the Defense of Marriage Act (DOMA) is unconstitutional because it violates the Fifth Amendment's equal protection guaranty for persons of the same sex who are legally married under the laws of their state of residence.

Prior to the Windsor ruling, Section 3 of DOMA provided that only persons of the opposite sex are recognized as "spouses" or "married" for purposes of federal law. Section 3 of DOMA applied to over 1,000 federal laws, rules and regulations, including the Internal Revenue Code and ERISA. As a result of the Windsor ruling, same-sex couples who are legally married in the state of their residence1 are required to be recognized as "spouses" or "married" for purposes of federal law. The Windsor ruling has immediate implications for employers maintaining retirement plans, health and welfare plans, and other fringe benefit programs. In addition, the ruling may also impact employers' payroll practices.

Below is a high-level overview of the effect the Windsor ruling is expected to have on various types of employee benefit plans and arrangements:

Qualified Retirement Plans

  • Survivor Benefits – Qualified defined benefit plans (and certain defined contribution plans) are required to provide that a participant's benefit will be paid in the form of an annuity for the life of the participant with a 50 percent (or more) survivor benefit paid to the participant's spouse unless the spouse consents to another form or payment. These plans must also provide that if a participant dies prior to retirement, the spouse would receive an annuity for the life of the spouse equal to 50 percent of the participant's benefit at the time of death. As a result of the Windsor ruling, a legally married same-sex spouse of a plan participant will be provided with these same rights.2

    Defined contribution plans that do not provide joint and survivor annuity payment forms must nonetheless provide that, unless the spouse consents otherwise, the entire plan account balance of the participant will be payable to the spouse upon the death of the participant. As a result of the Windsor ruling, a legally married same-sex spouse of a deceased participant will have the right to receive the deceased participant's plan account balance (and to consent otherwise).
  • QDROs – A qualified domestic relations order (QDRO) allows a divorced spouse to receive a portion of a participant's benefit in a qualified retirement plan. Previously, this process was not available for married same-sex couples. As a result of the Windsor ruling, divorcing same-sex couples can utilize the QDRO process to assign a portion of the participant's benefit in a qualified retirement plan to the former spouse.
  • Rollovers – The Internal Revenue Code provides that the spouse beneficiary of a retirement plan participant is permitted to receive distribution of the deceased participant's plan benefit in the form of a rollover to either a IRA or a qualified retirement plan. Previously, same-sex spouses were treated as non-spouse beneficiaries for this purpose and were limited to rolling over the benefit to an inherited IRA. As a result of the Windsor ruling, a legally married same-sex spouse of a deceased participant will be permitted to roll over the participant's benefit to the spouse's own IRA or to a qualified retirement plan sponsored by the spouse's employer. 
  • Minimum Required Distributions – As a result of the Windsor ruling, a legally married same-sex spouse of a deceased participant will be permitted to delay distribution of the participant's benefit from the plan until the time when the participant would have attained age 70½. Previously, a same-sex spouse would have been required to commence distribution of the participant's benefit on a more accelerated timeframe.
  • Hardship Withdrawals – As a result of the Windsor ruling, a participant will be permitted to receive a hardship withdrawal from a defined contribution plan (to the extent the plan generally permits hardship withdrawals) as a result of a legally married same-sex spouse's medical expenses, tuition costs and funeral expenses. Previously, hardship withdrawals were only permitted for such expenses if the plan provided for hardship withdrawals relating to medical, tuition and funeral expenses incurred by the participant's "primary beneficiary" and the same-sex spouse was designated as such.

Health and Welfare Plans

  • No Imputed Tax on Health Plan Costs – Previously, if the same-sex spouse of an employee was covered under the employee's group health plan, the portion of the cost associated with the coverage for the same-sex spouse was taxable to the employee and the employer was required to report and withhold applicable income and payroll taxes. As a result of the Windsor ruling, the coverage for a legally married same-sex spouse will not be subject to income or payroll taxes and the employer will have no reporting and withholding obligation. 
  • FSAs, HRAs, and HSAs – Qualifying medical expenses incurred by the legally married same-sex spouse of an employee may be eligible for tax-free reimbursement under flexible spending arrangements, health reimbursement arrangements and health savings accounts. Previously, such reimbursements were taxable to the employee. 
  • COBRA – A legally married same-sex spouse covered as a dependent under an employee spouse's group health plan can constitute a "qualified beneficiary" and elect COBRA continuation coverage upon a "qualifying event" (employee's termination of employment, divorce, death, etc.).
  • HIPPA Special Enrollment Rights – An employee may make a mid-year election to add a his legally married same-sex spouse to the employee's health plan coverage if the spouse loses coverage under another plan to the same extent as applies to opposite-sex spouses.

Employer-Provided Fringe Benefits

Many employers offer fringe benefits (e.g., no-additional-cost service benefits, employee discounts, and adoption assistance) to employees and their spouses and dependents. As a result of the Windsor ruling, these fringe benefits may be provided to the legally married same-sex spouse of an employee on a tax-free basis to the same extent as is applicable to opposite-sex spouses.

Open Questions

Although the Windsor ruling in many ways simplified the administration of certain employee benefit plans, there are number of open issues that were not addressed in the Supreme Court's opinion. Below is a high-level overview of those open issues:

  • The Windsor ruling does not address the extent to which same-sex spouses are required to be regarded as "spouses" under federal law if the same-sex couple were married in a state that permits such marriage but who now reside in a state that does not recognize same-sex marriage. Section 2 of DOMA, which was not at issue in the Windsor ruling, permits states to refuse to recognize a same-sex marriage that was performed in another state.
  • A key question for employers is whether the Windsor ruling will be given retroactive effect. If given retroactive effect, a same-sex spouse could again claim previously denied benefits for past years and employees could claim refunds for taxes paid for the cost of benefits provided to their same-sex spouses. Employers may seek refunds for their portion of payroll taxes paid for the cost of such benefits and may be required to amend tax forms (e.g., Form 941 and Form W-2) for open tax years.
  • The Windsor ruling also does not address whether health plans may elect to limit coverage to spouses of the opposite sex.

What Next?

We expect that federal regulators will issue guidance pertaining to the implications of the Windsor ruling. In the meantime, employers should review plan documents, summary plan descriptions, and other governing documents (e.g., insurance policies), as well as payroll systems and procedures to determine whether any changes are needed in response to the Windsor ruling.


1 Currently, same-sex marriage is permissible in Connecticut, Delaware (effective July 1, 2013), the District of Columbia, Iowa, Maine, Maryland, Massachusetts, Minnesota (effective August 1, 2013), New Hampshire, New York, Rhode Island (effective August 1, 2013), Vermont and Washington.

2 The Windsor ruling would also apply in the same way to any 401(k) or other type of defined contribution plan that permits participants to receive payment in the form of joint and survivor annuity.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Andrew J. Rudolph
Similar Articles
Relevancy Powered by MondaqAI
In association with
Related Topics
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Registration (you must scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions