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 70˝. 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
In association with
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
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). 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 & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd 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 or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


From time to time Mondaq may send you emails promoting Mondaq services including new services. You may opt out of receiving such emails by clicking below.

*** If you do not wish to receive any future announcements of services offered by Mondaq you may opt out by clicking here .


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.