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Supreme Court Ruling on Same-Sex Marriage Impacts Employee Benefit Plan Administration

July 1, 2015

As most readers will already be aware, the Supreme Court's recent ruling in Obergefell mandates that same-sex marriage must now be licensed and recognized at the state level.  While the ruling is unambiguous that the right to same-sex marriage is protected under the Fourteenth Amendment, future litigation will almost certainly be required to resolve the interaction of that right with the equally important First Amendment right to the free exercise of religion.  In this client alert, we focus on the more technical but nonetheless necessary question of how employee benefit plan administration will be affected by Obergefell, particularly for employers in states that did not previously recognize same-sex marriage.

Although Obergefell does not change the recognition of same-sex marriage for purposes of federal laws, including the Internal Revenue Code and the Employee Retirement Income Security Act of 1974 ("ERISA"), its practical impact may vary depending on an employer's current location.  Since the Supreme Court's 2013 ruling in United States v. Windsor, marital status at the federal level has been determined under the law of the state in which an employee was married. [1]   This uniform federal recognition notwithstanding, state recognition prior to Obergefell varied by state.  Employers in states that did not previously recognize same-sex marriage may now need to review their administrative practices.

In particular, employers may find that some administrative practices can be simplified as separate record keeping may no longer be required to distinguish federally-recognized from state-recognized marriages.  Also, the ruling may result in significant cost savings for employers who previously offered gross-ups in order to offset state-level taxation of benefits for same-sex spouses.   However, employers should understand that the speed and mechanics of implementation may vary by state.  Any review of benefits administration in light of Obergefell should be conducted by counsel licensed in the applicable state.

For more information about Obergefell, or other issues concerning your employee benefit plans, please contact Joanne C. Youn at jyoun@capdale.com / 202.862.7855 or Ronald G. Cluett at rcluett@capdale.com / 202.862.5094.

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[1]    We discuss the application of Windsor to employee benefit plans in a series of client alerts, most recently our April 2014 alert "IRS Issues Important Guidance for Employers on Application of U.S. v. Windsor to Qualified Retirement Plans".

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About Caplin & Drysdale
Having celebrated our 50th Anniversary in 2014, Caplin & Drysdale continues to be a leading provider of tax, tax controversy, and litigation legal services to corporations, individuals, and nonprofits throughout the United States and around the world. We are also privileged to serve as legal advisors to accounting firms, financial institutions, law firms, and other professional services organizations.

The firm's reputation over the years has earned us the trust and respect of clients, industry peers, and government agencies. Moreover, clients rely on our broad knowledge of the law and our keen insights into their business concerns and personal interests. Our lawyers' strong tactical and problem-solving skills - combined with substantial experience handling a variety of complex, high stakes, matters in a boutique environment - make us one the nation's most distinctive law firms.

With offices in New York City and Washington, D.C., Caplin & Drysdale's core practice areas include:

-Bankruptcy
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-Employee Benefits
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For more information, please visit us at www.caplindrysdale.com.

 

 

 

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Disclaimer
This communication does not provide legal advice, nor does it create an attorney-client relationship with you or any other reader. If you require legal guidance in any specific situation, you should engage a qualified lawyer for that purpose. Prior results do not guarantee a similar outcome.

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© 2015 Caplin & Drysdale, Chartered
All Rights Reserved.

________________________________________________

About Caplin & Drysdale
Having celebrated our 50th Anniversary in 2014, Caplin & Drysdale continues to be a leading provider of legal services to corporations, individuals, and nonprofits throughout the United States and around the world. We are also privileged to serve as legal advisors to accounting firms, financial institutions, law firms, and other professional services organizations.

The firm's reputation over the years has earned us the trust and respect of clients, industry peers, and government agencies. Moreover, clients rely on our broad knowledge of the law and our keen insights into their business concerns and personal interests. Our lawyers' strong tactical and problem-solving skills -- combined with substantial experience handling a variety of complex, high stakes, matters in a boutique environment -- make us one the nation's most distinctive law firms.

With offices in New York City and Washington, D.C., Caplin & Drysdale's core practice areas include:
For more information, please visit us at www.caplindrysdale.com.
Washington, DC Office:
One Thomas Circle NW
Suite 1100
Washington, DC 20005
202.862.5000
New York, NY Office:
600 Lexington Avenue
21st Floor
New York, NY 10022
212.379.6000

___________________________

Disclaimer
This communication does not provide legal advice, nor does it create an attorney-client relationship with you or any other reader. If you require legal guidance in any specific situation, you should engage a qualified lawyer for that purpose. Prior results do not guarantee a similar outcome.

Attorney Advertising
It is possible that under the laws, rules, or regulations of certain jurisdictions, this may be construed as an advertisement or solicitation.
© 2020 Caplin & Drysdale, Chartered
All Rights Reserved.

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