The U.S. Supreme Court decision Wednesday that allows federal recognition of same-sex marriages will have an immediate impact on employers that provide retirement plans in the 12 states and District of Columbia where those marriages are allowed.
But exactly how it will affect the bottom line is still an unknown.
“Getting clarification on how it works as quickly as possible is important,” said Scott Macey, president and CEO of the ERISA Industry Committee, which represents large employers on benefits issues. “What (employers) don't want is inconsistency from state to state or new administrative burdens.”
In U.S. vs. Windsor, the high court struck down a section of the Defense of Marriage Act that bars federal recognition of same-sex marriages. The ruling does not affect states that do not allow or recognize same-sex marriages, “raising important questions about which state's marriage laws will come into play when applying federal law,” according to a statement from Catherine Stamm, senior associate, and Valerie Grace, partner, in Mercer's Washington resource group.
In a related case, Hollingsworth vs. Perry, the Supreme Court denied standing to backers of California's voter ban on same-sex marriage, leaving intact a U.S. District Court decision declaring the proposition unconstitutional.
“The rulings take effect immediately, possibly even retroactively,” wrote Ms. Stamm and Ms. Grace, which means employers will have to reprogram tax reporting systems and update forms for enrollment, distributions and beneficiary designation, and more.
Officials at the American Benefits Council, which filed an amicus brief on the Windsor case, welcomed the decision. “DOMA imposed unequal federal tax treatment on workers covered by employer-sponsored benefit plans, and burdens on plan sponsors. Many more employers can now focus on providing benefits in a way that helps them achieve their core business goals,” ABC President James Klein said in a statement.