Mass Marriage Law and ERISA

[mwyatt]

The particulars are that a client of ours has their daughter buying into their business (more than 5% stock purchase). She is married to her partner under Mass Law, who will also be working for the business. Remember from an '04 EA meeting session (from the mouth of Jimmy Holland no less) that under Federal law, same-sex marriages are not recognized.

Questions abound in our state (and no, I don't want to get into any discussion of pros-cons of same-sex marriage, just want some answers to pension questions).

5% Owner attribution: if not "married" under Federal law, then IRC 318 attribution shouldn't apply to the partner - so not an HCE by stock attribution. Yes or no? This is a 401(k) plan and ADP testing is an issue.

Many other questions abound (beneficiaries, etc. and the quirk in MA law that contributions for "owners" aren't deductible on the State corporate return - would MA have differing attribution than the Feds), but this is the first thing that comes to mind.

Any others out there had to think this one out?

[Guest b2kates]

The Defense of Marriage Act, or DOMA, Pub. L. No. 104-199, 100 Stat. 2419 (Sept. 21, 1996), codified at 1 U.S.C. § 7 and 28 U.S.C. § 1738C, is a federal law of the United States passed by Congress and signed by President Bill Clinton on September 21, 1996. The law provides:

* First, it allows each state (or similar political division in the United States) to deny Constitutional marital rights between persons of the same sex which have been recognized in another state.

* Second, for purposes of federal law, it defines marriage as "a legal union of one man and one woman as husband and wife" and by stating that spouse "refers only to a person of the opposite sex who is a husband or a wife."

Accordingly, since the daughter and her partner "spouse" are not married for federal tax purposes, no stock attribution would exist.