QPSA and QJSA for domestic partners in a civil union -- now required i

[Guest Ernie Guerriero]

Vermont State has passed a law authorizing same sex marriages, or unions as they are called. Excerpt: "After four months of rancorous debate that divided neighbors throughout this normally tranquil state, Vermont yesterday approved a first-in-the-nation law that grants nearly all of the benefits of marriage to same-sex partners." (Knight-Ridder / Tribune Business News)

Would this State regulation offer a same sex partner the same rights that pertain to the pre and post joint and survivor options?

[david rigby]

I'm no legal expert, and doubt that we have heard the last in this tale, but my understanding is that the Vermont law does not change the definition of "spouse". Therefore, the answer to your question is "no." As I read, the Internal Revenue Code does not define "spouse", because federal law does not define marriage, and therefore such terms as husband, wife, and spouse are as defined in state law. (See the 10th amendment to the Constitution.)

My comments are probably oversimplified. Any others willing to correct me or fill in the gap?

[This message has been edited by pax (edited 05-02-2000).]

[Guest [Pat M]]

Pax, I'm waiting for this issue to surface in QDRO cases, since QDRO rules are being refined by court cases over the years.

Fortunately for QDRO administrators, after the UAL case last year, admin. was relieved of making certain determinations.

Hopefully in domestic partner cases, the burden will not fall on the Administrator to decide whether or not a marriage is valid under state law.

[Guest Ernie Guerriero]

Pax, if State Law makes the determination of who is a spouse then it would appear as though the pre and post qualifed survivor annuity rules would recognize the same sex partner. The only case that I could cite is Grabois v. Jones, 89 F.3d 97 (2nd Cir.1996) but that case had to do with the Federal Courts determination with a former spouse (opposite sex) because the State was not clear on the issue.

[david rigby]

Pat makes a good point about QDROs and that state court judges rarely sit still with respect to interpretations. My read of IRC 414(p) (haven't looked at the regs) is to refer to "marital property" and to "spouse". However, there is probably room to allow a judge some freedom.

Might be interesting if a judge does allow some freedom under those definitions. Then the other party (that is, the same sex former partner who is the plan participant) might appeal on the grounds that 414(p) does not recognize such relationships.

[This message has been edited by pax (edited 05-02-2000).]

[Erik Read]

So - who wants to move to Vermont, marry someone of the same sex, then get divorced and run it through for a test case? Any volunteer?

Just kidding!

[davef]

In a recent letter ruling (9850011) dealing with the tax treatment of health benefits to domestic partners, the IRS cited the "Defense of Marriage Act" as authority for defining a spouse as "a person of the opposite sex who is a husband or a wife." This is contrary to the historical position that marital status is determined by state law. In that ruling, the IRS stated that "an employee's same-sex domestic partner does not qualify as the 'spouse' of the employee for purposes of the Code."

I realize that PLRs can't be cited as precedent, but it looks like the IRS has found a way to not recognize domestic partners as spouses, regardless of state law.

[Guest Ernie Guerriero]

Dave, as always, thanks for your research. At least this provides some indication of the IRS' thinking, and would offer us some idea on how to treat these situations in Vermont, especially in the administrative area of these Plans.

[Guest PeterGulia]

To the extent that a plan includes a provision in favor of a spouse solely because federal law required that the provision be included, a federal statute states that a spouse (not defined in either ERISA or the Internal Revenue Code) means an opposite sex spouse.

"In determining the meaning of any Act of Congress ..., the word 'marriage' means only a legal union between one man and one woman as husband and wife, and the word 'spouse' refers only to a person of the opposite sex who is a husband or a wife." 1 U.S.C. section 7.

However, it is unclear whether this statute is the law because it may be unconstitutional. See U.S. Constitution article IV, section 1 & Fifth Amendment; Saenz v. Roe, 119 S.Ct. 1518, 143 L.Ed 2d 689, 67 U.S.L.W. 4291, 61 Social Security Reporter Service 75 (May 17, 1999); Romer v. Evans, 517 U.S. 620, 116 S.Ct. 1620, 134 L.Ed.2d 855, 64 U.S.L.W. 4353, 70 Fair Employment Practices Cases (BNA) 1180 (1996).

In the unlikely event that a plan administrator has knowledge that a participant has a same-sex spouse AND the participant has attempted to designate a beneficiary other than his or her spouse or seeks to elect out of a QJSA, the plan administrator should get legal advice.

If the legal advice is from unquestioned expert lawyers (including a constitutional law expert), it may be not imprudent for a plan administrator to act according to that advice if there was no other reasonable means of balancing the rights of the participant and his or her spouse.

If either a participant or a proposed alternate payee submits a court order for the plan administrator's determination as to whether the order is a QDRO, the plan administrator should use written legal advice to support its determination. The expense incurred in obtaining that advice should be a reasonable plan administration expense chargeable against plan assets.

If the federal statute is unconstitutional, it seems relatively clear that a Vermon civil union is a marriage and that the parties to a civil union are spouses.

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