domestic partner distribution options

[justanotheradmin]

This is an old thread on the topic - does anyone have any more current insight? 

 

A plan sponsor is trying to get a contract with San Francisco - and would be subject to their equal benefits requirements.

Considering that a domestic partner cannot rollover money to their own IRA the way a spouse would be able to, I don't know how the plan sponsor can affirm that the distribution options are the same. They are not under current Federal tax law. As far as I can tell preemption applies, but is there something else I'm missing? And certainly step-children are not treated the same as regular children in retirement plans. Also the RMD upon participant death options are usually different depending on the type of beneficiary. 

Here is an except from the contract info page from the city / county:

[Lou S.]

Since same sex marriage is now legal, is this an outdated requirement from the the City of San Francisco?

I'm not sure how under Federal Law and ERISA you would have a domestic partner considered a spouse with the same rigts, but I am not a lawyer so I could be missing something obvious. Like you point out I doubt there any ability for a domestic partner to roll to an IRA they treat as their own as a spouse could, you would need to roll to an inherited IRA like any other non-spousal beneficiary.

 

[RatherBeGolfing]

15 hours ago, Lou S. said:

Since same sex marriage is now legal, is this an outdated requirement from the the City of San Francisco?

You would think so but it is current, I checked it after reading this thread.  My document has an option to treat domestic partners as a spouse for death benefits, but caveat's it with "to the extent applicable".  

[Peter Gulia]

Without again reading San Francisco’s Equal Benefits Ordinance or the City and County agency’s administrative interpretations of it (I last looked six years ago), one imagines a contractor should be treated as meeting a condition if the contractor as an employer and a plan’s sponsor and administrator does all that it can do.

 

A retirement plan’s sponsor can decide which forms of payout (single sum, payments for nn months or years, annuity for the beneficiary’s life) the plan provides for a beneficiary.

 

But neither a plan’s sponsor nor its administrator decides the Federal income tax treatment that results from the payout option a beneficiary has chosen or from the distributee’s treatment for Federal tax purposes as a spouse or non-spouse.

[justanotheradmin]

1 hour ago, RatherBeGolfing said:

You would think so but it is current, I checked it after reading this thread.  My document has an option to treat domestic partners as a spouse for death benefits, but caveat's it with "to the extent applicable".  

I think you've got it right. Only to the extent applicable is doable. I suppose from a practical purpose it means if a participant dies without a beneficiary designation the domestic partner would be first in line for the benefit (before any children, parents etc.). I would wonder if there are step-children if they would need to treated the same as regular children under the terms of the document. That might get hairy. If one dies with both children and step children and some how the benefit has to be split equally among them. Hmm. I'm sure there are a number of permutations that would be tough to parse out. 

I feel like this ordinance and it's intersection with Federal law would be a good topic for a law review article. Maybe there is one out there. If someone knows of one or writes one, please let me know. 

Ratherbegolfing - does the document for your client just reference Domestic Partners (to be treated the same as Spouses to the extent possible)? Does it make similar claims for the treatment of Step Children (to be treated the same as Children to the extent possible)? 

[RatherBeGolfing]

1 hour ago, justanotheradmin said:

I feel like this ordinance and it's intersection with Federal law would be a good topic for a law review article. Maybe there is one out there. If someone knows of one or writes one, please let me know. 

There are several good articles out there on the impact of both Windsor and Obergefell.  I have read a few in Journal of Pension Benefits.

I don't think I have read one that focuses on domestic partnerships, but many discuss the issue.

1 hour ago, justanotheradmin said:

Ratherbegolfing - does the document for your client just reference Domestic Partners (to be treated the same as Spouses to the extent possible)? Does it make similar claims for the treatment of Step Children (to be treated the same as Children to the extent possible)? 

My AA has it as an to treat domestic partner as a spouse in the beneficiary section.  I do not remember anything about stepchildren in the BPD.

[justanotheradmin]

Thank you RatherBeGolfing, I appreciate the information.