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DOL Agrees with IRS Definition of Spouse: The “Celebration” Rule

Posted in Plan Administration, Retirement Plans, Welfare Plans

At the end of August, I wrote about the IRS’s statement that it will make a determination on same-sex couples based on where the marriage took place for income tax purposes.  Well, the DOL has now also adopted this “place of celebration” rule as its interpretation of “spouse.”   This means that for most benefit plans, the term spouse would reasonably include a same-sex spouse legally married in any state or foreign jurisdiction that recognizes the marriage, even if the couple resides in a state that does not permit or recognize same-sex marriage.

It is interesting that Technical Release No. 2013-04 confirms that this interpretation does not include individuals (of the same or opposite sex) in a domestic partnership or civil union, even if the partners have the same rights as married couples under the applicable state law.  However, it also does not specifically preclude plans from recognizing the status of these non-married partners.  Although the Release does not provide specific guidance on many of the issues faced by plan sponsors, such as COBRA or HIPAA, additional guidance is expected.

The DOL’s recognition of the “place of celebration” rule does not specifically require that plans follow this rule, it does appear that the DOL recognizes that this rule makes plan administration easier.  If plans adopt the “place of domicile” rule, following only the rules of the state in which the participant resides, it would likely lead to scenarios where a plan would cover same-sex spouses for some participant and not for others.  This way, uniformity is at least partially reestablished.  But remember that changes to plans have to be made by amendment.  So plan sponsors looking to revise their definitions of spouse to meet this DOL definition should follow the appropriate amendment procedures set out in their plan.  Make sure to send required notices of the modification and be prepared to add enrollees who would now be qualified as “spouses” under the new definition.