Same Gender Retirement Benefits Issues in Same Gender Retirement Benefits Presented by: Bruce B. Barth, Partner Robinson & Cole llp © 2012 Robinson & Cole llp

Disclaimer This presentation is designed to provide accurate information about the subject matter covered. However, it provides general information only and does not constitute legal advice. No attorney-client relationship has been created. If legal advice or other professional assistance is required, please contact the presenter. Presented by: Bruce B. Barth, Partner, Robinson & Cole llp 860-275-8267, bbarth@rc.com, www.rc.com

Overview: Marriage and Other Recognized Relationships Common Law Marriage Statutory Marriage Opposite-Sex Marriage Same-Sex Marriage Civil Union Domestic Partnership Presented by: Bruce B. Barth, Partner, Robinson & Cole llp 860-275-8267, bbarth@rc.com, www.rc.com

Overview: Common-Law Marriage Only a dozen states recognize common-law marriage AK, CO, D.C., IA, KS, MT, OK, RI, SC, TX, UT, and NH (for limited purposes) Typically, the couple must: Have a present intention to be married Hold themselves out as married to the public Have the legal capacity to marry (e.g., unmarried and able minded) Satisfy a “waiting period” Presented by: Bruce B. Barth, Partner, Robinson & Cole llp 860-275-8267, bbarth@rc.com, www.rc.com

Overview: Common-Law Marriage A common-law marriage, once established, is generally just as binding as if the couple had been formally married Common-law spouse is a bona fide spouse There is no such thing as a “common-law divorce” Under the Full Faith and Credit Clause, a state generally must accept as valid a common-law marriage formed in another state Thus, a couple could move from KS to CT and claim a common-law marriage had been formed in KS Presented by: Bruce B. Barth, Partner, Robinson & Cole llp 860-275-8267, bbarth@rc.com, www.rc.com

Overview: Same-Sex Spouses Several states recognize same-sex marriages MA, CT, VT, NH, NY, IA, WA, MD and D.C. MA, the first state to legalize same-sex marriage, also allows nonresidents to marry in the state Effective June 2012, WA will recognize same-sex marriage Effective January 2013, MD will recognize same-sex marriage CA recognizes the 18,000+ same-sex marriages that took place between June 17, 2008 and November 4, 2008 Presented by: Bruce B. Barth, Partner, Robinson & Cole llp 860-275-8267, bbarth@rc.com, www.rc.com

Overview: Civil Unions A civil union is a form of relationship recognition that gives same-sex couples access to state created rights and obligations of civil marriage Several states recognize civil unions DE, HI, IL, NJ, and RI VT now recognizes same-sex marriage but those domestic partnerships entered into prior to 9/1/09 remain valid (i.e. they have not been automatically converted to a same-sex marriage) Presented by: Bruce B. Barth, Partner, Robinson & Cole llp 860-275-8267, bbarth@rc.com, www.rc.com

Overview: Domestic Partners Several states recognize domestic partnerships CA, OR, WA, ME, HI, D.C., NV, and WI Opposite-sex domestic partners who are not common-law spouses rarely receive special consideration under state law This is because they may avail themselves of the rights, privileges, and protections afforded to “spouses” by simply marrying Presented by: Bruce B. Barth, Partner, Robinson & Cole llp 860-275-8267, bbarth@rc.com, www.rc.com

Overview: Domestic Partners “Domestic partner” may be defined by employer policy, local law, and/or state law States grant Domestic Partners limited rights ME provides for inheritance without a will, making funeral/burial arrangements, entitlement to be named guardian/conservator, and domestic violence protections Presented by: Bruce B. Barth, Partner, Robinson & Cole llp 860-275-8267, bbarth@rc.com, www.rc.com

Overview: Domestic Partners “Common” requirements include: Relationship: Unmarried adults of same or opposite gender, not related Exclusivity: Committed relationship intended to be permanent Cohabitation: Living together Interdependence: Mutual responsibility for each other Presented by: Bruce B. Barth, Partner, Robinson & Cole llp 860-275-8267, bbarth@rc.com, www.rc.com

Retirement Plan Benefits Marital status often determines what benefits are available to an employee benefit plan participant (and his or her spouse) Many retirement plans do not define the terms “marriage” or “spouse” Same-sex marriage raises the question of whether an employee benefit plan may or must recognize same-sex marriages in applying plan provisions that involve a participant’s marital status Well, that depends… Presented by: Bruce B. Barth, Partner, Robinson & Cole llp 860-275-8267, bbarth@rc.com, www.rc.com

The Current Dilemma Section 3 of the Defense of Marriage Act of 1996 (“DOMA”) defines marriage as a bond between one man and one woman for purposes of administering federal law Most employee benefit plans are subject to federal laws, such as ERISA and the Code Neither ERISA nor the Code recognize same-sex marriages, civil unions, or domestic partners Presented by: Bruce B. Barth, Partner, Robinson & Cole llp 860-275-8267, bbarth@rc.com, www.rc.com

The Current Dilemma All references to a person’s marital status in the below are governed by DOMA: ERISA The Code Rulings, regulations, and other guidance issued by the Department of Labor or the Department of the Treasury Presented by: Bruce B. Barth, Partner, Robinson & Cole llp 860-275-8267, bbarth@rc.com, www.rc.com

DOMA and Retirement Plan Benefits Pursuant to DOMA, a retirement plan participant married to a person of the same-sex must be treated as unmarried for purposes of ERISA and the Code Note: This includes civil unions and domestic partners Does this mean retirement plans cannot recognize same-sex married couples as married for any purpose? No For most purposes, employers may offer the same benefits to a participant in a same-sex marriage (and his or her spouse) as to any other participant or spouse Presented by: Bruce B. Barth, Partner, Robinson & Cole llp 860-275-8267, bbarth@rc.com, www.rc.com

DOMA and Retirement Plan Benefits In some cases, ERISA and the Code require retirement plans to treat married participants differently than unmarried participants: Qualified Joint and Survivor Annuity (“QJSA”) Spousal Consent Requirements Qualified Pre-Retirement Survivor Annuity (“QPSA”) Incidental Death Benefit Rule Required Minimum Distributions (“RMDs”) Rollover Rules Hardship Distributions Qualified Domestic Relations Orders (“QDROs”) Presented by: Bruce B. Barth, Partner, Robinson & Cole llp 860-275-8267, bbarth@rc.com, www.rc.com

Qualified Joint & Survivor Annuity ERISA and the Code require defined benefit and money purchase pension plans to pay benefits in the form of a QJSA (the default form of payment) For married persons, a QJSA is a monthly benefit for the joint lifetimes of the participant and the spouse (versus a single life annuity) Married participants may elect another payment form with spousal consent Presented by: Bruce B. Barth, Partner, Robinson & Cole llp 860-275-8267, bbarth@rc.com, www.rc.com

Qualified Joint & Survivor Annuity Due to DOMA, a participant in a same-sex marriage is considered unmarried for purposes of the QJSA rules Result: The default payment form for a participant in a same-sex marriage must be a single life annuity Presented by: Bruce B. Barth, Partner, Robinson & Cole llp 860-275-8267, bbarth@rc.com, www.rc.com

Qualified Joint & Survivor Annuity Plan design issues: Plans may permit “unmarried” participants (e.g., those with a same-sex spouse) to elect a joint and survivor annuity with a beneficiary of their choice Many plans have preference beneficiary rules for determining who receives a death benefit in the event the participant fails to designate a beneficiary (e.g., spouse, child, estate, etc.) A plan may recognize a surviving spouse of a same-sex marriage as a participant's preference beneficiary Presented by: Bruce B. Barth, Partner, Robinson & Cole llp 860-275-8267, bbarth@rc.com, www.rc.com

Required Minimum Distributions When a participant dies before receiving his or her total benefits from a qualified plan, the plan generally must begin distributing benefits to the spouse by April 1 following the year in which the participant would have attained age 70½ Because of DOMA, a participant’s same-sex spouse must be treated as a non-spouse beneficiary Benefits payable to a non-spouse beneficiary generally must be fully distributed within 5 years after the participant’s death or over life expectancy Presented by: Bruce B. Barth, Partner, Robinson & Cole llp 860-275-8267, bbarth@rc.com, www.rc.com

Rollover Rules Qualified plans are required to permit a deceased participant’s spouse to roll over an “eligible rollover distribution” to an “eligible retirement plan” A participant’s same-sex spouse cannot be treated as his or her spouse for this purpose The Pension Protection Act of 2006 (“PPA”) allows non-spouse beneficiaries to roll eligible rollover distributions into an inherited IRA (mandatory after 2010) Stretching distributions from the IRA over his/her lifetime helps defer taxation of the death benefit Presented by: Bruce B. Barth, Partner, Robinson & Cole llp 860-275-8267, bbarth@rc.com, www.rc.com

Hardship Distributions Plans may permit participants to receive an early distribution of salary deferrals on account of a severe financial hardship Before the PPA was enacted, plans could only permit hardship distributions due to certain hardships affecting the participant or the participant’s spouse or dependent A participant’s same-sex spouse cannot be treated as his or her spouse for this purpose The PPA now allows distributions on account of certain hardships affecting the participant’s “primary beneficiary” (if the plan specifically so provides) Presented by: Bruce B. Barth, Partner, Robinson & Cole llp 860-275-8267, bbarth@rc.com, www.rc.com

Looking Ahead: The Future of DOMA? In Gill v. Office of Personnel Management, same-sex married couples in MA filed suit for the denial of rights related to healthcare, taxation &social security In July 2010, the district court judge agreed with the plaintiffs and held that DOMA’s Section 3 violated the constitutional guarantee of equal protection In its companion case, Massachusetts v. U.S. Department of Health and Human Services, the same judge held that DOMA violated the Tenth Amendment and the Spending Clause of the Constitution The Department of Justice appealed both cases to the U.S. Court of Appeals for the First Circuit Presented by: Bruce B. Barth, Partner, Robinson & Cole llp 860-275-8267, bbarth@rc.com, www.rc.com

Looking Ahead: The Future of DOMA? In February 2011, Attorney General Eric Holder announced the U.S. Department of Justice’s revised position that: laws that classify on the basis of sexual orientation should be subject to heightened scrutiny Section 3 of DOMA was unconstitutional because it could not withstand heightened scrutiny the Department would no longer defend DOMA in federal court, though Congress had the option of stepping in Presented by: Bruce B. Barth, Partner, Robinson & Cole llp 860-275-8267, bbarth@rc.com, www.rc.com

Looking Ahead: The Future of DOMA? On April 4, 2012, the U.S. Court of Appeals for the First Circuit heard arguments Multiple challenges to Section 3 of DOMA have been filed in federal courts in CA, NY, CT, OK, and PA Cases are also pending in the Ninth Circuit for the denial of rights related to immigration Presented by: Bruce B. Barth, Partner, Robinson & Cole llp 860-275-8267, bbarth@rc.com, www.rc.com