401(k): Obergefell v Hodges: what it means means for 401(k) plans

On June 25, 2015, the Supreme Court handed down its decision in Obergefell v Hodges, in which it ruled that the United States Constitution does not permit States to bar same-sex couples from marriage on the same terms as those accorded to couples of the opposite sex. In addition, it held that there is no lawful basis for a State to refuse to recognize a lawful same-sex marriage performed in another State simply because it is a same-sex marriage. While we wait on official guidance relating to the new regulation, following are items which may impact your 401(k) plan.

Qualified Domestic Relations Orders (“QDRO”)

With same-sex marriages now being recognized, states will more than likely also grant same-sex divorce proceedings which will lead to same-sex spouses being able to obtain a QDRO that assigns part of retirement plan accounts to the former same-sex spouse or children of the same-sex marriage.

Default Beneficiaries

State laws typically hold that the spouse is the default beneficiary for estate settlement.  This will probably mean that same-sex spouses will now be the default beneficiary of plan benefits where plans incorporate state law.

For information on how Obergefell v Hodges may impact health plans, click here.