The Supreme Court's decision to hold portions of the Defense of Marriage Act unconstitutional could force the hand of retirement plan sponsors in Puerto Rico, even though the country has its own mini version of the DOMA and its IRS code does not recognize same-sex marriages.
According to an analysis by the Groom Law Group, recent guidance on the definitions of "marriage" and "spouse" by the U.S. Department of Labor has clarified what Puerto Rican plan sponsors must do moving forward.
Even though the country's laws specifically say same-sex marriage is out and follows the rules of its own Internal Revenue Service, not the U.S. IRS, many of its plans must still comply with the Employee Retirement Income Security Act. To maintain compliance with ERISA, they will have to comply with the DOL's guidance on the subject of same-sex marriage, the law firm said.
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Puerto Rico-only qualified retirement plans will have to recognize same-sex couples when it comes to spousal consent requirements and beneficiary designations, but because the country has different definitions of "marriage" and "spouse" written into its laws, other provisions and requirements of the PR Code which are not subject to ERISA, for instance hardship withdrawals, do not have to comply with the DOL's guidance on the subject.
Dual-qualified retirement plans, those that follow both the PR Code and the U.S. Code, are not only subject to the provisions of the PR Code, but also to the U.S. Code provisions and are subject to the jurisdiction of the PR Treasury, the IRS and the DOL. Consequently, these plans must follow the guidance released by the U.S. IRS and U.S. DOL when it comes to same-sex marriage, Groom Law Group found.
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