Effect of Colorado Civil Union Act and Windsor Decision on Colorado Retirement Plans

Significant changes in laws affecting same sex couples result from the Colorado Civil Union Act (CRS 14-15-101 et seq.), which took effect May 1, 2013, and the U.S. Supreme Court’s June 26, 2013 decision in United States v. Windsor.  

The new Colorado law grants individuals in a civil union “the rights, benefits …and other incidents under law as are granted to spouses, whether those rights are derived from statute, administrative or court rule, policy, common law or any other source of law.” The Act addresses retirement plans only once, stating that the spousal rights it creates include “survivor benefits under local government firefighter and police pensions.” (CRS 14-15-118)

The U.S. Supreme Court decision in Windsor requires federal law to follow state law in defining “marriage” and “spouse.”   

These developments raise the following preliminary questions and possible answers: 

• Are parties to a Colorado civil union entitled to benefits that a Colorado governmental retirement plan provides to a “spouse”?

Preliminary answer is: “yes” for retirement plans sponsored by Colorado governmental employers, if the retirement plan is a “law.” The Civil Union Act defines a “law” to include a “policy…or any other source of law.” It is possible that a retirement plan meets this definition of “law” even if it is not enacted into an ordinance or statute, if the retirement plan is a “policy” adopted by a Colorado governmental entity.

• Do federal tax law definitions of “spouse” include parties to a Colorado civil union, with the result that all tax law benefits for a “spouse” apply to parties to a civil union?

Preliminary answer:  The IRS is expected to issue guidance soon. If the IRS determines that a “spouse” includes parties to a Colorado civil union, ERISA retirement plans (sponsored by nongovernmental employers) will be required to offer parties to Colorado civil unions the same spousal protections as the plan offers to married spouses, e.g., surviving spouse benefit protections.

Retirement plan sponsors should keep informed of pending legal developments in this area.