On Sept. 20, 2013, the Federal Retirement Thrift Investment Board (FRTIB) issued an interim final rule that revised its regulations regarding coverage of the Thrift Savings Plan (TSP) (Fed. Reg. 2013-22898). The TSP is a tax-deferred retirement savings plan for federal employees (civilian and members of the uniformed services). It’s analogous to Internal Revenue Code Section 401(k) cash or deferred arrangements available to employees who work in the private sector. The revision was in response to the U.S. Supreme Court’s ruling that struck down Section 3 of the Defense of Marriage Act in which “spouse” was defined as a married person of the opposite sex. The FRTIB stated:
The FRTIB has determined that immediate action is necessary to allow the FRTIB to implement United States v. Windsor in a manner that comports with its statutory obligation to administer the Thrift Savings Plan solely in the interests of its participants and beneficiaries to the extent consistent with Chapter 5 of the United States Code.
The TSP is administered to provide benefits to participants and their beneficiaries and defray “reasonable expenses of administering the Thrift Savings Fund.” Prior to the revision, Section 1651.5(a) of the Code of Federal Register prohibited the FRTIB from offering certain TSP benefits to same-sex spouses of participants domiciled in jurisdictions that didn’t recognized same-sex marriages performed in other states.
Choice-of-Law Provision
The FRTIB determined that its choice-of-law provision was detrimental to certain TSP participants and failed to defer the expenses of administering the Thrift Savings Fund.
It recognized that Windsor required it to look to state law to determine a TSP participant’s marital status. The FRTIB anticipated conflicting state laws, for example, a scenario in which a same-sex couple married in a jurisdiction that allowed same-sex marriages and then moved to a jurisdiction that didn’t. Whether the couple was “married” for purposes of the TSP depended on whether the FRTIB looked to the law of the jurisdiction of celebration or the law of the participant’s state of domicile. The TSP’s choice-of-law provision stated that the state law of the participant's domicile should be used to determine whether a participant was “married” for purposes of distributing death benefits from a TSP account. This provision was “detrimental to the population of TSP participants,” the FRTIB said. As such, it revised its regulations to now look to the jurisdiction of celebration to determine a participant’s marital status. That is, if a participant is married in a jurisdiction that recognizes same-sex marriages, the participant is “married” under the TSP, regardless of where he lives.