The Federal Pension Protection Act passed by Congress and signed into law today by President George W. Bush contains two key provisions that will extend important financial protections to same-sex couples and other Americans who leave their retirement savings to non-spouse beneficiaries. The bipartisan provisions in the bill are a step forward in equality and stem from a continuous effort led by the Human Rights Campaign.A GLBT-friendly piece of legislation passed by congress and signed by Bush?!?!? I'm surprised it didn't state that any proof of a romantic relationship between people of the same-sex means the money is taxed twice the amount of everyone else.
The first provision allows the transfer of an individual’s retirement plan benefits to a domestic partner or other non-spouse beneficiary (sibling, parent, child, etc.) when the individual dies. Specifically, the surviving partner (or other non-spouse beneficiary) will now be able to transfer his or her deceased partner’s retirement funds into an Individual Retirement Account and either draw down the benefits over a five-year period, or over his or her own life expectancy. In the past, surviving same-sex partners or other non-spouse beneficiaries in similar situations were typically forced to withdraw the entire amount as a lump sum and incur immediate tax charges. In addition, this action often bumped the survivor into a higher tax bracket because the withdrawal was counted as taxable income to the beneficiary.
The second provision, which addresses retirement plan hardship distributions, allows gay couples (and others with non-spouse, non-dependent beneficiaries — siblings, parents, children, etc.) similar access to laws that permit people to draw on their retirement funds in the case of a qualifying medical or financial emergency. In the past, the federal law covered only the spouses or dependents of employees when it came to accessing retirement funds during an emergency.
These provisions will directly benefit my wife and I since we both name one another as beneficiaries for all of our retirement accounts. Thanks George! That is one less way we are screwed over by the taxman.