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New Federal Pension Law Includes Important Measures For Gay Couples

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New Federal Pension Law Includes Important Measures For Gay Couples

by 365Gay.com Newscenter Staff

August 17, 2006 - 3:00 pm ET

(Washington) President Bush on Thursday signed into law the Federal Pension Protection Act that contains two key provisions extending important financial protections to same-sex couples and other Americans who leave their retirement savings to non-spousal beneficiaries.

"For gay couples and all Americans with non-spouse beneficiaries, death and taxes weren't only certain, but also times of great and unequal financial difficulty," said Human Rights Campaign President Joe Solmonese who lobbied Congress to pass the measure.

"Today marks an important day for fairness under the law in America," Solmonese said .

The legislation, with strong bipartisan support received final approval on August 3.

The first provision allows the transfer of an individual's retirement plan benefits to a domestic partner or other non-spouse beneficiary including a sibling or parent 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, 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.

"This bill provides much needed support for non-spousal beneficiaries and will have meaningful impact," said David Ratcliffe, National co-leader of Merrill Lynch's LGBT Professional Network, and Director of the firm's Center for Philanthropy and Nonprofit Management.

"Specifically, passing these provisions means that when families are at their most vulnerable, they will have new options under the law that should alleviate some of the stresses that come in to play with the loss of a loved one," he said.

At Thursday's signing ceremony at the White House Senator Gordon Smith (R-OR) said that the legislation takes an important step but more needs to be done.

"There is a large group of Americans that are left behind in traditional pension benefit models," he said. "We need to do better to keep these groups from falling through the cracks."

That was echoed by Congressman Benjamin L. Cardin (D-MD).

"We need to address the economic and legal barriers that affect many American families - from providing equal access to family law, to equal opportunities in the workplace. All families need to be able to plan and save for their future," said Cardin.

©365Gay.com 2006

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