Exciting News on Retirement

I received this notice from the Human Rights Campaign Fund Action Center. It’s exciting news about legislation that was passed that will greatly benefit gay and lesbian families for retirement issues.

It is a great and historic day for our community. Today, federal legislation called the Pension Protection Act was signed into law and it includes two provisions that extend important financial protections to more Americans - including same-sex couples. This is an incredibly exciting victory that will be helpful to millions of gay, lesbian, bisexual and transgender families. This Act is important because it has two hard-fought HRC-backed provisions that we lobbied for intensely and secured its inclusion. These provisions will help same-sex couples nationwide. Basically what this means is that these two provisions ensure that the U.S. tax code, in times of emergencies, is fairer to more Americans, including our community, and puts us on a more equal footing with other couples. Here’s how these provisions can impact the lives of GLBT Americans: The first provision, called “Non-Spousal Rollover”

Allows the transfer of an individual’s retirement plan benefits, like a 401(k), to an Individual Retirement Account (IRA) for a non-spouse beneficiary like a domestic partner, sibling, parent, cousin or anyone else when the individual dies.

In the past, unless you were the legally recognized spouse of the deceased, you were forced to withdraw the amount as a lump sum and you faced immediate tax penalties which would eat away at the savings amount intended for retirement.

The second provision, known as “Hardship Distribution”:

Allows individuals who list their same-sex partner or other non-spouse beneficiary under a 401(k) plan the ability to tap into their retirement funds in the case of certain medical or financial emergencies of the beneficiary.

In the past, the federal law only permitted such withdrawals for employees’ legally recognized spouses or dependents.

Also, an article in the Los Angeles Times stated...

“I think it’s incredibly significant, and I think it’s historic,” said Joe Solmonese, president of the Human Rights Campaign, a gay rights organization. “What we really are seeing here, I think, is a huge step toward leveling the field.”

“It’s a meaningful part of the story,” said J. Mark Iwry, a Brookings Institution scholar and former Treasury Department pension official. “The gay community should definitely benefit.”

The move was made quietly and without controversy. In Congress, the idea of easing restrictions on the transfer of nest eggs was generally described as a fairness issue for family members and was not framed as a gay rights issue.

Go to the HRC website for more information.