Federal Pension Protection Act Gives Historic Rights to LGBT Americans

Thanks to HRC for this hot-off-the-presses news:

The federal Pension Protection Act signed into law today by President Bush includes two provisions extending important financial protections to same-sex couples as well as other Americans. HRC explains:

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.

None of us like to think of the death of a loved one or the types of emergencies that would cause us to draw on retirement savings. It’s good to know, though, that we now have the above options and protections just like straight couples. As always, you may wish to discuss these new benefits with a financial professional, particularly one with experience in financial planning for same-sex couples.

It’s also gratifying to see that we haven’t lost sight of the need for equality in important federal protections, even as many of us focus on the state-by-state struggle for marriage rights and/or relationship recognition. Congratulations to the HRC team that worked to secure these rights for all.