Not to say that King George didn’t read the Federal Pension Bill he signed into law yesterday, maybe he just didn’t understand what he was reading? It turns out with one signature, Bush has accomplished something that many states have been legislating against now for several years. It actually contains provisions that help gay and other non-traditional couple’s rights, at least when it comes to pensions.
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.