Sunday, January 4, 2009, 1:19pm
The Human Rights Campaign today hailed the passage of a law that protects partners who inherit retirement savings. The Worker, Retiree and Employer Recovery Act of 2008 (WRERA), signed by President Bush today, contains technical corrections to the Pension Protection Act of 2006 (PPA). PPA made it possible for employers to allow any nonspouse beneficiary of an employee's retirement plan--including an employee's same-sex partner--to roll inherited retirement benefits directly to an individual retirement account (IRA) and avoid immediate taxation. WRERA requires that all employers provide this rollover opportunity to nonspouse beneficiaries.
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Before 2007, partners who inherited retirement plan savings typically faced immediate taxation on inherited benefits, unlike different-sex spouses, who could roll savings over to an individual retirement account (IRA) with no tax penalty. Under the PPA, as of January 1, 2007, qualifying plans could permit any nonspouse beneficiary--including a domestic partner, parent or sibling--to roll over inherited retirement benefits paid as a lump sum directly to an IRA. Qualifying plans include defined benefit plans (pensions), 401(k) plans, employee stock ownership plans (ESOPs), profit-sharing plans, money purchase plans, 403(b) plans and governmental 457(b) plans.
A tiny step in the right direction.