Bush signs law requiring same-sex couples to enjoy retirement tax break
President Bush slipped a little something into the stockings of same-sex partners just before Christmas when he signed the Worker, Retiree and Employer Recovery Act of 2008 (WRERA), our sister site The Minnesota Independent notes. The sweeping pension relief bill contains a provision that requires employers to roll over inherited retirement benefits to surviving gay and lesbian partners, fixing an earlier law that simply allowed the practice.
The new law lets same-sex partners avoid tax penalties — the same as heterosexual “nonspouse” couples — when they inherit retirement savings and rollover the inheritance into an individual retirement account (IRA). Previously, businesses could opt against the rollover but as of Jan. 1, 2010, all retirement plans that pay lump sums to nonspouse beneficiaries will be required to provide the rollover opportunity.
The Human Rights Campaign (HRC) hailed the new law and urged businesses to make the provisions available to employees before the deadline. The gay rights group also urged gay and lesbian workers to make sure they designate same-sex partners as beneficiaries, if appropriate. HRC posted an instructional resource for employers to implement the law here.
“This legislation secures much-needed protection for lesbian and gay couples,” said HRC President Joe Solmonese. “Our community faces unique challenges in preparing for retirement because we are denied Social Security spousal and survivor benefits. Protecting our hard-earned retirement savings is even more crucial to us, and until now, the tax code made it that much harder.”
The WRERA legislation includes other provisions to allow employers latitude funding pension plans as the stock market tumbles and lets older retirees suspend mandatory distributions under certain circumstances next year.
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