In the midst of a bitter and divisive political climate, something amazing happened on Thursday, August 17, for gay, lesbian, bisexual, and transgender families. The Pension Protection Act became law.
Now, unless you're a financial planner, pension reform may not be an issue you study carefully. And, a pension reform bill may not immediately be something you would tie to our movement, but this particular law is important because it contains two hard-fought HRC-backed provisions.
Significant progress on any issue in Congress does not happen quickly. Our pension reform victory was no different. In fact, this major milestone would not have been possible if HRC hadn't started laying the groundwork for this over four years ago. I am extremely proud of the HRC team and all their work on this.
Throughout the very long process, our team of policy advocates worked tirelessly to educate members of Congress about why these provisions are so important to us and to our families. Then, we worked relentlessly, with such unlikely allies as Grover Norquist, to ensure that these provisions would be in the final law.
What was particularly striking about our victory was its bipartisan nature. Our friends in Congress – Democrats and Republicans – fought for us and they did so with a cooperative spirit that is increasingly elusive these days. We are incredibly grateful to them.
So what exactly do these new provisions do? Put simply, the provisions ensure that the U.S. tax code, in times of tragedy, is a lot fairer and a lot more compassionate toward our families than it used to be.
Anyone who has ever had to deal with the death of a spouse understands that it is a very difficult situation as the survivor is left to manage what the couple built together. For domestic partners, the situation is made worse by the administrative challenges and unfair taxation that results from the relationship not being recognized under federal law. Being in this position is an example of the 1,138 federal protections not afforded to couples that are not legally married and thereby treated different under the law.
The two provisions – one benefiting surviving partners who inherit retirement savings and another, extending the right to draw upon savings during certain medical or financial emergencies – will make a real difference to our families.
The first provision allows a person to transfer his or her retirement plan benefits to a domestic partner or other non-spouse beneficiary (sibling, parent, child, etc.,) when he or she dies. The surviving partner will then be able to roll the inherited retirement funds into an individual retirement account (IRA) and either withdraw the benefits over a five-year period or over his or her own life expectancy. 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. This form of tax discrimination often bumped the survivor into a much higher tax bracket, and left him or her with a crippling tax bill.
The second provision that we successfully fought for addresses what are known as retirement plan hardship distributions. Under the new law, gay couples who list their partners as beneficiaries may now tap into their retirement funds in the case of certain medical or financial emergencies. In the past, the federal law permitted such withdrawals only for employees' legally recognized spouses or dependents.
One day, we'll probably look back and think that these two provisions seem modest compared to the equal treatment we will eventually have for our families. But today, we celebrate this victory for what it is – a step toward fulfilling the American promise of equal protection and equal treatment.
Joe Solmonese is the president of the Human Rights Campaign. For more information about HRC's victory, visit www.hrc.org/pensionbill.