Thanks to years of work, the Human Rights Campaign was instrumental in ensuring that a new federal pension law includes two important provisions that give gay, lesbian, bisexual and transgender Americans and their partners full retirement protections - the kind long enjoyed by straight Americans.

The Pension Protection Act extends key financial protections to GLBT people who name non-spouses as their retirement plan beneficiaries - an opportunity previously denied to them. The new coverage - a huge victory for GLBT equality - is a direct result of years of hard work by the Human Rights Campaign to reach out to Democrats and Republicans, financial services companies and others, educating them about the real-life experiences of GLBT families.

The Basics
In the new Pension Protection Act, 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 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 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.

Act Now To Cover Your Loved One
To benefit from these laws, you must designate your partner as the beneficiary of your 401(k) plan. To do so, contact your employer's benefits coordinator and fill out a beneficiary designation form. Otherwise, they will not be covered.

HRC'S Online Chat
"By sharing stories of how real people are affected by the tax penalties under the old law, we made a case for more fair treatment," said HRC Legal Director Lara Schwartz, during a special online chat about the new law on HRC's website.

During the chat, Edward Koczorowski of Lincoln Financial Advisors in Chicago, a veteran financial planner and member of the HRC Board of Governors, and Schwartz laid out some of the basics of the new provisions. A large number of people joined in, asking a wide array of questions about what the law meant for them. Excerpts follow:
Question: So when do these new provisions go into effect?

Koczorowski: The amendments shall apply to distributions after Dec. 31, 2006. It's up to the individual plan participants to name their beneficiaries.

Question: Does this mean that when I die, my IRA can be rolled over into my domestic partner's IRA?

Koczorowski: No. It means that if your IRA names your partner as beneficiary, they have additional options for distributions. Your partner may not merge this IRA with his or her own.

Question: Would this new law be negated by the Federal Marriage Amendment, if passed, since it imitates a "legal consequence" of marriage?

Koczorowski: No. This concerns non-spousal beneficiaries. A lot of people are included in the class of non-spousal, not just partners. Friends, children or siblings, for example.

Question: We are a married couple (married in Massachusetts, at least) and are curious to know just how this new pension provision would impact married, same-sex couples in
Massachusetts. As we are not married for federal purposes, what type of evidence do we need to establish a "domestic partnership" to gain the protection of this new federal law?

Koczorowski: This is a federal law. Remember that the federal government does not recognize your marriage. However, this act supersedes state law. If your plan allows for non-spousal beneficiaries, all you need for it to apply is to name your partner as a beneficiary of your plan.

Question: So as a benefits executive, is there anything specific that needs to be done as employer regarding these provisions?

Schwartz: The Pension Protection Act does not create new requirements for employers. However, to make sure that your GLBT employees benefit from the act, you need to make sure that your plan allows them to designate domestic partners as beneficiaries.

Question: My partner of 14 years is a Mexican national. How does this new IRA rollover law address having an alien partner? How would a beneficiary residing in a foreign country access the funds? What about legal versus illegal residence status?

Koczorowski: You generally need a valid Social Security number or a tax identification number in order to be named a beneficiary or for benefits to be paid under any retirement plan.

Question: So glad to hear about how hard HRC had been working to add additional protections to the retirement pension act. Thank you for that, and am proud to be a sponsor. The question I have is: Will this act include domestic partners with partners in city jobs, in particular the San Francisco Police Department?

Koczorowski: If any pension plan currently allows benefits to non-spouses, this applies. This act does not have power to change terms in existing pensions if non-spouse beneficiaries are not currently addressed. However, if you can take a lump sum distribution and roll it into an IRA, this act really helps you.

Question: My partner and I already have each other as beneficiaries on our plans. What changes will this law provide in that case?

Schwartz: If your plans are 401(k)s, then you will see a decreased tax penalty on inheriting the other partner's plan - but here's hoping that this doesn't happen for a long, long time!

Question: Could this new policy pave the way for Social Security spousal benefits for gay and lesbian couples? My partner and I have been together for over 23 years and the lack of spousal benefits is absurd (especially given the fact that I'm self-employed and have been paying into this for my entire career). Shouldn't I be able to dictate where this money goes after my death???

Koczorowski: We can only hope that this first step is the vanguard of a new way of fair thinking when it comes to providing equality for all Americans.
Schwartz: This policy is one step in the long struggle to correct the injustice that GLBT families face - including that same-sex couples pay the same amount of Social Security but do not receive the same benefits. HRC is working to promote equity in Social Security and more than 1,000 other federal benefits and protections. To get involved, visit www.hrc.org/actioncenter.

Join the Human Rights Campaign today to receive a free subscription to HRC's quarterly magazine, Equality.