Just before the end of his presidency, George W. Bush signed into law the Worker, Retiree and Employer Recovery Act of 2008 (WRERA), which corrects certain portions of the Pension Protection Act of 2006 (PPA). Under the PPA, employers were permitted, but not required, to allow non-spouse beneficiaries, including beneficiaries in a same-sex relationship, an opportunity to roll inherited retirement benefits paid as a lump-sum to an inherited IRA on a tax-free basis. In a victory of sorts for individuals in a same-sex relationship, the WRERA now mandates that employers provide such an opportunity. Should a beneficiary choose to take benefits in cash, rather than roll them into an IRA, the benefits will suffer a 20% tax.
Retirement plans covered by the law include pension plans (defined benefit plans), 401(K) plans (deferred compensation plans), ESOPs, profit-sharing plans, money purchase plans, 403(b) plans and governmental 457(b) plans.
All qualifying retirement plans must implement the non-spouse rollover provision as of January 1, 2010. Thus, while the federal government does not recognize same-sex marriage and, as a result, protections afforded by ERISA probably do not apply, this amendment inches same-sex couples one step closer to equality under the law.