BY MARY DALRYMPLE
Some advantages of retirement accounts once reserved for spouses can now be used by other beneficiaries, a change lauded by gay and lesbian groups as a boon for unmarried couples.
One change, part of the pension overhaul President Bush signed into law Thursday, lets a beneficiary spread out the tax hit when inheriting a retirement plan like a 401(k).
The old law required a beneficiary who wasn't a spouse to take the money in a lump sum and pay income tax. The higher-than-average income meant they often paid tax at higher income tax rates.
Under the new law, heirs can put the money into an Individual Retirement Arrangement, or IRA, and withdraw the money over time -- either over five years or over his or her life expectancy.
''The passage of this legislation is fantastic for same-sex couples,'' said Joe Kapp, a Washington financial advisor who also teaches financial planning to same-sex couples.
Kapp said he used to tell his gay and lesbian clients that leaving an old 401(k) to a partner ranked among the top three problems they should try to manage.
The second change addressed hardship distributions from retirement funds permitted in cases of medical or financial emergency.
Past law only covered spouses and dependents when allowing emergency withdrawals from such accounts. The new law expands those withdrawals to others named as beneficiaries on the accounts.
The Human Rights Campaign, which worked for several years to secure passage of the changes, said they help equalize the financial rules for married and unmarried couples.
''For gay couples and all Americans with non-spouse beneficiaries, death and taxes weren't only certain but also times of great and unequal financial difficulty,'' said HRC President Joe Solmonese.