What Are DOMA's Effects on LGBT Couples?
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No deferral is given for inherited retirement account balance.
If you and your partner aren’t planning to rely solely on Social Security benefits in your golden years, one or both of you probably have Individual Retirement Accounts (IRAs) and possibly employer-based retirement accounts into which you contribute a bit each payday.
Assuming you’ve both named the other as a beneficiary on your retirement accounts, because DOMA doesn’t recognize your marriage, when the first partner dies, the surviving partner will immediately have to start withdrawing annual required minimum distributions (RMDs), which is a set amount of money from the deceased partner’s retirement account. That money is counted as income to the surviving partner and taxed accordingly.
Conversely, legally recognized surviving spouses can roll over a deceased spouse’s retirement plan into his or her own IRA, and they’re not required to start taking annual RMDs from the rollover IRA until after they turn 70-1/2. Because RMDs are taxable, heterosexual spouses are allowed to collect more tax-deferral benefits than same-sex partners whose marriage isn’t recognized by the feds.
Furthermore, because the Social Security Act is a federal law, a same-sex spouse isn’t entitled to receive his or her partner’s Social Security benefits either.