Pension Plans

In general, there are two kinds of pension plans: defined contribution and defined benefits plans.

defined contributions plan can be likened to an account reserved for the participating employee that grows or shrinks based on the employer and/or employee’s periodic contributions to the plan, as well as the income, expenses, gains and losses of the investments. Some examples of defined contribution plans include 401(k) and 403(b) plans, employee stock ownership plans and profit-sharing plans. The standard form of payment from a defined contribution plan is a lump sum.

defined benefit plan can be viewed as a contract between the employer and employee in which the employer promises to pay the employee a specific benefit at some point in the future. The promised amount is typically based on some kind of formula often linked to an employee's pay and years of service. The standard form of payment from a defined benefit plan is a lifetime annuity.

Pension Protection Act of 2006

The Pension Protection Act of 2006 included provisions that extend new benefits to non-spouse retirement plan beneficiaries such as same-sex domestic partners. These changes address the rollover of retirement benefits when an employee dies and hardship distribution rules that permit people to draw on their retirement funds in the case of a qualifying medical or financial emergency.

Be Sure Your Loved One Is Covered. In order to benefit from these laws, you must make sure your employer has taken the necessary steps to provide each benefit, and you must designate your partner as the beneficiary of your 401(k) plan. If you haven't done so, contact your employer’s benefits coordinator and fill out a beneficiary designation form.