A bipartisan pair of senators on Thursday called on the Government Accountability Office to examine the need for stronger spousal protections in defined contribution plans.
“People plan their futures around their retirement accounts, so it is important that no one have these critical resources undermined by their spouse’s decisions without their knowledge or consent,” said Sen. Patty Murray, D-Wash., chairwoman of the Senate Health, Education, Labor, and Pensions Committee, and Sen. Richard Burr, R-N.C., the committee’s ranking member, in a letter to Gene L. Dodaro, the GAO’s comptroller general.
Under current law, one spouse could take a withdrawal from their account without the other spouse’s knowledge or consent, the senators said. “This could have a devastating effect on the unknowing spouse and family members, especially if they are less familiar with the household’s finances,” they added.
While some 401(k) plans may require married employees to get spousal consent for certain transactions such as taking a loan from the plan, such protections are not mandatory, Ms. Murray and Mr. Burr noted.
The senators asked the GAO to examine a series of questions related to the issue:
- How often are withdrawals made from DC retirement accounts involving married couples?
- In what circumstances is a married participant able to withdraw money from a DC plan without spousal consent? What is known about the effect on their spouse? What are the perspectives of plan participants and spouses on distributions for which spousal consent is not required?
- How could the spousal protections for defined benefit plans and the federal government’s $769.5 billion Thrift Savings Plan, Washington, be applied to the DC plan regime?
- How could the administrative burdens on plan sponsors and record keepers in connection with DC spousal protections be eased?
- What impact would remote witnessing of written consent agreements to withdrawals or change of beneficiary have on the consent of the spouse?
- Under what circumstances would obtaining spousal consent prior to a DC plan withdrawal or change of beneficiary be inappropriate?
Ms. Murray along with Rep. Lauren Underwood, D-Ill., reintroduced the Women’s Retirement Protection Act of 2021 in July. The bill includes a provision that would expand existing spousal protections for DB and DC plans to prevent one spouse from making decisions that might undermine a couple’s retirement resources without the other’s knowledge and consent.
The issue will likely get further attention next week as the Senate HELP Committee has scheduled a hearing titled “Rise and Shine: Improving Retirement and Enhancing Savings” for March 29.