Senators Murray and Burr Ask Government Watchdog to Examine Need for Additional Spousal Protections for 401(k) Retirement Assets

Senators: “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.” 

Unlike defined benefit pension plans, defined contribution 401(k) plans—the most common retirement option for families—lack protections to prevent one spouse from independently undermining a couple’s retirement resources

Washington, D.C. – Today, Senate Health, Education, Labor, and Pensions (HELP) Committee Chair, Senator Patty Murray (D-WA), and Ranking Member, Senator Richard Burr (R-NC), sent a letter to the Government Accountability Office (GAO) calling on the agency to examine the need for stronger spousal protections in defined contribution retirement 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,” wrote the Senators. “Unlike traditional defined benefit retirement plans and the Federal government’s Thrift Savings Plan that have spousal protections,  private employer-sponsored defined contribution retirement plans – which have become the most common retirement savings vehicle – currently provide no similar safeguards. Under current law, one spouse could take a withdrawal from their account without the other spouse’s knowledge or consent. This could have a devastating effect on the unknowing spouse and family members, especially if they are less familiar with the household’s finances.” 

Under current law, defined benefit pension plans have protections to prevent one spouse from making decisions that might undermine a couple’s retirement resources without the other’s knowledge and consent. While some 401(k) plans may require married employees to get spousal consent for certain transactions such as taking a 401(k) loan, such protections are not mandatory.  Understanding industry trends toward protection for spouses will better inform any future Congressional spousal protection legislation concerning defined contribution plans like 401(k)s.  These plans have become increasingly common—to the point where they are now by far the most common retirement savings option used by families. The Senators’ letter to GAO comes ahead of a HELP Committee hearing next week, which will take a broader look at how to strengthen retirement and enhance savings for Americans.

Full text of the letter below and PDF available HERE.

March 24, 2022

The Honorable Gene Dodaro

Comptroller General

U.S. Government Accountability Office

441 G Street, N.W.

Washington, D.C. 20548

Dear Mr. Dodaro:

We write to request the U.S. Government Accountability Office (GAO) examine the need for stronger spousal protections in defined contribution retirement plans, as such accounts are often a couple’s largest asset aside from their home.  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.

Unlike traditional defined benefit retirement plans and the Federal government’s Thrift Savings Plan that have spousal protections,^[1] private employer-sponsored defined contribution retirement plans – which have become the most common retirement savings vehicle – currently provide no similar safeguards.  Under current law, one spouse could take a withdrawal from their account without the other spouse’s knowledge or consent.  This could have a devastating effect on the unknowing spouse and family members, especially if they are less familiar with the household’s finances. 

Congress has historically emphasized that “a spouse should be involved in making choices with respect to retirement income on which the spouse may also rely.”^[2]  Given the rise in the use of defined contribution plans but current lack of defined contribution spousal protections, we respectfully ask GAO to address the following questions:

1. How often are withdrawals made from defined contribution retirement accounts involving married couples?

1. In what circumstances is a married participant able to withdraw money from a defined contribution plan without spousal consent?  What is known about the effect on their spouse? What are the perspectives of plan participants and spouses on distributions where spousal consent is not required?

1. How could the spousal protections for defined benefit plans and the Federal government’s Thrift Savings Plan be applied to the defined contribution plan regime?

1. How could the administrative burdens on plan sponsors and recordkeepers in connection with defined contribution spousal protections be eased?

1. What impact would remote witnessing of written consent agreements to withdrawals or change of beneficiary have on the consent of the spouse?

1. Under what circumstances would obtaining spousal consent prior to a defined contribution plan withdrawal or change of beneficiary be inappropriate?

If you have any questions concerning this request, please contact Kendra Isaacson, Pensions Policy Director & Senior Tax Counsel for Chair Murray, at (202) 224-6572, or Lindsey Seidman, Deputy Staff Director for Ranking Member Burr, at (202) 224-8984.

Thank you for your attention to this matter.

Sincerely,

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