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 PDF available HERE.
Original source can be found here.
