Two key senators have asked the Government Accountability Office to investigate whether spouses should be given additional rights to safeguard and protect 401(k) assets.
The bipartisan request comes from Sen. Patty Murray (D-WA), chair of the Senate Health, Education, Labor and Pensions (HELP) Committee, which has jurisdiction over the issue, and the committee’s ranking Republican, Sen. Richard Burr (R-NC).
“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,” the senators write in their March 24 letter to Comptroller General Gene Dodaro.
Murray and Burr contend that the ability of one spouse to take a withdrawal from his or her account without the other spouse’s knowledge or consent could have a “devastating effect” on the unknowing spouse, especially if they are less familiar with the household’s finances. “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,” they note.
To better understand industry trends with an eye towards developing future legislation, Sens. Murray and Burr ask GAO to address the following:
- How often are withdrawals made from DC plans involving married couples?
- In what circumstances is a married participant able to withdraw money from a DC plan without spousal consent and 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?
- How could the spousal protections for DB plans and the TSP be applied to the DC plan regime?
- How could the administrative burdens on plan sponsors and recordkeepers 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?
The senators’ letter comes ahead of a Senate HELP Committee hearing scheduled for March 29, which, in addition to spousal protection issues, will take a broader look at how to strengthen retirement and enhance savings for Americans.
In July 2021, Murray reintroduced the Women’s Retirement Protection Act to help protect women’s retirement security by expanding existing spousal protections for both DB and DC plans. However, in requesting GAO to conduct the study, it appears that any action on this legislation will be delayed, potentially until next year, to give the agency time to conduct the study, which can take several months.
