Current protections for the spouses of plan participants are stronger in defined-benefit plans than in defined-contribution plans. Under the Retirement Equity Act (REA) of 1984, beneficiaries of defined-benefit plans must obtain written spousal consent to take payment in a form other than a joint-and-survivor annuity. Such protection for spouses is unavailable in individual retirement accounts and rare in defined-contribution plans. Thus, employees can withdraw and use 401(k) plan money without spousal consent. This is a serious shortcoming in the area of spousal protections. Although REA and the Pension Protection Act of 2006 improved spousal rights in cases of widowhood or divorce, these reforms have not eliminated all inequities.
Spousal Rights: Policy
Spousal protections in the REA for defined-benefit plans should be extended to all defined-contribution plans. Spousal protections also should be enacted for IRAs that provide for rollovers or transfers of plan distributions.
Spousal rights in cases of widowhood or divorce under REA and the PPA for all defined-benefit plans should be further enhanced.