Current protections for the spouses of plan participants are stronger in defined-benefit (DB) plans than in defined-contribution (DC) plans. Under the Retirement Equity Act (REA) of 1984, beneficiaries of DB 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 (IRAs) and rare in DC plans. Thus, employees can withdraw and use 401(k) and IRA assets without spousal consent. This is a serious shortcoming in the area of spousal protections. The REA and the Pension Protection Act of 2006 improved spousal rights in cases of widowhood or divorce. For example, they made it easier for divorced couples to qualify for spousal benefits and required employers to give workers more options for structuring joint-and-survivor annuities. However, these reforms have not eliminated all inequities.
SPOUSAL RIGHTS IN PRIVATE RETIREMENT PLANS: POLICY
Defined-contribution plan account holders should have to obtain written spousal consent to take payment from the account in a form other than a joint-and-survivor annuity. Similar spousal protections also should be enacted for individual retirement accounts (IRAs) funded by rollovers or other transfers of plan distributions.
Spousal rights for all defined benefit plans in cases of widowhood or divorce under the Retirement Equity Act of 1984 and the Pension Protection Act of 2006 should be further enhanced.