Letter to Gene Dodaro, Comptroller General of the Government Accountability Office - Senators Murray and Burr Ask Government Watchdog to Examine Need for Additional Spousal Protections for 401(k) Retirement Assets

Letter

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:

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

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?

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?

How could the administrative burdens on plan sponsors and recordkeepers in connection with defined contribution 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 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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