If you're married, your employer-sponsored
is not just yours. Your spouse has rights to that asset, under
So married workers can't do certain things unilaterally with
their plans. When it comes to death benefits, their better half
has a say.
The same is often true for pension rights. If you want to go
beyond the norm, you'll need to have your paperwork in place.
Some spousal rights kick in when a plan participant dies. A
spouse is the default beneficiary of 401(k)s and other qualified
Say Al Mox is married to Lee. But Mox wants to leave his
401(k) account to his children from a prior marriage.
When Al married Lee, she signed a prenuptial agreement,
stating that the children could be the plan beneficiaries.
That doesn't matter. By definition, a prenup is signed before
the marriage, so Lee wasn't Al's spouse then.
In order to waive her rights, Lee must sign a consent form
while she is the spouse. Most plans will have a form to sign and
a procedure to have it witnessed.
Moreover, spousal waivers may not last forever. They become
invalid the first day of the plan year that the participant
reaches age 35.
Waivers signed after that date are valid indefinitely.
Federal law allows plans to ignore the spousal consent rule
when a participant has been married less than a year.
In one case, an inherited 401(k) went to a woman who was
married for only six weeks. The named beneficiaries, the
employee's children from a prior marriage, lost out.
The plan did not impose a one-year rule for spousal rights.
And the new wife had not waived them.
So proceed with care if you want someone other than your
spouse to inherit your company plan.
Rules For Withdrawals
Different rules apply to distributions you take from a plan
when you retire. A married employee who is covered by a pension
plan must take a joint and survivor annuity.
That will keep paying as long as either spouse is alive. So a
surviving spouse will have lifelong income.
But not every retiree wants this choice. Many plans provide
alternatives. Some retiring employees might want an annuity for
their life only. That will have higher payouts than a joint
Or a departing worker might want to take a lump sum, which
he'd be able to invest.
Again, if an employee wants something other than a joint
pension, his spouse will have to provide a written consent. This
waiver must be signed no later than 90 days before the first plan
But remember: The 90-day rule does not apply to waivers of a
spouse's right to be the account beneficiary. Those situations
are described above.
If those rules apply to pension plans, what about other plans
such as 401(k)s? Rules vary from plan to plan. Spousal consent
can be required for distributions, including loans, but not
always. Ask your plan administrator what's required.
And spouses typically have no specific rights to IRAs. If your
money is in an IRA, you'll have more control.
The big exception is when you live in a community property
state such as California. Then your spouse likely is half-owner
of IRA money you earned while married.
And state law may affect your choice of IRA beneficiary, if
the account is community property. To save you and your loved
ones from hassle, find out how your plan's rules and your state's
law affect your spouse's rights to your retirement account.