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How to protect your 401(k) from emptying without your permission


401k spouse consent

401k spouse consent

Saving for retirement is one of the most pressing concerns of many Americans, and how to protect those funds is equally important. Private employer-sponsored defined-contribution plans have become the primary means of retirement accounts, with more than 90% of eligible workers contributing to retirement plans in the past year.

However, unlike traditional retirement plans, deterministic contribution plans like your 401(k) don’t offer the same degree of protections – including from your spouse if all things in marriage go south. Senators Patty Murray (D-WA) and Richard Burr (R-NC) posed the question: retirement accounts are so important to your future, can your spouse actually take the money? that you don’t know?

A financial advisor can help you design a retirement plan to protect your assets. Talk to a qualified counselor today.

Senator Calls on GAO to Investigate Spousal Protection

Despite their growing popularity, 401(k) and other defined contribution plans offer little if any spousal protection. Traditional retirement plans and the federal government Savings Savings Plan require the signatures of both spouses to withdraw or borrow money from those retirement accounts. They also provide spousal support in the event of death and divorce, as well as extending those benefits to same-sex married couples.

Senators Murray and Burr wrote an open letter to the Government Accountability Office (GAO) requesting an investigation into the need to protect spouses in defined contribution plan. Besides their primary residence, retirement accounts are often the biggest asset for married couples, making them potential targets in separation and divorce cases. Current law allows one spouse to withdraw the full amount without the other spouse’s consent or knowledge, and that has the potential to seriously affect the family’s future finances.

Steps you can take to protect your shared property

401k spouse consent

401k spouse consent

Current defined contribution plans offer less spousal protection spouse’s death benefit. In December 2021, a large number of senators led by Senator Murray wrote the US Treasury Department calling for more retirement plan protections for same-sex couples, who are denied the right to live because they could not legally marry. They’re now asking to extend protection to unsuspecting spouses, who can rely on the money accumulated in a 401(k) plan only to find it empty when the family needs it.

In the event of a divorce, 401(k) and other retirement benefits are often considered marital common property. Depending on your state, the court may split those funds 50/50 or in a fair share. If you want to keep your funds separate, it’s prudent to consider a pre- or post-closing agreement.

Sometimes, however, you may need to protect retirement assets from a spouse with little financial knowledge. In those cases, it may be helpful to talk to Financial Advisor or an attorney who can best guide you about your options. Until applicable law is updated or the government issues guidance changing the program’s rules, only eligible distributions, hard withdrawals, and primary beneficiary changes will be required. spouse’s consent.

Conclusion

401k spouse consent

401k spouse consent

Unlike traditional pension plans, privately defined contribution plans like your 401(k) don’t require a spouse’s consent for early withdrawals. This can cause problems if one spouse uses retirement funds without the other’s knowledge or consent. As a result, Senators Murray and Burr wrote an open letter to the GAO to investigate whether the government could easily extend existing spousal protections to such plans and help couples protect their property or not.

Retirement planning tips

  • Not sure how to protect your retirement from unexpected situations? For a solid, long-term financial plan, consider speaking with a qualified financial advisor. SmartAsset’s free tool Match you with up to three financial advisors serving your area, and you can interview your advisor matches for free to decide which is right for you. If you are ready to find an advisor who can help you achieve your financial goals, start right now.

  • Use SmartAsset for free retirement calculator to get a good first estimate of How much money will you need for retirement?

Image credits: © iStock.com / CatLane, © iStock.com / bymuratdeniz, © iStock.com / LaylaBird

Post Can your spouse void a 401(k) without your consent? Senator urges Government to investigate appeared first on SmartAsset Blog.

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