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When Must Participants Get Spousal Consent to Take a Loan or Distribution?


· 5 minute read


· 5 minute read

QUESTION: Some retirement plans seem to require spousal consent whenever a participant takes a distribution. But our 401(k) does not require spousal consent when a participant takes a distribution or a loan. We only require consent if a participant wants to designate a primary beneficiary other than the participant’s spouse. When are 401(k) plans required to obtain spousal consent for distributions to participants?

ANSWER: Spousal consent is required if a married participant designates a nonspouse primary beneficiary and may be necessary if a 401(k) plan offers one or more annuity forms of distribution. Here is a summary of these rules and the way many 401(k) plans avoid spousal consents.

Generally speaking, tax-qualified retirement plans are required to provide distributions to participants in the form of a qualified joint and survivor annuity (QJSA), and a minimum preretirement death benefit known as a qualified preretirement survivor annuity (QPSA). These forms assure surviving spouses a minimum benefit that can only be waived with the spouse’s consent. A 401(k) plan, however, avoids these survivor annuity requirements (i.e., the QJSA and QPSA) so long as—

  • the plan requires that vested benefits be paid in full to the participant’s surviving spouse after the participant dies (unless the spouse has consented to a different beneficiary or there is no surviving spouse);
  • participants do not elect payment in any form of life annuity; and
  • participants’ benefits do not include amounts transferred from a plan that was subject to the Code’s survivor annuity requirements.

Your plan appears to satisfy the first requirement. Thus, if your plan does not offer participants any life annuity distribution option and is not the recipient of funds from a plan that was subject to the survivor annuity requirements, your plan does not have to obtain spousal consent before making distributions to plan participants.

Plans that have received transfers from plans that were subject to the survivor annuity requirements can prevent those requirements from applying to other benefits under the plan by separately accounting for the transferred assets (and their income).

For purposes of the survivor annuity rules, plan loans are treated like distributions to the participant. So, if a plan does not need to obtain spousal consent for other distributions to a participant, consent is not needed for plan loans either.

Certain deferred annuity contracts that include lifetime income options can be used as investments in a plan without triggering the spousal consent requirements if they allow participants to move funds freely in and out of the contract until the annuity’s deferred starting date. If the contract is accounted for separately, the spousal consent rules will not apply to the contract until the deferred starting date of an annuity distribution. (This allows earlier distributions and loans to occur without spousal consents.)

For more information, see EBIA’s 401(k) Plans manual at Sections XIII.G (“Spousal Consent to Distribution May Be Required”) and XVI.G (“Participant Loans: Spousal Consent Generally Not Required”).

Contributing Editors: EBIA Staff.

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