PRC Urges IRS to Protect Spouses

PRC Urges IRS to Protect Spouses


The Pension Rights Center (PRC) filed comments with the IRS/Treasury Department today urging the agency to strengthen – not weaken – critical legal protections for spouses’ retirement security.    

In its letter, PRC registered its strong disapproval of an IRS proposed rule that would eliminate the long-standing requirement that a spouse can only sign away their right to a survivor’s benefit knowingly and voluntarily in the physical presence of a notary or plan official who witnesses this transaction in order to safeguard against fraud and coercion by the worker-spouse. The IRS/Treasury proposes to permanently eliminate this important physical presence requirement in favor of allowing the signed consent to be witnessed remotely, which would significantly open the door to fraud and coercion and undermine spousal rights.  

The federal private pension law, ERISA, is clear on the importance of protecting surviving spouses. The law requires that when a worker-spouse dies, the surviving spouse must automatically receive a surviving spouse pension from a traditional defined benefit pension plan, or be the named beneficiary of a 401(k)-type retirement account, unless the spouse had already provided written consent to give up those critical benefits. This consent must be witnessed in the physical presence of a notary or a plan administrator. While spousal pension rights apply equally to both men and women, there are many factors that make women generally more dependent on spousal benefits for their retirement security than men – including earning lower pay, taking more time out of the workforce for caregiving duties and working at jobs without employer sponsored plans. This makes spousal rights primarily a women’s retirement security issue.   

PRC’s letter emphasized that “spousal consent to waive automatic retirement benefits for surviving spouses is the linchpin of statutory spousal protections and Congress structured this protection in the way it did because it recognized that for several reasons, this decision, this ERISA protection, is different.”   

This election is unique, because there is an inevitable conflict of interest between the spouses: leaving nothing for a spouse means more money for the participant (or, in a 401(k) plan, even for a different beneficiary). Moreover, “the interests that are at stake are huge and largely irreplaceable. Whether a couple has significant retirement assets or a modest amount, what they have accumulated is often critical to helping ensure a more secure retirement. Ensuring the continuation of a surviving spouse pension can make the difference between making ends meet and falling into poverty in widowhood.” If the spouse signs away their right to get this benefit, “when this resource is gone, it’s gone typically it is too late for the surviving spouse to work to make up the losses or to be able to save anymore for retirement.”   

PRC also responded to arguments made by the business community contending that remote notarization is an easy and necessary convenience.  PRC pointed out that spousal consents are “the only type of election under ERISA that requires a third-party witness. Congress did not intend for renunciations of automatic spousal benefits to be quick and easy to execute. Congress knew that requiring the spouse to appear in person before a notary or plan administrator was an extra step, but one that slowed things down, required a second decision maker, and that communicated the gravity of the decision and the document being witnessed, just by virtue of having to arrange for and appear before someone.”   

The Pension Rights Center urged the adoption of multiple safeguards that would improve the consent process, both for in-person witnessing and necessary for remote witnessing if the agency goes forward with that. Among the recommendations are:  

  • Plans should be required to provide separate communications to spouses so that they understand the enormity of the decision they are making and the participant has less control over the spouse’s actions;  
  • Stronger protocols for witnessing spousal consents including comparisons of photo IDs and comparison of signatures if the witnessing is remote; 
  • Ensuring that the notary, whether in person or remotely, asks whether spouses are signing freely without duress or coercion (without the other spouse in the room).  

Also, importantly, PRC recommended that remote witnesses be required to make a video-recording of the proceeding and to send it to the plan – not kept by the notary – so that there is a permanent record if, years later, there is a need to prove the authenticity of the consent.   

The Pension Rights Center wasn’t the only advocate for workers and retirees to oppose the proposed rule. A large group of women’s and retiree organizations, unions and groups representing survivors of domestic abuse also filed a letter to the IRS. Those who signed include: National Women’s Law Center; Alliance for Retired Americans; American Postal Workers Union Retirees Department, AFL-CIO; Equal Rights Advocates; Esperanza United (formerly Casa de Esperanza: National Latin@ Network); National Caucus & Center on Black Aging; National Committee to Preserve Social Security and Medicare; National Consumers League; National Domestic Violence Hotline; National Employment Law Project; National Network to End Domestic Violence; National Organization for Women; National Partnership for Women & Families; National Retiree Legislative Network; Social Security Works; Tahirih Justice Center; United Food and Commercial Workers International Union; Women Employed; and the Women’s Law Project.  

Since 1976, the Pension Rights Center has been a leading consumer voice working to protect and promote the retirement security of workers, retirees and their families.  

Contact: Kate Pixley

(202) 296-3776

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